Busan District Court 2010Guhap2839 ( October 22, 2010)

It can not be recognized that there was no tax avoidance purpose in the title trust of shares to Chok.

Whether there was an objective of tax avoidance or not shall be determined at the time of title trust, and as long as it is not determined at the time of subsequent title trust, whether there was an objective of tax avoidance or not, it cannot be said that there was no objective of tax avoidance at the time of title trust of stocks.

2010Nu6090 Revocation of Disposition of Imposition of Gift Tax

XX

O Head of tax office

Busan District Court Decision 2010Guhap2839 Decided October 22, 2010

June 8, 2011

July 6, 2011

1. The plaintiff's appeal is dismissed

2. The costs of appeal shall be borne by the Plaintiff.

The judgment of the first instance is revoked. The defendant's disposition of imposition of KRW 27,398,00 against the plaintiff on March 4, 2010 is revoked (it appears to be a clerical error on March 4, 2010, written in the written complaint's purport of claim).

1. Details of the disposition;

A. The Plaintiff, upon establishing Scar HeadA on March 18, 2003, established XX Construction Co., Ltd. (hereinafter referred to as the “P Construction”), held a title trust on December 13, 2004 of the said company’s 9,000 shares out of 30,000 shares issued by the said company, and 6,000 shares out of 20,00 shares of the said company’s capital increase (hereinafter referred to as the “instant shares”).

B. (1) On February 1, 2010, the Defendant applied Article 41-2 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 7010 of Dec. 30, 2003) and Article 45-2 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 7335 of Jan. 14, 2005), thereby imposing KRW 26,60,000 as gift tax for the year 203.

(2) After that, when it was determined that it is difficult for the head of the Gu to secure the gift tax even if the head of the Gu made a disposition on default with bad credit standing, the Defendant notified the Plaintiff of the payment of gift tax on March 4, 2010 pursuant to Article 4 of the same Act, and imposed KRW 27,398,000 on the sum of KRW 26,60,000 and additional dues KRW 798,00 (hereinafter “instant disposition”).

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

2. Determination on the defense prior to the merits

A. Details of the defense prior to the merits

The Plaintiff is not entitled to dispute over the imposition of gift tax for the year 2003, since there is no direct and specific interest in dispute over the imposition of gift tax for the Republic of Korea. Therefore, the instant lawsuit is unlawful.

B. Determination

Since the disposition of this case seeking revocation by the plaintiff is not against the head of the Dong, but against the plaintiff, the defendant's defense, which is based on the premise that the plaintiff seeks revocation of the disposition of imposition against the head of the Dong, is without merit.

3. Judgment on the merits

A. The plaintiff's assertion

The reason behind the Plaintiff’s title trust of the instant shares with the head of Tong was to avoid the lending limit per capita in receiving the above shares from a financial institution as collateral, and the purpose was not to avoid taxation. This was to avoid the lending limit per capita. This was to aggregate the share ratio when determining whether the Plaintiff is an oligopolistic shareholder because the Plaintiff and headA is a relative of relationship, so even if the instant shares are held in title trust, the Plaintiff cannot change the liability for tax payment as the secondary taxpayer for construction, and even if the instant shares are held in title trust, the Plaintiff did not have the global income tax to avoid the said shares due to the lack of distribution after the establishment.

B. Determination

(1) The legislative purport of Article 41-2(1) of the former Inheritance Tax and Gift Tax Act is to recognize an exception to the principle of substantial taxation to the purport that the act of tax avoidance using the title trust system is effectively prevented, thereby realizing the tax justice. Thus, if it is recognized that the title trust was made for any reason other than the purpose of tax avoidance, and it is merely a minor reduction of tax incidental to the said title trust, it cannot be deemed that there was a "tax avoidance purpose" under the proviso of the same Article, and the burden of proving that there was no purpose of tax avoidance in the title trust has the burden of proving that there was no purpose of tax avoidance (Supreme Court Decision 2004Du13936 Decided May 25, 2006).

With respect to the absence of the purpose of tax avoidance, it can be proven by such method as proving that there was another purpose, not the purpose of tax avoidance. However, as the nominal owner who bears the burden of proof, there was a clear objective of tax avoidance to the extent that it is recognized that there was no purpose of tax avoidance in the title trust, and if there was no tax to be avoided in the future at the time of the title trust or in the future, it should be proved to the extent that it would not have any doubt if it is ordinary by objective and objective evidence (see, e.g., Supreme Court Decision 2004Du11220, Sept. 22, 2006).

(2) Based on the above legal principles, it is insufficient to recognize that the Plaintiff did not have the purpose of tax avoidance in the title trust of the shares of this case to the head of the Si/Gun/Gu, solely based on the following circumstances, and the testimony of the witness B of the first instance trial, based on the following circumstances, comprehensively taking into account each description of the evidence Nos. 3 through 5, 9, and 11 (including all the pertinent numbers) and the entire purport of the pleadings, which are acknowledged as having been comprehensively considered in the statement Nos. 3, 5, 6 through 8 (including all the pertinent numbers), and there is no evidence to acknowledge otherwise.

(A) The Plaintiff asserted that, in receiving the instant shares from a financial institution as collateral, the said shares were held in title trust with the head of the Dong in order to avoid the lending limit per person. However, it is common that the Plaintiff did not receive the instant shares from the financial institution as collateral, and that the financial institution does not grant a loan as collateral to the company’s shares, such as GATT construction, as well as the company’s shares.

On the other hand, the Plaintiff purchased from KimCC on September 13, 2003 the PG 822-109 of the PGG 82-109, which is the site for the construction of the PGG 82-10, but on March 30, 2004, purchased it from 8 persons from 8 persons from 8 persons from 8 persons from 2004, and then did not receive construction payment. The Plaintiff asserted that the PG 1 did not receive a loan as security because it was known that the PG 15 March 15, 2005 (the time when the headA disposes of shares in the above site) was a bad credit holder, but it was insufficient to recognize that the construction was actually selling the above site to 8 persons from 2005, and that the Plaintiff was a bad credit holder around March 15, 205.

(B) On the ground that the Plaintiff did not have any objective of tax avoidance, the Plaintiff did not pay dividends after the establishment of XX Construction. However, whether there was an objective of tax avoidance or not should be determined at the time of title trust, and as long as it is not determined at the time of title trust, it cannot be said that there was no objective of tax avoidance at the time of title trust of the pertinent shares, on the ground that the Plaintiff did not actually pay dividends to the shareholders for any reason, unless it is determined at the time of title trust (see Supreme Court Decision 2003Du4300, Jan. 27, 2005).

(3) Therefore, the Plaintiff’s assertion is without merit.

4. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and the judgment of the court of first instance is just in its conclusion, and the plaintiff's appeal is dismissed. It is so decided as per Disposition.