Suwon District Court-2015-Gu Partnership-6960 ( April 28, 2016)

Whether it constitutes an exception to the provisions on taxation of gift tax at the time of sunset and whether the statutes are unconstitutional;

Article 34-2 (7) (proviso) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act does not apply to the case where the transaction in this case is conducted with a specially related corporation under other Acts, and the pertinent tax provisions cannot be deemed as unconstitutional.

Article 34-2 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (Amended by Presidential Decree No. 24385, Feb. 15, 2013)

2016Nu60593 Disposition of revocation of refusal to correct gift tax

Labor*

*The Director of the Tax Office

Suwon District Court Decision 2015Guhap6960 Decided July 28, 2016

April 27, 2017

May 25, 2017

1. The plaintiff's appeal is dismissed.

2. The costs of appeal shall be borne by the Plaintiff.

The judgment of the first instance shall be revoked. The defendant's refusal to correct the gift tax amounting to KRW 458,003,510 on November 21, 2014 shall be revoked.

1. Quotation of judgment of the first instance;

The reasoning of the judgment of this court is as follows, and it is identical to the judgment of the court of first instance except for the addition of some contents and the omission of some contents. Thus, it is accepted by Article 8(2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act.

Part to be added or dried.

○ The following shall be added to the fifth fifth sentence of the first instance judgment:

4) The provision on deemed donation of this case does not have any general exception provision such as the provision on deemed donation of title trust. Therefore, the provision on deemed donation of this case is contrary to the principle of tax equality and the principle of substantial taxation. Furthermore, the provision on deemed donation of this case is unconstitutional elements such as taxation on unrealized profits, double taxation, violation of the principle of excessive prohibition, and violation of the principle of freedom of contract. Therefore, the disposition of this case

○○ Decision 20th 7th 20th son**’s “*” is regarded as “***”.

○ The following shall be added to the 9th instance judgment of the first instance court.

4) Whether Article 45-3 of the former Inheritance Tax and Gift Tax Act is unconstitutional

A) Whether the pertinent deemed donation provision is contrary to the principle of tax equality and substance over form principle

The provision on the deemed donation of title trust (Article 45-2 of the Inheritance Tax and Gift Tax Act) does not provide for general exceptions such as the provision on the deemed donation of title trust (Article 45-2 of the Inheritance Tax and Gift Tax Act). However, the provision on the deemed donation of this case can be traded with the specially-related corporation up to 30% of the sales (Article 34-2 (4) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act), and a corporation which invests 50% or more of the total number of stocks issued by the beneficiary corporation and the corporation which invests 50% or more of the total number of stocks issued by the beneficiary corporation is excluded from the specially-related corporation (Article 34-2 (3) (proviso and 1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act), and where a beneficiary corporation trades with a specially-related corporation located overseas for the purpose of exporting products and goods, the relevant sales amount is excluded from the sales amount to the specially-related corporation (the proviso to Article 34-2 (7) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act).

Therefore, the plaintiff's assertion on this part is without merit.

B) Whether the taxation of unrealized gain and double taxation are unconstitutional

(1) It is difficult to see that the profit gained by a beneficiary corporation from the transaction with a special relationship corporation is the profit fully realized from the perspective of the controlling shareholder of the beneficiary corporation. However, whether the scope of the gift income, which is subject to taxation, is limited to the income realized or includes unrealized gain is a legislative policy issue that is determined by considering the purpose of taxation, the characteristics of taxable income, and the issues of taxation technology, and it cannot be deemed that there is any inconsistency that is contrary to or incompatible with the tax concept under the Constitution (see Constitutional Court Order 92Hun-Ba49, 52, Jul. 29, 199).

In addition, the controlling shareholders, etc. can make a decision to distribute or withhold the profit acquired by the recipient corporation through the exercise of voting rights, and the taxation of corporate tax and dividend income tax on the controlling shareholders is difficult to achieve the legislative purpose merely because there are many cases where the recipient corporation holds stocks for a long time to secure management rights. While it is difficult to calculate the profit indirectly acquired through the recipient corporation, it is difficult for the controlling shareholders, etc. to calculate the profit amount, while the method of deeming the profit acquired by the controlling shareholders, etc. as the profit acquired by multiplying the ratio of shares of the controlling shareholders, etc. based on the profit acquired by the recipient corporation is recognized as convenience and rationality of the method, it is difficult to view that the calculation of the profit of donation by the controlling shareholders, etc. is

