Examination-transfer-2017-0065 (Law No. 16, 2016)

Whether it constitutes a title trust for non-listed shares

The instant disposition is lawful on the premise that the instant shares were nominal in trust to the Plaintiff, and that the Plaintiff did not have any objective of tax avoidance at the time, and that the gift tax was imposed upon the deemed gift pursuant to the main sentence of Article 45-2(1)

Donation of title trust property under Article 45-2 of the Inheritance Tax and Gift Tax Act

Incheon District Court 2016Guhap5359 Revocation of Disposition of Imposing Gift Tax

○ ○

○○ Head of tax office

1, 2017.08

2017.09.08

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of gift tax of KRW 602,350,330 against the Plaintiff on June 1, 2016 is revoked.

1. Details of the disposition;

A. On February 25, 2012, 200, both ○○ and ○○ purchased all 30,000 shares issued by ○○○○ and ○○○○○, a stock company (hereinafter “instant company”) from △○ and △△△, a purchase price of KRW 2,130,000 for each purchase price (71,000 won per share of the purchase price). Both ○○ and ○ agreed to acquire 25,34 shares out of the above shares (hereinafter “the instant sales contract”).

B. On March 13, 2013, a change of entry was made in the name of both ○○○ and the Plaintiff (2 South) who was the Plaintiff and the Plaintiff (1 South) who was the Plaintiff and their children, on July 30, 2012, with respect to 25,344 shares that the instant company had to acquire in accordance with the instant sales contract on the statement on the change of shares, etc. submitted to the competent tax office on March 13, 2013, and the change of ownership was made in the name of both ○○○ and the Plaintiff (2 South) who was their children, and 1 South and North Korea on July 30, 2012 on the list on the change of shares, etc.

[Attachment 1]

Name of the former shareholder

Number of shares held

July 30, 2012

After entry of change

Shareholders' Name

Number of shares held

○ ○

15,000

14,483

Doz.

15,000

Both △△△△

7,241

Yang-○

3,620

○ ○

2,588

○ ○

1,034

○ ○

1,034

Total

30,000

Total

30,000

C. Since then, on February 11, 2014, the change of the title to the entire shares issued by the instant company was made again as of February 11, 2014 on the detailed statement on the change of stocks, etc. submitted by the instant company to the competent tax office. The name of the shareholder and the shareholding status of the instant company before and after the change of ownership on February 11, 2014 are as follows.

[Attachment 2]

July 30, 2012

After entry of change

Shareholders' Name

Number of shares held

February 11, 2014

After entry of change

Shareholders' Name

Number of shares held

14,483

○ ○

12,412

Both △△△△

7,241

○ ○

9,309

Yang-○

3,620

Red○ ○

5,601

○ ○

2,588

○ ○

2,588

○ ○

1,034

○ ○

1,034

Total

30,000

Total

30,000

D. As the head of the ○○ Tax Office: (a) conducted an investigation on the change of shares with respect to the instant company from April 13, 2015 to June 10, 2015; and (b) made a title trust to the Plaintiff; (c) “14,483 shares, among the shares issued by the instant company, registered in the name of the Plaintiff from July 30, 2012 to February 11, 2014 (hereinafter “instant shares”) were held in the title of the Plaintiff by both ○○ and the Plaintiff; and (d) this is deemed deemed donated pursuant to the main sentence of Article 45-2(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 1357, Dec. 15, 2015; hereinafter “former Inheritance Tax and Gift Tax Act”). Accordingly, the head of the ○○ Tax Office notified the Plaintiff of the gift tax based on the timing of donation 1,028,293,00 won per share x 130

E. Accordingly, on September 15, 2015, the Defendant imposed gift tax of KRW 589,543,150 on the Plaintiff based on the foregoing taxation data (hereinafter “the previous disposition”). The Plaintiff dissatisfied with the previous disposition on October 1, 2015, and filed a request for examination with the National Tax Examination Committee. The National Tax Examination Committee on December 29, 2015 (hereinafter “former Enforcement Decree of the Inheritance Tax and Gift Tax Act”) stipulated that the sale price shall be calculated based on the transaction price, etc. verified within three months before and after the base date of appraisal, and that the sale price should be calculated based on the sale price for the previous property within the period of 20 days before and after the date of donation as the transfer date, which was the date of donation; and thus, the disposition of the instant shares was unlawful for the purpose that the sale price was not calculated based on the donation price for the previous sale price for the period of 3 months before and after December 20, 2012.

