National High Court Decision 2007west 1895 (Law No. 16, 2007)

Whether or not a donation of shares is made by fraud or by fraudulent means;

Although shares have been donated by deception of donee, that the gift contract still remains valid unless the contract is legally revoked by reason of fraud, etc.

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

Article 2 (Gift Tax Taxables)

Article 4 (Gift Tax Liability)

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of KRW 734,721,730 on May 18, 2007 against the Plaintiff and the disposition of demanding payment of KRW 24,552,510 on the above gift tax (the purport of the claim stated in the complaint is to seek revocation of the disposition of imposing the above additional dues, but the Defendant’s notification of the payment of the above additional dues is not a disposition of imposition, but a demand disposition for payment, and thus, a revocation of the above demand disposition is sought).

1. Details of the disposition;

The following facts are not disputed between the parties, or may be acknowledged by comprehensively considering the whole purport of pleadings in each of the statements in Gap's evidence 1, 2, 7, 9, Eul's evidence 1 through 4, Eul's evidence 5, Eul's evidence 1, 2, Eul's evidence 6, Eul's evidence 7-1, 2, Gap's evidence 8, 9, 11, and evidence 7.

A. On November 10, 1998, ○○ Start-up Investment Co., Ltd. (hereinafter collectively referred to as “Nonindicted Company”) of ○○ Start-up Investment Co., Ltd. (hereinafter referred to as “○○○○○○○ Investment Co., Ltd.”), ○○○ Investment Co., Ltd. (hereinafter referred to as “○○○○○○○○ Start-up Investment Co., Ltd.”), January 3, 2003, to ○○○○○○○ Start-up Investment Co., Ltd. on June 9, 2006, to ○○○○○○○ Start-up Investment Co., Ltd. on July 24, 2007, and to ○○○○○○○ Start-up Investment Co., Ltd.).

B. On July 15, 1999, the Plaintiff acquired shares of Nonparty Company 5,00,000,000, and KRW 1,446,000 on August 20, 1999 through each new shares subscription in KRW 7,230,00,000. On October 15, 199, the Plaintiff acquired shares of Nonparty Company 3,000,000,000 upon a claim for conversion of the above convertible shares into shares on May 2, 200 (the capital of Nonparty Company increased from KRW 10,00,000,000 to KRW 23,230,000,000,000, in total as at the time of its incorporation). The Plaintiff acquired shares of Nonparty Company 1’s acquisition of KRW 46,00,000 upon a claim for conversion of the above convertible shares into shares (the capital of Nonparty Company 1 was increased to KRW 46,606,00 each shares).

C. On the other hand, on June 15, 200, the Plaintiff transferred 535,503 share of the non-party company's shares (hereinafter "the shares of this case") to Kim ○ without receiving any separate consideration. The director of the Seoul Regional Tax Office conducted a tax investigation with respect to the non-party company from November 1, 2006 to December 12, 2006, it shall be deemed that the Plaintiff transferred the shares of this case to Kim ○ without compensation and notified the Defendant that the Plaintiff donated shares worth KRW 2,225,50,468 in total to Kim ○ by evaluating the value per share of KRW 4,156, and the Defendant imposed a gift tax of KRW 1,02,30 for the year 200 on the Kim ○ on February 16, 2007.

D. However, on May 17, 2007, in the event that Kim Jong-dong failed to pay the gift tax, the said gift tax was imposed and notified to the Plaintiff as a joint and several taxpayer of the said gift tax, and at the same time the said gift tax was imposed and notified, and the said additional tax was paid and urged to pay KRW 5,204,260 on the said gift tax (hereinafter “instant previous disposition”).

E. On November 19, 2007, the Plaintiff appealed to the National Tax Tribunal, but was dismissed on February 21, 2008.

F. Meanwhile, on June 17, 2008, the defendant decided to exclude the application of the certificate to the largest shareholder, which was the premise of the above disposition (30%) and to reduce ex officio the tax amount of KRW 1,077,512,880 (i.e., KRW 1,022,308,260 + KRW 55,204,260) to KRW 759,274,240 (in the above amount, KRW 734,721,730 among the above amount is the gift tax, and the remaining KRW 24,52,510 is the additional charge based on the amount of gift tax in arrears) (i.e., the remaining portion of KRW 759,274,240 remaining after the correction of the above reduction).

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff’s transfer of the instant shares to Kim ○ on June 15, 2000 without monetary consideration was based on the deception by Kim ○, which led to the Plaintiff’s deception. Since it brought about the instant shares owned by the Plaintiff by tort (Fraud), the Plaintiff is not a donor under Article 4(3) of the Inheritance Tax and Gift Tax Act (amended by Act No. 6301, Dec. 29, 2000; hereinafter the same) but the disposition of this case, which designated the Plaintiff as a joint and several taxpayer of Kim ○, was unlawful.

