Cho Jae-2016-1055 (2016.10)

Whether it is intended that a stock has been transferred in a detailed statement of stock transfer;

Since the statement of stock movement cannot be the same as the list of shareholders, even if the statement of stock movement state stated the situation of stock movement in the statement of stock movement, it does not mean that the shares are transferred in name.

Article 19 of the Income Tax Act

2016Guhap10287 Revocation of Disposition of Imposition of Gift Tax

Note AA

AA Head of the Tax Office

on October 25, 2017

on October 23, 2017

1. The Defendant’s disposition of imposition of gift tax AA for the year 2002, against the Plaintiff on May 21, 2015, shall be revoked, and the portion exceeding the AAAAA won out of the disposition of imposition of gift tax for the year 2005, shall be revoked.

2. The plaintiff's remaining claims are dismissed.

3. Of the litigation costs, 50% is assessed against the Plaintiff, and the remainder is assessed against the Defendant, respectively.

Cheong-gu Office

The Defendant’s imposition of the AAAA(2002) on the Plaintiff on May 21, 2015 and the imposition of the AAAA(2005) on the gift tax reverted to the Plaintiff shall be revoked.

1. Details of the disposition;

A. On September 9, 1997, AA established AA corporation (hereinafter referred to as the “instant company”) with the same birth A for the purpose of textile chroning processing business, etc.

B. On August 31, 2002, AA respectively nominal trust with 11,250 shares issued by the instant company (hereinafter “1 shares”) to the Plaintiff, and 20,000 shares issued by the instant company on September 8, 2005 (hereinafter “2 shares”) respectively.

C. As a result of the AAA’s investigation into changes in stocks with respect to the instant company, the Defendant confirmed the above title trust and notified the Defendant of the taxation data, on May 21, 2015, determined and notified the Plaintiff of the gift tax AA for the year 2002 and the gift tax AA for the year 2005 (hereinafter “instant disposition”).

D. The Plaintiff appealed and filed an appeal with the Tax Tribunal on January 20, 2016 on August 18, 2015, but the Tax Tribunal dismissed the appeal on August 10, 2016.

2. Whether the disposition is lawful;

A. The plaintiff's assertion

The instant disposition should be revoked on the grounds that it is unlawful for the following reasons.

1) Since the transfer of title to the shares No. 1 of this case was not made in the Plaintiff’s future, Article 41-2(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002) cannot be applied (hereinafter “the legal provision of this case”). However, the Defendant’s disposition of this case based on the statement on the change of shares, etc. of the company of this case is unlawful.

2) Article 45-2(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828 of Dec. 31, 2007) (amended by Act No. 8828 of Dec. 31, 2007) (amended by Act No. 8828 of Dec. 31, 2007) on title trust cannot be applied to the said title trust, because it is likely that AA in a bad credit standing may obtain compulsory execution from creditors. Therefore, the instant disposition is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Presumption of deemed donation for title trust of shares 1 of this case

With respect to the legal fiction of title trust property, the main text of Article 1 (1) of the Framework Act on National Taxes provides, “in case where the actual owner and the nominal owner are different, the value of the property shall be deemed to have been donated to the actual owner on the date the actual owner registers, etc. as the nominal owner, notwithstanding the provisions of Article 14 of the Framework Act on National Taxes.” However, transfer of registered shares does not oppose the company unless the acquisitor’s name and address are entered in the register of shareholders. Thus, unless a change of ownership is entered in the register of shareholders in the name of another person who is not the actual owner of shares, it cannot be deemed that the actual owner and the nominal owner are different in the property requiring the transfer of rights or the registration, etc. thereof, which are the requirements for the legal fiction of title trust property pursuant to the provisions of Article 1 (1) of the Act, unless the actual owner and the nominal owner are entered in the register of shareholders. Therefore, the statement of stock transfer, which is a document submitted at the time of filing the tax base and amount of corporate tax, cannot be deemed to have been transferred shares (see, etc.).