F. Accordingly, the Defendant revoked the previous disposition of this case, and imposed KRW 602,350,330,000 (=14,483 x 71,000 per share sales price per share under the instant sales contract) calculated on the basis of the transaction price confirmed under the instant sales contract, on June 1, 2016, on the grounds that there were no special circumstances regarding the price fluctuation in the stocks of this case during the period between the date of the instant sales contract (25, 2012) and the transfer date (70, 300) pursuant to the proviso of Article 49(1) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (hereinafter “instant disposition”).

G. On June 16, 2016, the Plaintiff filed a request for a tax trial with the Tax Tribunal on the grounds that it was dissatisfied with the instant disposition, but the Tax Tribunal dismissed the request for a trial on September 6, 2016.

[Reasons for Recognition] Facts without dispute, Gap evidence 1 through 11, 14, 15, 18, 19, Eul evidence 1 through 9 (including provisional numbers; hereinafter the same shall apply), the purport of the whole pleadings

2. The plaintiff's assertion

A. First argument

With respect to the title trust of the instant shares under the name of the Plaintiff, there was no agreement between both ○○ and the Plaintiff, and both ○○○ and the Plaintiff unilaterally acquired the instant shares under the name of the Plaintiff without obtaining the Plaintiff’s consent, on the ground that it is easy for the Plaintiff to access the seal imprint, etc. under the Plaintiff’s name, and thus, the provision on deemed donation under Article 45-2(1) of

B. Second argument

Even if the shares of this case were held in title trust, Article 45-2(1)1 of the former Inheritance Tax and Gift Tax Act provides that the title truster shall not be deemed a gift in the case of a title trust without any purpose of tax avoidance. The existence of "the purpose of tax avoidance" should be determined on the basis of the title truster. At the time, both ○○, a title truster, would facilitate the transfer of shares by dividing the shares held in his/her name and facilitate the transfer of shares, while maintaining the management right of the company of this case even in the case where a sudden emergency situation occurs, and incidentally, the company of this case, a taxi transportation company, intended to facilitate its management by ensuring that the number of taxi drivers employed in light of the characteristics of the company of this case, a taxi transportation company, would have had the intention of facilitating its management by means of the

Therefore, the main text of Article 45-2(1) of the former Inheritance Tax and Gift Tax Act should be excluded in cases where the title truster fails to transfer the title to his/her own name without the purpose of tax avoidance, pursuant to the proviso of Article 45-2(1)1 of the same Act.

C. Third argument

Furthermore, on July 30, 2012, the transfer date indicated in the statement on the change of the shares of the instant company and the statement on the transfer of shares and equity shares, which is the transfer date of July 30, 2012, is not meaningful and actually a transfer date is not made on the above date. Thus, the above date cannot be deemed the transfer date.

3. Determination

A. Relevant statutes

Attached Form 3 is as shown in the "relevant Acts and subordinate statutes".

B. Determination as to the first argument

(1) The provision on constructive gift under Article 45-2(1) of the former Inheritance Tax and Gift Tax Act shall apply in cases where the actual owner and the nominal owner register in the name of the nominal owner under an agreement or communication with respect to property which requires the transfer or exercise of the right, etc., and such registration is unilaterally made in the name of the nominal owner, regardless of the intent of the nominal owner (see, e.g., Supreme Court Decisions 84Nu748, Mar. 26, 1985; 95Nu13531, May 31, 1996). In this case, if the tax authority proves that the actual owner is different from the nominal owner, the burden of proving that the registration, etc., as the nominal owner was made in the unilateral act of the real owner regardless of the intent of the nominal owner should be applied (see, e.g., Supreme Court Decision 2007Du15780, Feb. 14, 2008

(2) In light of the above legal principles, the nominal owner of the instant shares is the Plaintiff, but the actual owner is the same as seen earlier (the Plaintiff also acknowledges such circumstances). Therefore, it should be proved that the transfer of the instant shares in the name of the Plaintiff was made by the unilateral act of mass○○, regardless of the Plaintiff’s intent, regardless of the Plaintiff’s intention.

