Whether a person who has a relative or other special relationship with an oligopolistic stockholder of a corporation, but did not have a shareholder of the corporation, is subject to the deemed acquisition tax in case where he newly acquired a part of the stocks or shares from the oligopolistic stockholder and became the oligopolistic stockholder, but there is no change in the total stocks or shares held by the whole oligopolistic stockholder

In light of the fact that whether a person is an oligopolistic shareholder who is liable to pay deemed acquisition tax is not determined on the basis of an increase in the total stocks or shares owned by a specific shareholder among oligopolistic shareholders, but on the basis of an increase in the total stocks or shares owned by all oligopolistic shareholders, it cannot be subject to deemed acquisition tax unless there is a change in the ratio of the total stocks or shares owned by a specific oligopolistic shareholder, even if a person who was not a shareholder of the relevant corporation, has transferred stocks or shares among oligopolistic shareholders or has a special relationship with the existing oligopolistic shareholders, but has newly been included in the oligopolistic shareholder by acquiring a part of the stocks

Articles 22 subparag. 2 and 105(6) of the former Local Tax Act (amended by Act No. 7843 of Dec. 31, 2005), Article 78(1) of the Enforcement Decree of the Local Tax Act

[Plaintiff-Appellant] Plaintiff 1 and 15 others (Law Firm Gyeong, Attorneys Lee Jae-soo et al., Counsel for plaintiff-appellant)

Plaintiff (Attorney Park Young-chul et al., Counsel for plaintiff-appellant)

Head of Daegu Metropolitan City Month;

Daegu High Court Decision 2006Nu2177 Decided April 27, 2007

The appeal is dismissed. The costs of appeal are assessed against the defendant.

We examine the grounds of appeal.

Article 105 (6) of the former Local Tax Act (amended by Act No. 7843, Dec. 31, 2005; hereinafter the same) provides that where an oligopolistic stockholder becomes an oligopolistic stockholder by acquiring the stocks or shares of a corporation, such oligopolistic stockholder shall be deemed to have acquired the real estate, etc. of the corporation concerned. Here, the oligopolistic stockholder means a person whose total amount of stocks held or investments made by a stockholder or a partner with limited liability and a relative or a person in a special relationship with him as prescribed by the Presidential Decree is 51/100 or more of the total number of stocks issued or investments made by the corporation concerned.

In light of the fact that whether a person is an oligopolistic shareholder who is liable to pay deemed acquisition tax is not determined based on the increase in the total stocks or shares owned by a specific shareholder among the oligopolistic shareholders, but on the basis of the increase in the total stocks or shares owned by all the oligopolistic shareholders, it is not determined based on the increase in the number of stocks or shares owned by all the oligopolistic shareholders. In light of the fact that a person who is not a shareholder of the relevant corporation has transferred stocks or shares among the oligopolistic shareholders or has a special relationship with the existing oligopolistic shareholders, but has newly been included in the oligopolistic shareholder after acquiring a part of the stocks or shares from the existing oligopolistic shareholder, it cannot be subject to the deemed acquisition tax unless there is a change in the total stocks or shares owned by the whole oligopolistic shareholder (see Supreme Court Decision 2002Du1144, Feb. 27, 2004). However, even if a person who is a relative or a special relationship with

In the same purport, the court below is justified in holding that the disposition of this case, which imposes deemed acquisition tax, etc. on the plaintiff by applying Article 105 (6) of the former Local Tax Act to the plaintiff, is unlawful, even though the non-party 1, who is the husband of the plaintiff, donated all of the shares of the non-party 2 corporation owned by himself to the plaintiff with a special relation, since the ratio of stocks held by the plaintiff and non-party 1, who is a new oligopolistic shareholder, is 70%, regardless of whether or not the above donation was made or not, and

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Shin Hyun-chul (Presiding Justice)