title trust with the purpose of tax avoidance, which may avoid the application of the gift tax progressive rate;

It is possible to omit the return of capital gains tax by selling and selling another person's name, and it seems that the actual amount of capital gains tax has not been reported and paid, and where the stocks held in title trust are distributed and donated to a person with a special relationship by pretending to trade, the title trust with the purpose of tax avoidance may avoid the application of the gift tax progressive rate

2012Guhap25545 Revocation, etc. of Disposition of Imposition of Gift Tax

Section AA

head of Sung Dong Tax Office

September 13, 2013

October 29, 2013

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

Each disposition taken by the Defendant against the Plaintiff on January 13, 2012, 2004, OOO on the gift tax in 2005, OOO on the gift tax in 2005, and OOO on the gift tax in 2005, shall be revoked.

1. Details of the disposition;

(a) Paid-in capital increase process of BBB;

(1) On July 16, 2004, KimCC acquired 6,000,000 listed stocks of EE, a listed corporation, from the yellowF, the former owner, and changed the trade name into BB of the Co., Ltd. on March 28, 2005. On June 1, 2005, the non-listed corporation entered into an all-inclusive share swap contract with GG bioscience Co., Ltd., Ltd., a non-listed corporation on July 20, 2005, and changed its trade name into “GG Bioio” (hereinafter referred to as the “corporation of this case without distinguishing the previous change”) upon approval of the temporary general shareholders’ meeting on July 20, 2005.

(2) On March 3, 2004, the instant corporation resolved to issue new shares with a common share of 7,905,000 common shares at the board of directors under the third party allocation method. As indicated in the table 1, the corporation was built in the electronic construction system of the Financial Supervisory Service, and reported correction on January 24, 2005.

Public notice on March 3, 2004

Items

Correction

After Correction

Class and Number of New Shares

common shares 7,905,000

common shares 7,905,000

Method of Capital increase

Third Party Allocation (Public Offering Method)

Allocation by third party (private placement method)

Date of payment for shares;

Subsequent Final Judgment

January 26, 2005

(3) On January 14, 2005, the corporation of this case decided on the board of directors on March 14, 2005 that "the subscription date for new shares shall be March 14, 2005; the subscription date for new shares shall be 100,000,000 common shares by the method of shareholders allotment; however, the forfeited shares and fractional shares shall be subject to a subsequent resolution of the board of directors; on the same day, the corporation constructed the electronic public disclosure system of the Financial Supervisory Service (hereinafter "the subscription date for new shares")

(4) On March 12, 2005, the instant corporation decided to allocate forfeited stocks related to capital increase with rights issued on January 14, 2005 to third parties, and on the same day, publicly announced the electronic publication system of the Financial Supervisory Service.

B. Title trust of KimCC

The KimCC acquired the shares of the instant legal entity in the name of 16 persons including the Plaintiff, as indicated in Table 2, through a borrowed account opened through Dong Jae H Kim H (former name Kim HH). In other words, KimCC acquired the total of 4,417,076 shares until February 11, 2005, including the acquisition of 430,00 shares in the name of white II on September 15, 2004 (hereinafter referred to as "non-highland transfer shares"), acquired 15,058,912 shares with the allocation of shareholders (hereinafter referred to as "non-highland shares"), acquired shares with the allocation of 15,058,912 shares with the allocation of shareholders on January 14, 205 (hereinafter referred to as "non-highland shares"), acquired shares under the name of 30,300 shares with the allocation of forfeited shares, and acquired shares under the name of 30,000 shares (hereinafter referred to as "non-highland shares").

Table 2. The current status of title trust shares

No.

title trustee

Transfer Date

Number of shares (number of shares)

Value per share of assessment;

Jinay

Original Disposition

Correction Disposition

1

Park JJ

March 15, 2005

2,500,000

OOO

Third Party Allocation

2

Song KK

March 15, 2005

1,500,000

OOO

Third Party Allocation

3

AL

March 15, 2005

1,500,000

OOO

Third Party Allocation

4

Plaintiff (AA)

