Whether title trust shares meet the requirements of simple promoters without the purpose of tax avoidance

Since 7 or more promoters and shareholders shall not continue to exist after the incorporation of the company, the assertion that title trust was made to meet the requirements of simple promoters is without merit.

The contents of the decision shall be the same as attached.

1. The plaintiff's claim is dismissed.

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

The Defendant’s imposition of KRW 107,784,90 on November 28, 2007 and KRW 490,620,480 on the gift tax of KRW 107,784,90 on the Plaintiff in 195 and the gift tax of KRW 490,620,480 on the gift tax of

1. Details of the disposition;

A. (1) On July 20, 1990, KimA established CCB for the purpose of wholesale and retail business of the machinery tools (hereinafter the company in this case), and acquired 3,000 shares out of 10,000 shares of the total 10,00 shares (hereinafter the company in this case) under the name of the Plaintiff (hereinafter the company in this case was added to 12,00 shares), and transferred 1 shares again on May 12, 1995 under the name of the Plaintiff as a title, and (3) on December 26, 2000, it acquired 12,000 shares out of 40,00 shares of the company in this case (hereinafter the company in this case was added to 1 and 2 shares) under the name of the Plaintiff (hereinafter the shares in this case).

B. On November 28, 2007, the Defendant imposed and notified, respectively, KRW 107,784,90 of the gift tax for the year 195 pursuant to Article 32-2(1) of the Inheritance Tax and Gift Tax Act (wholly amended by Act No. 5193, Dec. 30, 1996); and KRW 490,620,480 of the gift tax for the year 1995 pursuant to Article 41-2(1) of the Inheritance Tax and Gift Tax Act (wholly amended by Act No. 6780, Dec. 18, 2002) on the ground that the Defendant held the title trust of the shares of this case against the Plaintiff on May 12, 1995 and December 26, 200 (hereinafter the instant disposition).

C. The Plaintiff dissatisfied with the instant disposition and filed an appeal on February 22, 2008, but the Tax Tribunal dismissed the appeal on September 29 of the same year.

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

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) The instant shares do not constitute the instant shares, since the title trust subject to deemed donation under Article 41-2(1) of the Inheritance Tax and Gift Tax Act (amended by Act No. 6780, Dec. 18, 2002) is limited to a case where the registration, etc. is required as an effective requirement or an effective requirement in the transfer or exercise of rights.

(2) In order to meet the requirements of promoters under the Commercial Act at the time of the establishment of the instant company, KimA acquired shares in the name of ParkB in order to satisfy the requirements of promoters under the Commercial Act, and acquired shares in the name of the Plaintiff according to the share ratio, such as the aggravation of the health of ParkB and attempted suicide. Since the instant company did not pay taxes or pay dividends at all, there was no problem such as avoidance of secondary tax liability, deemed acquisition tax, and avoidance of cumulative tax rate on the dividend income due to the instant title trust.

Therefore, the title trust of the instant shares did not have any purpose of tax avoidance.

(b) Related statutes;

It is as shown in the attached Form.

(c) Fact of recognition;

(1) The plaintiff was organized while conducting the business of manufacturing a small-scale kitchen, and served as apartment security guards from 193 to 193.

(2) The instant company did not have distributed dividends once until December 31, 2007 after its establishment, and the cumulative amount of earned surplus as of December 31, 2007 is KRW 6,382,00,000.

(3) As the Plaintiff’s wife is at a risk of divorce, KimA recommended the termination of the title trust of the instant shares. On December 13, 2002, the title trust of 8,000 shares out of the instant shares was made in the name of Lee Ho-sungD, but was changed on February 25, 2003. On December 27, 2002, the title trust was made in the name of 7,000 shares out of the instant shares under the name of Ma-ho Ga-ho Ga, but was changed on February 27, 2003.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 3-1 through 7, Eul evidence Nos. 2-6, the purport of the whole pleadings

D. Determination

(1) As to the first argument

On the other hand, Article 32-2(1) of the Inheritance Tax and Gift Tax Act (amended by Act No. 5193 of Dec. 30, 1996) provides that property requiring the transfer, registration, transfer of title, etc. on the subject of deemed donation of title trust shall be the property requiring the transfer, registration, transfer of title, etc. on the transfer or exercise of rights, and Article 41-2(1) of the Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002) provides that property requiring the transfer, registration, transfer of title, etc. on the other hand, excluding land and buildings and where certain requirements are met among stocks or equity shares under the proviso and subparagraph 2, it shall be excluded from the subject of deemed donation of title trust (the Supreme Court Decision 87Nu118 of Oct. 13, 1987, which was required by the Plaintiff, is related to whether the above provision can be applied in the case of a title trust with respect

Therefore, the plaintiff's above assertion is without merit.

(2) On the second argument

(A) Article 32-2(1) of the Inheritance Tax and Gift Tax Act (wholly amended by Act No. 5193, Dec. 30, 1996); Article 41-2(1) of the Inheritance Tax and Gift Tax Act (amended by Act No. 6780, Dec. 18, 2002) recognizes exceptions to the substance over form principle with the purport that the act of tax avoidance using the title trust system effectively prevents the act of tax avoidance and realize the tax justice. Thus, if the title trust is recognized to have been made for reasons 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 purpose of tax avoidance under the proviso of the same Article in such title trust. In this case, the burden of proving that there was no purpose of tax avoidance is a person asserting it, and if there was no purpose of tax avoidance, it shall be proven that there was no objective and objective purpose of tax evasion other than the purpose of tax avoidance (see, e.g., Supreme Court Decision 2002Du37374, May 204, etc.).

(B) As to the instant case, the Plaintiff asserted that, in order for KimA to meet the promoters requirements required under the Commercial Act to establish the instant company, the Plaintiff was merely nominal to the Plaintiff on May 12, 1995 after acquiring shares No. 1 in the name of ParkB at the time of establishment of the instant company. However, it does not require more than 7 promoters and shareholders to continue to maintain until the date of establishment of the instant company (in addition, the amended provision with three or more promoters was enforced on October 1, 1996, and its requirements were more mitigated by the amendment of the Commercial Act on July 24, 2001). If the earned surplus was continuously generated from the instant company, the Plaintiff would have distributed dividends, and thus, the corporation whose earned surplus has been continuously increased, did not have any evidence to acknowledge any difference between the Plaintiff’s establishment of the instant stock under title trust and the amount of global income tax and the amount of global income tax at the time of the instant tax evasion and thus, the Plaintiff did not have any other evidence to establish the instant global income tax evasion system.

Therefore, the plaintiff's above assertion is without merit.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.