Comprehensively taking account of the statement No. 5-1 of the evidence No. 5-1 of this case and the purport of the entire pleadings in witness A's testimony, the company of this case filed a report on the tax base and tax amount of corporate tax for the business year 2002, together with 14,000 shares owned by AA and 7,000 shares owned by AA and shares owned by AA were transferred to A, and 3,500 shares were transferred to the Plaintiff. However, the company of this case can be acknowledged that the transfer under the name of the Plaintiff was not made as stated in the above specification because the shareholder registry was not in itself.

In light of the above facts in light of the above legal principles, even if the Plaintiff entered the statement of change in stocks, etc. submitted by the instant company upon filing a corporate tax return for the business year 2002 as the owner of the instant 1 share, it cannot be deemed that the instant 1 share was transferred to the Plaintiff unless the Plaintiff entered into a change of ownership in the name of the Plaintiff. Thus, the instant disposition that the Defendant imposed gift tax on the Plaintiff by deeming that the instant 1 share was donated to the Plaintiff pursuant to Article 1 (1) of the Act was unlawful. In cases where the list of shareholders, etc. was not prepared, Article 45-2 (3) of the former Inheritance Tax and Gift Tax Act (wholly amended by Act No. 7010, Dec. 30, 2003) which provides that the transfer of ownership shall be determined based on the statement of change in stocks, etc. submitted by the head of the tax office having jurisdiction over the place of tax payment, shall apply from the portion submitted after January 1, 2004.

2) Legal fiction of title trust of the second stocks of this case

The legislative purport of Article 2 (1) of the instant Act is to effectively prevent the act of tax avoidance using the title trust system and realize the tax justice. Thus, the proviso of the instant provision is applicable only where the purpose of tax avoidance is not included in the purpose of the title trust, and the tax stipulated in the proviso cannot be limited to the gift tax, and the burden of proving that there was no purpose of the tax avoidance in the title trust is against the person who asserts it (see, e.g., Supreme Court Decisions 2003Du13649, Dec. 23, 2004; 2003Du4300, Jan. 27, 2005). Therefore, the burden of proving that there was no purpose of the tax avoidance, other than the purpose of the tax avoidance, can be proved by the method of proving that there was no other purpose of the tax avoidance (see, e.g., Supreme Court Decisions 2004Du733, May 12, 2006; 2006Du3964, May 294, etc.).

In light of the following circumstances, the evidence submitted by the Plaintiff alone is insufficient to acknowledge that there was no purpose of tax avoidance in the title trust of the shares 2 in this case, and there is no other evidence to acknowledge otherwise. Therefore, the title trust of the shares 2 in this case is deemed as a donation pursuant to Article 2 (1) of the instant Act and thus subject to gift tax assessment.

(1) Even if the head of the competent tax office finds any other property of AA, such as the shares in this case, even though there was a loss disposal already for the national taxes in arrears of AA at the time of title trust with the shares in this case, he may cancel the said loss disposal and make a disposition for arrears.

② If AA acquired the instant 2 shares under its own name, it was possible to assume the secondary tax liability for the national taxes, etc. of the instant company as an oligopolistic shareholder with the same relationship with A.A..

(3) The holding of shares may not necessarily take into account the occurrence of dividend income, notwithstanding the existence of actual dividends by a corporation issuing shares or the difference in the amount available for dividends. Under the current income tax taxation system, dividend income of unlisted shares is subject to global taxation, and thus, if the Plaintiff pays dividends under the name of the title holder of the second shares, tax evasion may occur due to the difference in the global income tax.

(iii) a reasonable tax amount;

Article 47(2) and Article 58 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007) provides that the value of the shares of this case calculated by adding the value of the shares of this case to the taxable amount of gift taxes levied on the taxable amount of gift taxes for 2005, and as seen earlier, the imposition of the gift tax of 2002 shall be re-calculated as long as the imposition of the gift tax is unlawful. Accordingly, a legitimate tax amount shall be calculated as a member of the AAA when calculating the tax amount.

3. Conclusion

Thus, the plaintiff's claim is accepted within the above scope of recognition, and the remaining claims are dismissed as they are without merit.