(3) Meanwhile, title trust relation is not necessarily established under an explicit contract between the title truster and the title trustee, but can be established under an implied agreement (see Supreme Court Decision 2000Da49091, Jan. 5, 2001). The following circumstances, i.e., the contract for the operation of the company (No. 7) prepared between ○○○ and the 14,483 shares (No. 28 shares in taxi) and the Plaintiff’s signature and seal impression were stated in the name of ○○○○○○○○○’s certificate of personal seal impression issued as 1,50,000, and the Plaintiff’s personal seal impression issued as 30,000 shares issued as 7,000 shares issued as 1,000 shares and 3,000 shares issued as 1,000 shares and 4,000 shares issued as 3,000 shares issued as 7,000 shares issued as 3,000 shares.

2) The Plaintiff asserts that he is both ○○○’s tax agent.

In light of such circumstances, it cannot be deemed that the conclusion of a partnership agreement in the name of the plaintiff using the certificate of the personal seal impression of this case, or that the transfer of shares in the name of the plaintiff was without any consent or permission, including implied and comprehensive consent from the plaintiff. Thus, it cannot be deemed that the plaintiff, as a mental health medical specialist, has lived with both ○○ and has no interest in the operation of the company of this case, or that the part of the "business operation contract of this case" of the certificate of the personal seal impression of this case was not written by the plaintiff but written by both ○○ as a result of the court's entrustment of appraisal of the owner of interests in the company of this case. Thus, it is insufficient to view that the transfer of shares in the name of the plaintiff was made in the name of the plaintiff as a unilateral act of both ○○ regardless of the plaintiff's will, and there is no evidence to prove otherwise.

(4) Therefore, this part of the Plaintiff’s assertion on the premise that the transfer of title in the name of the Plaintiff with respect to the instant shares was conducted by both ○○ and the actual owner’s unilateral act regardless of the Plaintiff’s intent is without merit.

C. Judgment on the second argument

(1) 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, the proviso to the same Article is applicable only where the purpose of tax avoidance is not included in the purpose of title trust. In such a case, the burden of proving that there was no purpose of tax avoidance exists the person who asserts it (see, e.g., Supreme Court Decisions 9Du2192, Jul. 23, 199; 2003Du13649, Dec. 23, 2004).

If it is recognized that the title trust was made for another reason, not for the purpose of tax avoidance, and it is merely a minor reduction of tax incidental to the said title trust, such title trust cannot be deemed to have an objective of tax avoidance (see, e.g., Supreme Court Decision 2004Du7733, May 12, 2006). However, as the nominal owner who bears the burden of proving the existence of no objective of tax avoidance has an obvious objective of tax avoidance to the extent that it is deemed that there was no objective of tax avoidance in the title trust, and the nominal owner who bears the burden of proving that there was no objective of tax avoidance at the time of the title trust or there was no tax avoidance at the time of the title trust, must prove to the extent that there was no doubt if the title owner is ordinary by objective and conclusive evidence that there was no objective of tax avoidance at the time of the title trust (see, e.g., Supreme Court Decision 2004Du11220, Sept. 22, 2006).

[Reference]

Furthermore, whether there was a purpose of tax avoidance or not should be determined at the time of title trust, and it should not be determined as to whether there was a tax evasion or not later (see Supreme Court Decision 2012Du546, Nov. 28, 2013).

(2) First of all, the Plaintiff’s assertion that the existence of “the purpose of tax avoidance” under the proviso of Article 45-2(1)1 of the former Inheritance Tax and Gift Tax Act should be determined on the basis of the title truster and that the determination should not be made on the basis of the title trustee, that there is a health burden on the part of the title truster and the title trustee (for example, transfer income tax, inheritance tax or gift tax in the case of the title truster), and that of the Supreme Court Decision 2004Du1421 Decided June 11, 2004, etc., the legal principles of the above Supreme Court Decision 2004Du1421 Decided June 11, 2004 can be deemed that the purpose of tax avoidance is on the premise that the actual owner and the title truster should consider whether the purpose of tax avoidance exists. In light of the above, the Plaintiff’s assertion that only the title truster should be determined on the basis of the existence of tax avoidance purpose cannot be accepted.