D. Meanwhile, double taxation generally refers to the imposition of two or more taxes on the same taxable object. According to the so-called so-called sunset, the gift tax, dividend income tax, and corporate tax on the beneficiary corporation, which are imposed by the controlling shareholder as the gift profit from the increase in the value of the shares of the beneficiary corporation, are different from each other, so it is difficult to view that the same taxable object has been imposed in duplicate because the legislative purpose, taxable objects, and the subject of burden are different. In addition, in the pertinent deemed donation provision, where the gift tax paid by the controlling shareholder, etc. is distributed from the beneficiary corporation after the gift tax was paid, it is not considered when calculating the dividend income tax, but it is not considered when the controlling shareholder disposes of the shares of the beneficiary corporation (see Article 163(10)1 of the Enforcement Decree of the Income Tax Act). Considering that the controlling shareholder, etc. is in the position to determine the dividend of the beneficiary corporation by exercising his voting right for the beneficiary corporation, it is difficult to deem it unreasonable even if it is not necessarily considered when calculating

The plaintiff's assertion on this part is without merit.

C) Whether the principle of excessive prohibition and the principle of freedom of contract are violated

(1) Article 45-3 of the former Inheritance Tax and Gift Tax Act imposes gift tax on a beneficiary corporation by deeming that the controlling shareholder of the beneficiary corporation and his/her relatives (hereinafter “controlling shareholder, etc.”) have donated a certain portion of the taxable income of the beneficiary corporation when the sales amount in excess of a certain ratio out of the sales amount of the beneficiary corporation have occurred in transactions with a corporation in a special relationship with the controlling shareholder of the beneficiary corporation. The so-called “one-off period” provision was introduced in the situation where a person who may have a substantial influence over a certain company is in a relationship with the beneficiary corporation by taking advantage of such position so that he/she is supplied with goods or services by himself/herself or his/her relatives, thereby accumulating personal records through which the concentration of economic power is deepened. The act of earning profits by the beneficiary corporation through the sunset period and increasing the value of assets by the controlling shareholder, etc. is excluded from the scope of taxation under the private law or because it is difficult to recognize the existing provisions of the Inheritance Tax and Gift Tax Act as taxable objects. However, the act of this case was indirectly alleviated between the controlling shareholder, etc.

Article 45-3 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 45-3) provides for fair taxation between other types of donation by including the increase in the property value of the controlling shareholder, etc. using the business opportunity of a special relationship corporation in the scope of donation, and promoting fair taxation between other types of donation acts, while protecting the interests of the related corporation or shareholders, etc. who are not the controlling shareholder of such corporation, and relaxings economic concentration. In addition, if a beneficiary corporation gains profits through transactions between the corporations, it can be deemed that the increase in the value of shares of the controlling shareholder, etc. has increased, and if the controlling shareholder has a considerable influence on the corporation that provided such business opportunity, it can be deemed that the controlling shareholder, etc. received property donation. In addition, in light of the background of the introduction of the system, the taxation of gift tax to the controlling shareholder, etc. can be deemed an appropriate means.

Article 45-3 of the former Inheritance Tax and Gift Tax Act concerning the transaction between the specially related corporation and the beneficiary corporation

In light of the following: (a) there is no general exception provision that can escape from the taxation object of gift tax by means of proving that there is no intention of “the sunset cycle”; (b) the beneficiary corporation can trade with the related corporation up to 30% of its sales; (c) the beneficiary corporation holding at least 50% of its equity shares is not regarded as a special relation corporation; and (d) transactions, etc. which are mandatory under the law are recognized as having various exceptions that excludes the sales from the related corporation; and (e) the profit deemed as donated by the controlling shareholder in the future is reduced as much as the amount of capital gains corresponding to the profit deemed donated by adding the acquisition value to the acquisition value at the time of transfer of shares of the beneficiary corporation (see Article 163(10)1 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act). In addition, it is difficult to view that Article 45-3 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act violates the minimum principle of infringement on fundamental rights of the beneficiary corporation, such as freedom of contract or freedom of business activities, etc. It is difficult to view that the controlling shareholder can be restricted from imposing economic benefits.

• Accordingly, the plaintiff's assertion on this part is without merit.

2. Conclusion

Since the judgment of the first instance is justifiable, the plaintiff's appeal is dismissed as it is groundless.