Seoul Administrative Court 2010Guhap40700 ( October 21, 2011)

Cho High Court Decision 2010Du0088 ( November 26, 2010)

Transfer of shares in this case is not subject to capital gains tax, and there is no tax avoidance purpose.

After acquiring shares in the Plaintiff’s name for the purpose of evading tax, such as capital gains tax, the sales price was not immediately transferred to the Plaintiff’s own securities account, etc., and thereafter, the remaining shares were purchased through the Plaintiff’s securities account in the process of continuing the stock transaction, but the transfer of shares was not subject to capital gains tax,

2011Nu28730 Revocation of Disposition of Imposing gift tax

XX

Head of the District Tax Office

Seoul Administrative Court Decision 2010Guhap40700 decided July 21, 201

January 11, 2012

February 8, 2012

1. The part of the judgment of the court of first instance against the plaintiff falling under the following shall be revoked:

The Defendant’s imposition of gift tax on the portion of donation on July 15, 2005 against the Plaintiff on October 1, 2009, on September 30, 2007, on the portion of donation, ○○○○○○○○○○, on December 31, 2007, respectively, of gift tax on the portion of donation on December 31, 2007, and the imposition of gift tax on the portion of donation on December 31, 2006, on the amount exceeding ○○○○○○○○, on December 31, 2006, shall be revoked.

2. The remaining appeal by the plaintiff is dismissed.

3. The total costs of the lawsuit shall be six minutes, and five minutes shall be borne by the Plaintiff, and the remainder by the Defendant, respectively.

The judgment of the first instance shall be revoked. The defendant revoked each disposition of the gift tax on October 1, 2009 against the plaintiff on December 31, 2004, ○○○○○○○○○○○ on July 15, 2005, ○○○○○○○ on December 31, 2006, ○○○○○○○○ on September 30, 2007, ○○○○○○○○ on the gift tax on the donation portion on September 30, 207, and ○○○○○○○○ on the donation portion on December 31, 2007.

1. cite the judgment of the first instance;

The Court’s reasoning is as follows: (a) the developments leading up to the instant disposition; (b) whether the instant disposition is legitimate; (c) the relevant laws and regulations; (d) the facts of recognition; and (d) the judgment on the first argument (whether the instant shares have been trusted in trust or not) of the grounds for use in the instant case (from the second fifth to the eleventh day), refers to the relevant parts of the judgment of the court of the first instance as stated in Article 8(2) of the Administrative Litigation Act; and (b) the main text of Article 420 of the Civil Procedure Act, except in the following cases:

O 120% off to 130%, and 6th of the same reduction, ○○○ is raised to ○○○○.

O The fourth 1-6th is as follows:

2) Even if the next AA had title trust with the Plaintiff, it was aimed at securing the right to vote in favor of the Plaintiff from the defense source for the right of management regarding the XX industry, along with the purpose of providing the Plaintiff with economic assistance as a profit from the sale and purchase of the shares. In other words, the next AA president KimB, the head of the XX industry KimB, who is a part of the next AA, need to secure the right to vote in favor of the dispute over the management right of the XX industry, such as KimCC, KimD, etc., a type of punishment, and accordingly, the next AA purchased 80,000 shares of the XX industry held by OB in the Plaintiff’s name on July 15, 2004 immediately after the opening of the securities account in the name of the Plaintiff, and purchased 80,000 shares of the P industry held by OB in the name of the Plaintiff in 204 and 2005, as in the case of transfer of shares in the XX industry, the transfer income tax is imposed on the dividend income avoided by title trust.

The fourth 12th th th th th th th "it is illegal in violation of the principle of double taxation," and "in particular, the part of the disposition of this case imposing gift tax on the shares acquired after 2005 is regarded as unlawful against the principle of tax equality, the principle of proportionality, the guarantee of private property, and the principle of double taxation prohibition."

O's 11th 6-16th.

2. A new part.

2) Determination of the second argument (whether there is a purpose of tax avoidance)

A) The legislative purport of Article 45-2(1) of the former Inheritance Tax and Gift Tax Act is to recognize an exception to the substance over form principle to realize tax justice by effectively preventing the act of tax avoidance using the title trust system. Thus, if it is recognized that the title trust was conducted for any reason other than the purpose of tax avoidance, and it is merely a minor reduction of tax incidental to the title trust, it is difficult to deem that the purpose of tax avoidance exists in the title trust. However, in light of the aforementioned legislative intent, if the principal purpose and intent of tax avoidance were to exist, it should be deemed that the purpose of tax avoidance exists. The burden of proving that there was no purpose of tax avoidance exists the person asserting it (see Supreme Court Decision 2007Du19331, Apr. 9, 200

B) Of the shares of this case, the determination on the part of the shares of XX Industrial Complex (referred to as the shares of this case, 82,690 shares on December 31, 2004, 8,130 shares on December 31, 2006, hereinafter referred to as "the shares of this case")

Comprehensively taking account of the following circumstances, it is difficult to deem that the tea used to secure the Plaintiff with a favorable voting right for the purpose of economic assistance or for KimB, a part of the sale, to have held the Plaintiff a title trust for the instant shares of the XX industry. Moreover, even if there were such purposes to the tea, it should be deemed that the Plaintiff intended to reduce the tax burden, such as capital gains tax, even if there were such purposes to the tea, and it should not be deemed that the next A had no tax avoidance purpose.