(b) Related statutes;

Article 2 (Gift Tax Taxables)

Article 4 (Gift Tax Liability)

Article 31 (Scope of Donated Property)

Article 60 (Principles, etc. of Appraisal)

Article 63 (Appraisal of Securities, etc.)

Article 68 (Reporting of Tax Base of Gift Tax)

Article 54 (Appraisal of Unlisted Stocks)

Article 14 (Real Taxation under the former Framework Act on National Taxes)

Article 21 (Establishment Date of Liability for Tax Payment under the former Framework Act on National Taxes)

(c) Fact of recognition;

The following facts are not disputed between the parties, or may be acknowledged by comprehensively taking into account the descriptions of Gap evidence 1-1-2, Eul evidence 1-2, evidence 1-2, evidence 1-4-1, 2, A7, 8, 10, evidence 11-1, 2, 3, evidence 12-1 through 8, Gap evidence 13, 14, 15, evidence 3-4, evidence 5-1, 2, Eul evidence 6, evidence 7-1, 7-2, 8, 9, and 10 of evidence 1-2, and evidence 1-2, 3, and 12-13, 14, 15, evidence 3-4, evidence 5-1, 5-2, Eul evidence 6, evidence 7-1, 7-2, 8, 9, and 10, the number

(1) On November 10, 1998, Kim ○ and Lee ○ have established a non-party company with a capital of KRW 10,000,000 (Issuance shares 2,00,000,000, and KRW 5,000 per share) invested in a share of 50% on November 10, 199.

(2) The Kim Jong-soo borrowed 5,00,000 won of his share in a lump sum and deposited in capital as a lump sum and received a share capital payment certificate, and repaid this. In the financial statements of the non-party company, the non-party company processed the settlement of shares as if it acquired securities, etc. or lent money to another person.

(3) On the other hand, the plaintiff was recommended to make an investment in the non-party company from Kim ○ and acquired the non-party company's shares at a par value of KRW 5,00 per share with Kim ○, but the value per share of the non-party company's shares at a later rate of KRW 10,000 after assessing the value of the shares, and subsequently made an oral agreement to transfer part of the shares acquired by the plaintiff to Kim ○, Lee ○, the non-party company's ○○, and the ○○ Government Co., Ltd. (hereinafter referred to as "the agreement of this case") free of charge (hereinafter referred to as "the agreement of this case"). On July 15, 199, the plaintiff acquired 1,00,000 shares of the non-party company at KRW 5,00,000 on August 20, 199, and acquired 200,000 shares of the non-party company's shares at KRW 230,00 per share through new shares (the non-party 2000.

(4) On June 15, 200, Kim Jong-han actually transferred 321,302 shares out of the shares of the non-party company to ○○ Government, to the non-party Kim Jong-sung, 214,201 shares to the non-party ○ Government on the following grounds: (a) although the value per share of the non-party company's shares does not reach 10,000 won, the value per share of the non-party company's shares exceeds 10,000 won under the financial structure of the non-party company; and (b) the plaintiff demanded the plaintiff to implement the instant agreement. In accordance with the instant agreement, on June 15, 2000, the plaintiff transferred ○, 321,302 shares, among the shares of the non-party company's shares, to the non-party ○○ Government, 214,201 shares to the non-party ○ Government (this share ratio was changed to 33.05% on the non-party ○ Government).

(5) After that, the number of directors in charge of accounting of the non-party company was ordered by the plaintiff to report the financial status of the non-party company in the second half of 2000, and reported to the plaintiff the fact of the fictitious payment and analysis accounting as stated in paragraph (2) above.

(6) Accordingly, the plaintiff argued that he would have lowered the value of the shares of the non-party company owned by himself due to the fictitious payment and the window dressing accounting of Kim ○, and that he would withdraw various legal measures. The Kim ○ promised that the plaintiff would pay KRW 5,000,000,000, which was the most paid to the non-party company.

(7) However, as Kim Jong-han failed to comply with the commitments set forth in the above Paragraph (6), the Plaintiff and Kim Jong-jin et al. (in addition, ○○○○○, Lee Jong-jin Kim, Lee Jong-jin Kim, Chojin-jin, Cho Jong-jin, Kim Jong-tae, Kim Tae, hereinafter referred to as “the Plaintiff, etc.”) made an agreement with the following contents (hereinafter referred to as “the first agreement”) around February 12, 2001, and stored 921,302 shares held by Kim Il-○ et al. as a security thereafter in the whitening of law firms.