December 31, 2004

2,757,576

OOO

OOO

Change of Transfer

March 15, 2005

5,000,000

OOO

OOO

Initial Stockholders

March 15, 2005

180,768

OOO

OOO

Change of Transfer

5

YellowM

December 16, 2005

2,000,000

OOO

Third Party Allocation

6

NN

March 15, 2005

180,000

OOO

OOO

Change of Transfer

December 31, 2004

796,484

OOO

OOO

Initial Stockholders

7

PP

March 15, 2005

20,000

OOO

Change of Transfer

December 31, 2004

1,460,222

OOO

Initial Stockholders

8

이QQ

March 15, 2005

2,100,000

OOO

Third Party Allocation

9

RR

March 15, 2005

2,500,000

OOO

Third Party Allocation

10

S

March 15, 2005

1,500,000

OOO

Third Party Allocation

11

MaximumT

March 15, 2005

2,700,000

OOO

Third Party Allocation

12

eU

December 31, 2004

323,000

OOO

OOO

Change of Transfer

March 15, 2005

2,123,959

OOO

OOO

Initial Stockholders

13

V

December 31, 2004

311,500

OOO

OOO

Change of Transfer

March 15, 2005

2,190,33

OOO

OOO

Initial Stockholders

14

W

March 15, 2005

2,000,000

OOO

Third Party Allocation

15

XX

December 31, 2004

85,000

OOO

OOO

Change of Transfer

March 15, 2005

1,227,914

OOO

OOO

Initial Stockholders

16

Y

September 15, 2004

430,000

OOO

Change of Transfer

February 11, 2005

10,000

OOO

Change of Transfer

March 15, 2005

2,260,000

OOO

OOO

Initial Stockholders

Total

37,956,756

C. Taxation, etc.

(1) From July 21, 2011 to December 23, 2011, the director of the Seoul Regional Tax Office notified the head of the competent tax office of the imposition of gift tax pursuant to the title trust of the instant shares after conducting the consolidated investigation of personal and property tax on KimCC.

(2) Accordingly, on January 13, 2012, based on the provision on the constructive gift of title trust property under Article 45-2 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007; hereinafter referred to as the "former Inheritance Tax and Gift Tax Act"), the Defendant imposed and notified, respectively, the Plaintiff on December 13, 2012, OOO(including additional tax OOO(including additional tax) of the gift tax on the donation of March 15, 2005, and OOOO(including additional tax OOO) of the gift tax on the donation of December 16, 2005 and OOO(including additional tax OOO) of the gift tax on the donation of December 16, 2005.

(3) The Plaintiff dissatisfied with each of the above dispositions and filed an appeal with the Tax Tribunal on April 2, 2012, but the said claim was dismissed on June 29, 2012.

(4) On October 4, 2012, the head of Seoul Regional Tax Office notified the Defendant of the tax decision list to correct the market price per share when shares are allocated in the way other than the third party allotment method, as shown in the following Table 3. Accordingly, the Defendant, on December 31, 2004, as OOO (including additional tax, OOO for the principal gift tax, among the gift tax), 200 OOO for the gift tax on March 15, 2005 (including additional tax, OOO for the first 20 OO for the principal gift tax on December 16, 2005, 200 200 OO for the first 5 200 OO for shares issued on March 15, 2005 20 OO for shares issued on December 16, 2005 20 OO for shares issued on 205 O.5 O.20 O.25 o.25 o.20

Value per stock; and

Date of deemed donation

Classification

Market price (won)

The period of evaluation;

December 31, 2004

Initial Stockholders

OOO

From November 1, 2004 to February 4, 2005

March 15, 2005

Initial Stockholders

OOO

From February 7, 2005 to May 15, 2005

Third Party Allocation

OOO

From January 17, 2005 to May 15, 2005

December 16, 2005

Initial Stockholders

OOO

From November 9, 2005 to February 16, 2006

(5) In addition, the Defendant revoked the additional tax amount of each of the above dispositions during the proceeding of the instant lawsuit ex officio, and subsequently imposed and notified the same amount of additional tax by clarifying the type of the additional tax and the grounds for its calculation on December 15, 2012 (the Plaintiff did not dispute the imposition of each of the said additional tax by modifying the purport of the claim on September 12, 2003, and therefore, the Defendant did not dispute the imposition of each of the said additional taxes. As such, the remaining portion of the imposition imposition of each of the principal gift tax on January 13, 2012 is referred to as “each

Facts that there is no dispute over the basis of recognition, Gap evidence 1 through 5, 14, Eul evidence 1 through 6 (including evidence with serial numbers), and the purport of the whole pleadings.