① It is difficult to believe that the next AA, who had been well aware of the fact that a considerable amount of gift tax is imposed in the case of a stock title trust with the abundant practical experience in securities transaction and related knowledge, having worked for 20 years in △△ Securities, acquired and traded the shares of the relevant XX industry in the name of the Plaintiff for the purpose of economic assistance to the Plaintiff only when taking the risk of imposing gift tax.

② In a case where shares are purchased for the purpose of securing an ordinary preferred voting right, the shares were purchased for a long period of time. The nextA continued to sell shares after purchasing shares in the name of the Plaintiff in large quantity, namely, the shares of the Plaintiff were 82,690 shares on December 31, 2004, and the shares of the Plaintiff were 8,130 shares on December 31, 2006.

③ The transfer of shares in the XX industry that occurred in 2004 and 2005 ought to be subject to capital gains tax as well as the next AA. However, there is considerable room for the next AA to practically avoid capital gains tax by title trust of the said shares to the Plaintiff. In other words, in a case where the next A, a major shareholder of the XX industry, KimB president, has traded shares in his own name, it is clearly revealed that it constitutes subject to capital gains tax due to blood relationship with the KimB. However, in a case where the next AA acquired and traded shares in the name of the Plaintiff such as the Plaintiff, etc., it is difficult for the tax authority to avoid capital gains tax because the total equity ratio of shares in the XX industry owned by the Plaintiff, E, E, F, and CO2, etc., who are relatives or other specially related parties, exceeds 3/100 of capital gains tax. However, it is difficult for the tax authority to understand such fact from its standpoint.

④ In fact, the Plaintiff failed to report and pay the transfer income tax on the transfer of shares in the XX industry in 2004 and 2005, and the tax authorities also failed to discover or find such income tax. The Plaintiff reported and paid the transfer income tax on June 1, 2009, which was after the commencement of the investigation of source for the acquisition of shares in the instant case, on June 1, 2009.

C) Determination on the remaining shares (Ocare 40,000 shares, △ 7,168 shares, △△ 20,50 shares; hereinafter referred to as “the remaining shares”) out of the shares of this case

A. On December 31, 2004, after selling a significant portion of the shares in this case, which was improved on December 31, 2004, the sales amount was deposited into the account of the headquarters branch in the name of the Plaintiff. The above sales amount was used as the capital increase for the capital increase of 40,000 shares in the name of the Plaintiff, and it was used to purchase KRW 7,168 shares, △△△△, △△△, △△, △△, △△, △△, △△, △△, △△, △△, △△, △△.

The main text of Article 45-2(1) of the former Inheritance Tax and Gift Tax Act is one of the exceptions to the substance over form principle under Article 14 of the Framework Act on National Taxes, and should be limited to the extent that it is intended to realize tax justice by preventing title trust from being abused as a means of tax avoidance (see Supreme Court Decision 2009Du21352, Jul. 14, 201).

In full view of the following circumstances, the next AA had no intent to avoid taxes on the title trust of the remaining shares of this case to the Plaintiff.

① In order to avoid tax, including capital gains tax, the Plaintiff acquired the instant shares under the Plaintiff’s name for the purpose of evading taxes, and sold the said shares, and did not immediately re-transfer the sales price to its own securities account, etc. The Plaintiff still purchased the remainder of the instant shares through the securities account in the Plaintiff’s name during continuing the transaction of shares. In such cases, the provisions on deemed donation may apply only to the instant shares, other than for the purpose of tax avoidance with respect to the title trust of the existing XX industry’s shares. However, the instant remaining shares are not subject to capital gains tax.

② The dividend that the Plaintiff received with respect to the remaining shares of this case is entirely owned by the ○○○○○○○○○ on December 28, 2007, and accordingly, global income tax that the next AA was reduced due to the exemption of additional tax (Evidence 9) is merely KRW ○○○ upon the exclusion of the global income tax (Evidence 9). In other words, it appears that the next AA had no tax that could have been avoided by title trust to the Plaintiff.

③ In the course of trading the instant shares with the securities account opened in the name of the Plaintiff, the teaA traded the instant shares with the same account or participated in capital increase with capital increase.

3) Determination as to the third argument (the assertion that the amount of duty imposed is excessive)

This Court's reasoning is as follows: (a) the corresponding part of the first instance court's decision (from the 14th to the 3th following day) except that the term "the principle of tax law, tax equality, proportionality, proportionality, private property guarantee, and double taxation prohibition principle", which will be considered below the 3th day below the 14th day above). This Court shall refer in accordance with Article 8(2) of the Administrative Litigation Act, and Article 420 of the Civil Procedure Act.

(iv) a reasonable tax amount;

Among the shares of this case, the shares that are recognized to have been trusted to the Plaintiff for the purpose of tax avoidance are the shares of the relevant XX industry. The reasonable gift tax amount to be imposed on the Plaintiff regarding the shares of this case is ○○○○○○ on December 31, 2004 and ○○○○○ on December 31, 2006, as shown in the attached Table.

3. Conclusion

Among the instant dispositions, the part of the disposition, which exceeds ○○○○○○○○, on July 15, 2005, on the gift tax on the gift portion on September 30, 2007, on the gift tax on the gift portion on December 31, 2007, on the gift portion on December 31, 2007, on the gift tax on the gift portion on December 31, 2007, on the gift tax of December 31, 2006, on the gift tax of ○○○○○, on the gift tax on the

The part of the judgment of the court of first instance against the plaintiff, which ruled illegal, shall be revoked. The disposition of this part shall be revoked. The remaining appeal by the plaintiff shall be dismissed.