Busan High Court-2012-Nu-1532 ( October 31, 2012)

It includes capital increase in consideration of the object of gift tax on stock listing marginal profits.

The "new shares" under Article 41-3 (6) of the former Inheritance Tax and Gift Tax Act includes not only the original shares based on the shares originally acquired by donation or transfer, but also the new shares for consideration based on such shares. Additional taxes are administrative sanctions, and the taxpayer's intentional or negligent acts are not considered, but also the land or mistake of the statutes does not constitute justifiable grounds

Article 41-3 of the Inheritance Tax and Gift Tax Act (Donation of Benefits Following Listing, etc. of Stocks or Equity Shares)

All appeals are dismissed.

The costs of appeal are assessed against the plaintiffs.

The grounds of appeal are examined.

1. Article 41-3(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 9916, Jan. 1, 2010; hereinafter referred to as the "former Inheritance Tax and Gift Tax Act") provides that where a person having a special relationship with the largest shareholder, etc. receives a donation of stocks of the relevant corporation from the largest shareholder, etc. or has acquired a compensation therefor, if the person who received a donation of the relevant stocks, etc. or acquired a compensation therefor gains a certain amount of profits in excess of the initial taxable amount of gift taxes or acquisition value, such profits shall be deemed as the value of donated assets of the person who acquired the relevant profits, and Paragraph (6) of the same Article provides that "in the application of the provisions of paragraph (1), the acquisition of stocks,

The legislative intent of Article 41-3(1) of the former Inheritance Tax and Gift Tax Act is to promote the equality of taxation by imposing gift tax on the listed profits of unlisted stocks and imposing tax on the transfer of the transferred stocks expected to be realized at the time of donation or transfer. Thus, the new stocks under Article 41-3(6) of the former Inheritance Tax and Gift Tax Act shall be deemed to include not only the new stocks based on the original donation or transfer stocks, but also the new stocks based on

2. In addition, Article 47-2 of the former Framework Act on National Taxes (amended by Act No. 911, Jan. 1, 2010; hereinafter the same) provides that: (a) where a taxpayer fails to file a tax base return within the statutory due date of return; (b) where a taxpayer files a tax base return under the tax-related Acts within the statutory due date of return; (c) where the reported tax base falls short of the tax base to be reported under the tax-related Acts; and (d) where a taxpayer fails to pay national taxes within the due date of return under the tax-related Acts; and (e) Article 47-5 of the former Framework Act on National Taxes provides that a taxpayer shall impose an additional tax if the amount of tax to be paid falls short of the tax base to be reported under the tax-related Acts. Meanwhile, Article 48(1) of the former Framework Act on National Taxes provides that “Where the Government imposes an additional tax under this Act or other tax-related Acts, the Government shall not impose the relevant additional tax.”

In order to facilitate the exercise of taxation rights and the realization of tax claims under the tax law, a taxpayer’s intentional or negligent act is an administrative sanction imposed in accordance with the law in cases where a taxpayer violates a tax return and tax liability as prescribed by the law without justifiable grounds, and the taxpayer’s intentional or negligent act does not constitute a justifiable reason. Moreover, even if a taxpayer has believed a tax official’s wrong explanation and failed to perform his/her duty to report and pay taxes, if it is evident that such failure is contrary to the relevant law, such reason alone does not constitute a justifiable reason (see, e.g., Supreme Court Decision 2003Du10350, Sept. 24, 2004).

3. Therefore, the court below is just in rejecting each of the plaintiffs' assertion that ① the newly issued shares under Article 41-3 (6) of the former Inheritance Tax and Gift Tax Act does not include the newly issued shares based on the shares originally received or transferred; ② Article 41-3 (6) of the former Inheritance Tax and Gift Tax Act is unconstitutional; ③ the plaintiffs' failure to pay the gift tax on the listed marginal profits of their own stocks, or the plaintiffs' failure to pay each gift tax after August 10, 2009, are justifiable; and contrary to what is alleged in the grounds of appeal, the court below did not err by misapprehending the legal principles as to the scope of application under Article 41-3 (6) of the former Inheritance Tax and Gift Tax Act, interpretation of the constitutional law, and legitimate grounds for exempting additional tax, or by omitting the judgment on the unconstitutionality

4. Therefore, all appeals are 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 on the bench.