2. Whether each of the dispositions of this case is legitimate

A. The plaintiff's assertion

(1) The non-existence of tax avoidance purpose

Even if KimCC acquired the instant stocks under its own name, it does not constitute an oligopolistic shareholder of the instant corporation. As such, it cannot be deemed that the instant stocks were left out of the position of oligopolistic shareholder liable for secondary tax liability due to title trust, and there was no lack of dividend received from the instant corporation, and thus, there was no avoidance from the progressive tax rate pursuant to global income tax on dividend income. The transfer income tax and securities transaction tax are faithfully paid for part of the transfer income by transferring the instant stocks in a short period, and the possibility that KimCC may avoid the transfer income tax beyond the requirement of a major shareholder is merely the result of tax reduction likely to occur after the title trust. As such, it cannot be the basis for determining whether there was a tax avoidance purpose at the time of the title trust. Article 200-2 (1) of the former Securities and Exchange Act (repealed by Act No. 8635, Aug. 3, 2007; hereinafter the same) provides for the Financial Services Commission and the Exchange to freely dispose of the instant stocks for the purpose of title trust and the Exchange.

(2) Illegal assertion of the method of calculating the gift value

Among each disposition of this case, there are errors as follows in calculating the amount of tax of gift tax of December 31, 2004 and gift tax of March 15, 2005.

In other words, at the time of assessing the value of the shares under Article 63 (1) of the former Inheritance Tax and Gift Tax Act and Article 52-2 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 20621 of Feb. 22, 2008; hereinafter the same shall apply), the method of evaluation varies if there occurs a cause such as a merger of capital within two months before or after the evaluation base date. In this case, the prior meaning of the capital increase is that the capital increase is to increase the company's capital by issuing the shares. Thus, the concept most close to the capital increase is that the company's capital increase is the payment date for the capital increase, the date of classifying the capital increase after the issuance of the forfeited shares by a third party, namely, the date of the occurrence of the capital increase is the payment date for the stock price. However, the defendant calculated the tax amount based on the "rights". Thus, each disposition is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination as to whether the purpose of tax avoidance exists

(1) Relevant legal principles

The legislative intent 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 with the purport of effectively preventing the act of tax avoidance by using the title trust system and realizing the tax justice. Thus, the application of the proviso to Article 45-2 is possible only if the purpose of tax avoidance is not included in the purpose of title trust, and in this case, the burden of proving that there was no purpose of tax avoidance can be proved by means of proving that there was a purpose other than the purpose of tax avoidance. Therefore, the nominal owner who bears the burden of proving that there was no purpose of tax avoidance can be proved by means of proving that there was a purpose other than the purpose of tax avoidance. However, the nominal owner who bears the burden of proof has a clear purpose irrelevant to the tax avoidance to the degree that there was no purpose of tax avoidance in the title trust, and has to prove that there was no tax avoidance at the time of the title trust or in the future, based on objective and supporting evidence (see Supreme Court Decision 2004Du11220

(2) Facts of recognition

Each of the following private opinions is recognized as either a dispute between the parties, or as a whole in light of the evidence framework and evidence No. 11 within 7 and the purport of all the arguments.

(A) The instant corporation promoted capital increase with January 14, 2005 in order to resolve the total capital erosion as an OO member in the year 2005.

(B) The KimCC purchased and sold the shares of the instant legal entity as indicated in the table 4 below, and the share share ratio of the instant legal entity to the instant legal entity, including the shares held in title by 16 persons including the Plaintiff and those in the name of KimCC, is as listed below.

Details of purchase and sale of shares of the corporation in this case.

Classification

Period of sale

Number of shares (number of shares)

Amount (won)

Purchase

Within the Chapter

From August 26, 2004 to August 12, 2005

2,031,200

OOO

Paid-in capital

March 14, 2005

37,058,912

OOO

Sub-committees

39,090,112

OOO

Sale

Within the Chapter

From September 17, 2004 to September 14, 2005

18,425,910

OOO

The airspace outside the territory (ZZ)

June 1, 2005, July 20, 2005

16,000,000

OOO

March 31, 2005

4,300,000

OOO

Sub-committees

20,300,000

OOO

Profit Profit Profit

OOO

Details of shares of KimCC (including borrowed-name shares)

Reference Date

Number of shares owned (States)

Total issued shares (States)

Equity ratio (%)

