Early High Court Decision 201J 3752 ( December 22, 2011)

Gift tax is illegal because there is no consent to the registration of shares in the name of the plaintiff.

In light of the fact that the Plaintiff only lent the name of audit and submitted a certificate to the tax authority that no shares have been acquired, and that the designation of the secondary taxpayer was revoked as a result of confirming that the Plaintiff was not a shareholder, the gift tax imposition is unlawful on the ground that there was no consent to the registration of shares in the Plaintiff’s name.

2012Guhap1246 Revocation of Disposition of Imposition of Gift Tax

Park XX

Deputy Director of the Tax Office

September 20, 2012

October 25, 2012

1. The Defendant’s imposition of gift tax of KRW 000 against the Plaintiff on August 1, 2011 shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. On December 12, 2005, ParkA established XX (the trade name before the change: OO Korea Co., Ltd.; hereinafter referred to as “ XX”) for the purpose of manufacturing industrial machinery, etc., but closed on October 31, 2010.

B. Although the Plaintiff did not acquire shares of XX, the 55% of the shares of XX (hereinafter “the shares of this case”) was stated in the statement of changes in shares of XX as owned by the Plaintiff.

C. On August 1, 2011, the Defendant: (a) applied Article 45-2 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007; hereinafter “former Inheritance Tax and Gift Tax Act”) with respect to deemed donation of title trust property on the ground that the Plaintiff had ParkA enter the instant shares in the specification of changes in stocks, etc. in the Plaintiff’s name even though the Plaintiff did not acquire the shares of XX; (b) applied Article 45-2 of the former Inheritance Tax and Gift Tax Act (including additional tax) to the Plaintiff (hereinafter “instant disposition”).

D. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on October 7, 201, but was dismissed on December 22, 2011.

[Ground of recognition] Facts without dispute, Gap evidence 1 through 5, Eul evidence 1 and 2, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

The Plaintiff did not agree to the entry of the instant shares in the name of the Plaintiff at the time of establishment of ParkA, and thus, the instant disposition based on the premise that the Plaintiff entered into a title trust agreement with the ParkA on the instant shares was unlawful.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

The provision on deemed donation of property under a title trust under Article 45-2 of the former Inheritance Tax and Gift Tax Act shall apply in cases where the actual owner and the nominal owner enter into a registration or transfer of title in the name of the nominal owner by agreement or communication with respect to property, the transfer of which requires a registration or transfer of title. Thus, such provision may not apply in cases where a registration or transfer of title is made by unilaterally using the nominal owner’s name regardless of the intent of the nominal owner (see, e.g., Supreme Court Decision 2004Du70

As seen earlier, the facts that the Plaintiff is not the actual owner of the instant shares are as follows. The evidence mentioned above and the testimony of the witness Park Jong and KimB comprehensively considered the purport of the entire pleadings, namely, ① from this law, ParkA and KimB requested the Plaintiff at the time of establishment of XX to lend the name of the auditor to the Plaintiff who is a mother employee, and the Plaintiff consented thereto. However, the Plaintiff testified to the purport that the Plaintiff does not agree to the registration of the Plaintiff as a mother employee. ② The Plaintiff was registered as an auditor in the corporate register at the time of establishment of XX and registered as a resignation on May 11, 2006. ③ On December 15, 2008, it is reasonable to view that the Plaintiff’s disposal of the instant shares under the premise that the Plaintiff did not have consented to the cancellation of the registration of the Plaintiff’s shares under the name of the Plaintiff’s taxpayer at the time of establishment and the Plaintiff’s disposal of the instant shares under the name of the second shareholder, and that the Plaintiff did not have consented to the cancellation of the registration of the instant shares under the name of the Plaintiff.

3. Conclusion

Therefore, the plaintiff's claim of this case is reasonable, and it is decided as per Disposition.