The ○○, etc. shall sell to a third party the shares of the non-party company 3,071,006, which they own, until February 12, 2002, and pay to the non-party company the amount equivalent to KRW 5,000,000,000, which was counted in the account book with the proceeds from sale of the shares in a separate account.

If the contents of the above agreement are not fulfilled, the shares of the non-party company offered as security for the implementation of the above agreement shall be transferred to the plaintiff free of charge.

(8) 그런데, 김○한 등이 이 사건 1차 합의의 이행시한(2002. 2. 12.)이 임박해서도 위 합의 내용을 이행하지 못하여 위와 같이 담보목적으로 보관된 주식 921,302주가 모두 원고에게 양도됨으로써 소외 회사의 경영권까지 함께 넘어갈 가능성이 높게 되자, 이○곤은 2002. 1.경 원고에게 '위 담보 목적 보관 주식 921,302주 중 748,006주는 원고가 갖고 나머지 173,296주는 자신이 보유함으로써 원고와 이○곤의 주식 비율을 50%씩 하여 소외 회사를 공동 경영하자'고 제안하였고 이에 원고 역시 회사를 정상화 시키면 투자자금을 회수할 수 있을 것으로 믿고 2002. 1. 17. 이○곤과 사이에ㅐ 위 제안과 같은 내용의 합의(이하 '이 사건 2차 합의'라고 한다)를 하고 그에 따라 2002. 2. 18. 김○한, 강ㅍ전, 조○혁, 최○철, 강○금(김○한을 제외한 나머지 사람들은 김○한의 명의수탁자들이다, 이하 '김○한 측이라고 한다)으로부터 위 담보 목적 보관 주식 921,302주 중 748,006주를 무상으로 양도받았다.

(9) Meanwhile, at the time of the Plaintiff’s transfer of shares of 748,006 shares according to the second agreement, the Plaintiff prepared a sales contract for shares that were entered on the part of the seller, who was the buyer, as the buyer between Lee ○ and Lee ○○.

D. Determination

(1) According to the above facts, it is reasonable to view that the plaintiff recognized that he transferred the shares of this case to Kim Jong-hwan on June 15, 2000 without compensation, and this constitutes a donation under Article 2 (1) of the Inheritance Tax and Gift Tax Act, and therefore, the taxation requirements of gift tax are satisfied.

(2) As to this, the Plaintiff alleged that it does not constitute a donor under Article 4(3) of the Inheritance Tax and Gift Tax Act, since the Plaintiff donated the instant shares by deception of Kim○, the said contract still remains valid unless the said contract is lawfully revoked on the grounds of fraud, etc., and therefore, there is no special reason to exclude the donor who donated shares by defective declaration of intent in interpreting the meaning of the donor under the above provision. Therefore, the Plaintiff’s assertion cannot be accepted.

In addition, even if the plaintiff's domestic claim was decided on June 15, 200 to be "the purport that the contract was cancelled because it constitutes an expression of intent by fraud," the above facts of recognition were examined as follows: (a) the plaintiff was aware of the fact of the provisional payment and the window dressing accounting; and (b) it was found that there was a decrease in the value of the shares arising therefrom; (c) it was not intended to compensate for losses arising from the above donation contract in a manner of cancelling the above donation contract and returning the shares; and (d) it was difficult to recognize only a portion of the shares that were transferred to the non-party company by allowing the non-party company Kim ○ to actually pay for the loss by recovering the actual value of the shares of the non-party company; and (e) it was difficult to recognize that the non-party company was subject to the above agreement to provide the non-party company's shares as a security right to guarantee the implementation of the agreement; and (e) it was difficult to recognize that the non-party company was transferred to the non-party company's original state without compensation.

(3) However, according to the second agreement of February 18, 200, the plaintiff was transferred 748,006 shares of the non-party company without compensation from the non-party company on the part of the non-party company on June 15, 200, and there is no room to regard that part of the shares were returned by the non-party company upon the rescission of the donation agreement of June 15, 200. However, according to Article 31(4) of the Inheritance Tax and Gift Tax Act, the "in case where the property donated (excluding salaries) after the donation was made is returned within the report deadline under Article 68, the donation shall be deemed not to have existed from the beginning." Article 68 of the same Act provides that the report deadline shall be three months from the donation date, and according to the above facts of recognition, the plaintiff was legally released from the non-party company's donation to the non-party company on June 15, 200 and the decision was not made within the report deadline of return (see, e.g., Supreme Court Decision 97Da184, 20088.

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.