December 31, 2004

Total Stocks

4,400,876

15,066,200

29

name of principal

40,010

2.92

December 31, 2005

name of principal

1,012,768

62,140,740

1.62

(C) The KimCC filed a return on capital gains tax and securities transaction tax with respect to the shares sold outside the market without going through the securities market as shown in the following table 6:

Details of return and payment of transfer income tax.

title trustee

Number of shares (number of shares)

Transfer Income Tax (including local income tax)

Securities Transaction Tax (won)

Date of Payment

Amount (won)

Date of Payment

Amount (won)

MaximumT

2,700,000

November 8, 2005

OOO

August 10, 2005

OOO

Song KK

1,500,000

November 30, 2005

OOO

OOO

RR

2,500,000

November 28, 2005

OOO

OOO

이QQ

2,100,000

November 18, 2005

OOO

OOO

W

2,000,000

November 25, 2005

OOO

OOO

AL

1,500,000

November 30, 2005

OOO

OOO

YellowM

2,000,000

November 10, 2005

OOO

OOO

Total

14,300,000

OOO

OOO

(D) In relation to the shares of this case, the omission of transfer income tax for the year 2005 shall be as follows:

Details of omission in filing a return on the transfer income tax;

Title holder

Number of shares (number of shares)

Transfer Value

Acquisition Value

Necessary expenses

Capital gains (won)

The amount paid at a fixed rate;

CC Kim

4,995,500

OOO

OOO

OOO

OOO

XX

1,412,914

OOO

OOO

OOO

OOO

S

1,500,000

OOO

OOO

OOO

OOO

개지 Kim

2,700,000

OOO

OOO

OOO

OOO

NN

1,272,074

OOO

OOO

OOO

OOO

PP

1,733,292

OOO

OOO

OOO

OOO

eU

2,514,590

OOO

OOO

OOO

OOO

V

2,529,963

OOO

OOO

OOO

OOO

Park JJ

1,765,957

OOO

OOO

OOO

OOO

Y

2,797,130

OOO

OOO

OOO

OOO

SongK and 5 others

14,300,000

OOO

OOO

OOO

OOO

OOO

조◆◆

2,245,952

OOO

OOO

OOO

OOO

OOO

Total

39,767,372

OOO

OOO

OOO

OOO

OOO

(3) Determination

In light of the aforementioned facts, (1) the former Securities and Exchange Act (repealed by Article 2 of the Addenda to the Financial Investment Services and Capital Markets Act, Act No. 8635, Aug. 3, 2007; hereinafter referred to as the “Capital Markets Act”) provides that if a stock-listed corporation holds 5% or more of its shares, etc. under Article 200-2(1) of the former Securities and Exchange Act and Article 147(1) of the current Capital Markets Act shall be reported to the Financial Services Commission and the Korea Exchange; (2) even if the duty to report does not restrict the shareholder’s right to dispose of shares owned 5% or more of the shares, it is difficult to believe the Plaintiff’s assertion that the above shares were held in title trust only for the purpose of freely disposing of the shares, and (2) KimCC held 29% or more of its shares, and thus, it is difficult to recognize that the Plaintiff’s share ratio was 30% or more under the name of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 14530%).

Therefore, regarding the title trust of the instant shares, it cannot be deemed that there was no tax avoidance purpose as alleged by the Plaintiff.

D. Determination on the illegality of the method of calculating the gift value

(1) Article 60 of the former Inheritance Tax and Gift Tax Act provides that "the average market price corresponding to the value of the property on which the gift tax is assessed according to the method of appraisal under Article 63 (1) 1 (a) and (b) of the former Inheritance Tax and Gift Tax Act." Article 63 (1) 1 (a) of the former Inheritance Tax and Gift Tax Act provides that "the stocks and equity shares traded at the Korea Stock Exchange shall be the average market price of the Korea Stock Exchange every 2 months before and after the evaluation base date, respectively. However, in cases where it is inappropriate to determine the average market price on the same date as the average market price during two months before and after the evaluation base date due to the occurrence of reasons such as capital increase or merger, referring to the average market price for the period calculated as prescribed by Presidential Decree between two months before and after the evaluation base date, and Article 52-2 (1) 1 and 2 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act shall be referring to the two months before and after the evaluation base date, and the two months before the evaluation base date.