(3) Next, with respect to the Plaintiff’s assertion that both ○○ or the Plaintiff had a clear purpose of not superior to the tax avoidance, and that there was no tax avoidance at the time of entry of the change of holders, in full view of the purport of the entire pleadings as seen earlier, both ○○ and ○○ acquired 25,34 shares out of the total shares of the instant company with the instant sales contract, but the Plaintiff acquired 25,34 shares above a half of 30,000 shares of the instant company, as part of the shares so acquired, and formed a title trust with the Plaintiff by separately combining 14,483 shares less than half of the instant company’s total shares (the instant shares) and title trust was formed from the Plaintiff with the same appearance as that of the instant company without a excessive shareholder. Accordingly, from the Plaintiff’s nominal owner’s perspective, even if ○○○ died, the inheritance tax rate can be avoided by including the value of the instant shares in the inherited property, and ② from the perspective of both owners, the number of oligopolistic shareholders should be excluded from the global income tax rate of the instant shares.

In addition, it is difficult to say that the purpose of the Plaintiff’s claim is to facilitate the transfer of shares by dividing the shares in the name of each person, and that the purpose of this case’s company’s management right is to maintain the company’s management right even in the event of a sudden sudden emergency situation, and that “the intent to facilitate its management by avoiding from the doping that the demand for a concurrent decision on taxi commission should be obtained from other shareholders due to the characteristics of the company of this case, which is a taxi transportation company, is not objectively impossible to maintain tax avoidance and tax avoidance, so it is difficult to say that it is a clear purpose which is not related to tax avoidance. This is more so in that both ○○○ and the Plaintiff are expected to be in the legal relationship of future inheritance as a matter of course, and the motive or necessity of the donation is greater than that of other general public, it is difficult to conclude that there is no evidence to prove otherwise if there is no ordinary doubt that there was no tax evasion at the time of transfer due to the Plaintiff’s name or tax evasion in the name of the Plaintiff.

(4) Therefore, the Plaintiff’s assertion on this part is without merit.

D. Judgment on the third argument

(1) Article 45-2(3) of the former Inheritance Tax and Gift Tax Act provides that where a list of stockholders or a list of members of a stock company has not been prepared, whether a transfer of ownership is made based on the documents, stocks, etc. submitted to the head of the tax office having jurisdiction over the place of tax payment under Articles 109(1) and 119 of the former Corporate Tax Act (amended by Act No. 11607, Jan. 1, 201

(2) The fact that the shareholder registry was not prepared in the instant company is not disputed between the parties, and when comprehensively considering the purport of the entire arguments in the evidence as seen earlier, the instant company submitted a statement on the change of stocks, etc. to the head of the competent tax office on March 31, 2013, and the transfer date of the instant shares was stated on July 30, 2012 in the said statement on the change of stocks. Thus, the Defendant’s disposition of the instant case and the transfer of the instant shares was made in the Plaintiff’s name on July 30, 2012 in accordance with the said statement on the change of stocks.

(3) Although the transfer date stated in the above statement on the change of stocks, etc. was July 30, 2012, the Plaintiff asserted to the effect that the transfer date was no longer meaningful as the date of arbitrary preparation of directors' heat, which is ○○○’s tax agent, and actually became a transfer date on the above date. However, even after the conclusion of the instant sales contract ( February 25, 2012), the Plaintiff did not specify that the transfer date was made at any time other than July 30, 2012 with regard to the acquisition of stocks of the instant company, and the Plaintiff’s assertion that the transfer date was 30 days after the transfer date under the name of the Plaintiff’s tax office, such as the transfer date, was 30 days after July 30, 2012 and the transfer date was 30 days after the transfer date under the name of the Plaintiff’s tax office, and the Plaintiff’s assertion that the transfer date was 30 days after the transfer date was 30 days after the transfer date.

E. Sub-decision

Ultimately, the instant disposition is lawful, based on the premise that the instant shares were title trust as of July 30, 2012, the transfer date for entry into a transfer date, and that at that time the Plaintiff or Yang ○○○ did not have any purpose of tax avoidance.

4. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.