The donee of shares shall be a child under special provisions of the Restriction of Special Taxation Act concerning family business succession.

According to the special provisions on family business succession, the subject of family business succession can be the "child's spouse" other than the "child", but it is clear that the donee of the shares should be the "child". It is difficult to see that there is a justifiable reason to believe that Article 30-6 (1) of the Restriction of Special Taxation Act applies to the case where the plaintiff is the spouse of a child due to the error response by the National Tax Counseling Center.

Article 30-6 (1) of the Restriction of Special Taxation Act

2018Guhap8159 Revocation of Disposition of Imposition of Gift Tax, etc.

KimA

00. Head of tax office

May 29, 2019

June 21, 2019

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 imposing gift tax of KRW 000,00,000 (including additional tax) on November 16, 2015 against the Plaintiff on September 1, 2017, which exceeds KRW 000,000,000, shall be revoked.

1. Details of the disposition;

(a) The plaintiff's Internet national tax counseling (hereinafter referred to as "counseling of this case");

1) On September 16, 2015, the Plaintiff asked the Internet National Tax Counseling Center of Korea about whether a donee may be subject to special taxation even in cases where the donee is the spouse of his/her child. On September 18, 2015, the Plaintiff responded that “the deceased does not correspond to his/her child and thus the special taxation is not applicable.”

2) On September 18, 2015, the Plaintiff sought again from January 1, 2015, the amendment was made to the effect that the spouse of the donee was also applicable to the time when the donee’s spouse satisfies the requirements. On September 21, 2015, the tax law was amended to the effect that the latter is also applicable to the case where the donee’s spouse’s spouse satisfies the requirements for special taxation from the donation since February 3, 2015 (the original text is the same as the attached Table 1).

(b) Return, payment, correction, and notification of gift tax;

1) On November 16, 2015, the Plaintiff donated 10,000 shares (the share ratio of 40%; hereinafter referred to as “instant shares”) issued by the KimA Co., Ltd. (hereinafter referred to as “k machinery”), which was the head of KimA on November 16, 2015, and reported and paid 10% special tax rate of 10,000,000, which was calculated by deducting 500,000 won from the stock value of 0,000,000,000, which was assessed by himself, pursuant to Article 30-6(1) of the Restriction of Special Taxation Act, for 9,700 shares, from the basic tax rate of 0,000,000 won that was reduced by 5,000,000 won from the basic tax rate of 10,000 won.

2) On June 12, 2017, the Defendant decided on June 12, 2017. However, the director of the Namcheon District Tax Office, from June 29, 2017 to July 19, 2017, notified the Defendant of the application of Article 30-6(1) of the Restriction of Special Taxation Act to the Plaintiff. Accordingly, the Defendant: (a) applied the tax credit of KRW 100,000,000 (+ +00,000,000) calculated tax amount on the basis of the Plaintiff’s reported tax base; (b) applied the tax credit of KRW 100,00,000,000 for the Plaintiff’s gift tax amount of KRW 00,000,000; (c) applied the tax credit of KRW 00,000 for the gift tax amount of KRW 00,000,000 to September 1, 2017 (hereinafter referred to as “the instant tax return and correction”).

(c) Procedures of the previous trial;

On February 7, 2018, the Plaintiff filed a tax appeal on February 7, 2018, but was dismissed on November 27, 2018.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 4, Eul evidence Nos. 1 and 2, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The Plaintiff reported and paid gift tax according to the result of the instant counseling that Article 30-6(1) of the Restriction of Special Taxation Act applies to the instant shares. Therefore, the Plaintiff’s application of the tax credit based on the tax base reported by the Plaintiff with respect to the Plaintiff is unreasonable, and the tax credit for total tax amount of KRW 304,860,000 based on the tax base calculated by the Defendant should be additionally added to KRW 14,691,000 due to the application of the tax credit for total tax amount of KRW 304,860,000 according to the tax base calculated by the Defendant, and the additional tax for additional tax returns

2) Even though the Defendant received and examined the necessary data from the Plaintiff, it would be an abuse of the authority to conduct a tax investigation again even after making a decision of approval.

B. Relevant statutes

Attached Form 3 shall be as listed in attached Table 3.

C. Determination

The plaintiff's above assertion is rejected in light of the following legal principles and circumstances.

1) Article 30-6(1) of the Restriction of Special Taxation Act provides that special taxation shall apply to cases where a resident aged 19 or older is donated stocks of the relevant family business for the purpose of succeeding to the family business from a parent aged 60 or older, and succeeds to the family business as prescribed by Presidential Decree. Article 27-6(1) of the Enforcement Decree of the same Act provides that "a person who has received stocks, etc. of the relevant family business or his/her spouse succeeds to the family business" shall engage in the family business within the deadline for filing a gift tax base under Article 68 of the Inheritance Tax and Gift Tax Act and take the office of the representative director within five years from the date of donation. Accordingly, according to the special provision above, the subject of family business succession may be a "child spouse" other than a "child", but it is apparent that a "child" shall be a "child".

2) According to the circumstances of the above disposition, the contents of the counseling in this case are limited to the donee for the purpose of applying the special provisions on taxation, and the requirements for family business succession under Article 27-6(1) of the Enforcement Decree of the Restriction of Special Taxation Act, on the premise that the spouse of the child is not included, shall meet not only the child but also the spouse of the child. Therefore, the defendant cannot be deemed to have expressed a public opinion that Article 30-6(1) of the Restriction of Special Taxation Act may apply to the plaintiff

Furthermore, in order to facilitate the exercise of taxation rights and the realization of tax claims, additional tax under the tax law is an administrative sanction imposed by a taxpayer who violates a tax return and tax liability as prescribed by the Act without justifiable grounds, and the taxpayer’s intentional or negligent act is not considered as a justifiable reason. Moreover, even if a taxpayer believed a tax official’s wrong explanation and did not perform his/her duty to report and pay taxes, if it is evident that it is contrary to the relevant Acts and subordinate statutes, such reason does not constitute a justifiable reason (see Supreme Court Decision 2000Du5944, Apr. 12, 2002). According to the circumstances of the above disposition, it is difficult to deem that there is a justifiable reason to believe that Article 30-6(1) of the Restriction of Special Taxation Act applies even in cases where the donee is the spouse of his/her child.

3) Article 69(2) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 14388, Dec. 20, 2016) provides that an amount equivalent to 10/100 of the calculated amount of gift tax shall be deducted when a taxpayer files a return on the tax base of gift tax. If the taxpayer files a return on the tax base and makes a decision on the correction of any different content, it is reasonable to deduct an amount equivalent to 10/100 of the calculated amount based on the reported tax base from the taxpayer

4) In accordance with the circumstances of the above disposition, it is difficult to recognize that the defendant requested some data prior to the defendant's declaration and received them by facsimile before the decision was made, as alleged by the plaintiff, carried out a tax investigation prohibited by duplicate investigation against the plaintiff. In light of the fact that the investigation conducted by the director of the Southern District Tax Office was not the tax investigation against the plaintiff, but the investigation conducted by the director of the Southern District Tax Office was an investigation of stock change on the k machine, it is difficult to deem that there was a duplicate tax investigation against the plaintiff or that there was a