(2) However, the capital increase through the issuance of new shares was the method of the shareholder allocation and the third party allocation, and there are various stages such as the resolution of the board of directors on capital increase with respect to the capital increase, the publication of the plan and the basic date of the issuance of new shares, the resolution of the board of directors on the third party allocation, the payment of stock price, and the registration of the capital increase. The period of evaluation

(A) In the case of the issuance of shares, in principle, the party who trades shares when there is a public announcement of the increase in the capital. As such, in principle, the public announcement of the increase in the capital has a considerable impact on the formation of the stock price. However, in the case of the shareholder allocation method, the shareholder allotment method has the right to participate in the allotment of shares as of the base date, to determine the preemptive right. Meanwhile, in principle, a listed company has the right to participate in the allotment of shares until two days prior to the base date because it acquires the ownership of the relevant purchased shares, even if it purchases shares without the right to participate in the allotment of shares, the value of shares per day prior to the base date is lower than the value of shares two days prior to the base date because the purchase of shares takes place on or after the base date of the 3th day prior to the issuance of new shares (the closing date of the shares after the 1st day prior to the issuance of the preemptive right). Therefore, it is not necessary to reasonably reduce the value of shares prior to the 9th day immediately preceding the base date.

(B) Next, in the case of issuing new shares by the corporation of this case where a third party is allocated only for forfeited shares, such as the facts cited prior to the time of capital increase by the method of shareholder allocation, the public announcement of capital increase has already been publicly announced and the number of new shares and capital increase related to the capital increase has already been newly made. Since the stock price is newly formed due to the measure of stock increase by the method of shareholder allocation, the resolution of the board of directors for a third party allocation is deemed not to have a special effect on the already formed stock price. Therefore, even in that case, it is reasonable to view the "the date of stock increase" to be the date following the occurrence of the cause, such as the capital increase.

(C) Furthermore, the purport of the Supreme Court Decision 2007Du7949 Decided August 20, 209, arguing that the former Inheritance Tax and Gift Tax should be assessed on the basis of the calculation of the value of the gift in the event of a cause such as a capital increase, is to take account of the fact that such cause has been significantly affected the formation of the future stock price. The first issue price and the number of shares issued have already been changed before the payment of stock price was made, and the actual payment of stock price did not result in a significant change in the stock price. Therefore, in general, it is judged that the correlation between the payment of stock price and the increase in stock price is not high, and ② The Supreme Court Decision 2007Du7949 Decided August 20, 209, arguing that the Plaintiff should be considered as the date of the increase in stock price, and that the above 3rd share price should not be considered as the 3rd share price increase due to the reasons for the issuance of new shares after the issuance of new shares.

(3) Based on the above determination, the period of appraisal of the value of donated property on the instant shares, which the Plaintiff is dissatisfied with, and the value per share thereafter, shall be determined as follows.

(A) First, in the case of shares of the plaintiff's transfer to December 31, 2004, as of December 31, 2004, the date following the base date of appraisal shall be deemed to be the day following the occurrence of a reason such as an increase in the capital as of January 14, 2005 ( February 7, 2005). Thus, the base date of appraisal shall be from November 1, 2004 ( October 31, 2004) to the day immediately before the base date of appraisal before the date of the above base date of appraisal until February 4, 2005 (the date of February 5, 2005, and February 6, 2004). In addition to the evidence stated above, the average amount of shares during the above period shall be deemed to be an "O's average amount" of shares during the above period.

(B) In addition, in the case of shares of which the first shareholder was changed as of March 15, 2005 in the name of the Plaintiff as of March 15, 2005, the date following the date on which the cause of the above increase in the capital occurred within the period of two months prior to the base date of appraisal ( February 7, 2005). Thus, the evaluation period is from February 7, 2005, which is the date of the above right, to May 15, 2005, which is two months after the base date of appraisal. According to the above evidence, the evaluation price per share during the above period can be recognized as "OOO".

(4) However, according to the above facts, the defendant is deemed to have calculated the gift value of each of the above dispositions based on the average price per share as seen above (i.e., the plaintiff's transfer of ownership in the future, i.e., the "OOO" per share, ii the shares of this case as of March 15, 2005, i.e., the "OOOO" per share, and ii the shares of this case as of March 15, 2005, i.e., the "OOO" per share. Thus, there is no error in the method of calculating the gift value in each of the above dispositions.

E. Sub-decision

Ultimately, each of the dispositions of this case is lawful.

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.