Seocho 2017west 2574 (Law No. 19, 2017)

Whether the mother who had a domicile in the Republic of Korea after departure of the United States is a domestic resident of the United States wage and salary income earner and student at the time of donation.

In the resident registration card, domestic residents, or children who have derived domestic income with domestic address in the Republic of Korea appear permanently, rather than temporary study, and since it is difficult to view that there is a real basis of living in the Republic of Korea to the extent that they are liable for tax payment, it shall not be deemed a resident. Therefore, the case where a domestic resident donated foreign property

Article 2 of the former Inheritance and Gift Tax Act, Article 2 of the Enforcement Decree of the Income Tax Act, Article 21 of the Adjustment of International Taxes Act

2017Guhap81458 Revocation of Disposition of Imposition of Gift Tax

HongA et al.1

O Head of tax office

September 21, 2018

December 7, 2018

1. On January 19, 2017, the Defendant’s imposition of gift tax (including additional tax) imposed on Plaintiff HongB on Plaintiff HongB on Plaintiff HongB on January 19, 2017 and the imposition of gift tax (including additional tax) KRW 139,614,200 shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. The plaintiff HongA (S. 29 July 1981) and RedB (S. 20 February 20, 1989) left the Republic of Korea with the United States around July 1994. The plaintiffs and ParkCC acquired the permanent residence of the United States on October 17, 1996.

B. On April 19, 2006, ParkCC purchased land located in DDR EE City (hereinafter “instant land”) at US 1,140,000, and registered each 1/3 in the name of ParkCC and Red F (Plaintiffs) and each 1/3 in the name of the Plaintiffs.

C. On January 19, 2017, the Defendant imposed a gift tax (including additional tax), KRW 140,131,040, and KRW 139,614,200 on Plaintiff HongB, on June 27, 2018, on Plaintiff HongB, who is a domestic resident, donated funds to acquire the instant land to the Plaintiffs, a domestic resident.

[Reasons for Recognition] Facts without dispute, Gap 1, 3 through 6, Eul 1, 13, 14, 15, oral argument

The purport of the whole

2. Relevant statutes;

It is as shown in the attached Form.

3. Whether the instant disposition is lawful

A. Summary of the parties' assertion

1) The plaintiffs

Where a non-resident donates property located abroad to a non-resident under the Inheritance Tax and Gift Tax Act (hereinafter referred to as the "Inheritance Tax and Gift Tax Act"), both the donor and the donee shall not be liable to pay gift tax

Even if a donor is a resident, a donee, is not liable to pay gift tax. Since both the Plaintiffs and ParkCC are non-residents, the Plaintiffs are not liable to pay gift tax. Even if ParkCC is deemed a resident, the Plaintiffs are non-residents, and there is no gift tax liability.

2) Defendant

ParkCC is clear that it is a domestic resident, and the plaintiffs have been staying in the United States for a long time, and are dependent on the income of a parent who is a domestic resident at the time of the acquisition of the land in this case.

B. Determination

1) Standard for determining residents under the Inheritance Tax and Gift Tax Act

Article 1(1)1 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8435, Dec. 31, 2007; hereinafter the same) provides that "a person who has either established a domicile in the Republic of Korea or has established a temporary domicile for at least one year" is a resident, and Article 1(2) delegates "necessary matters concerning the definition, etc. of a domicile, residence, and resident or non-resident" to the President. Articles 1(1) and 2(1) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 24358, Feb. 15, 2013; hereinafter the same shall apply) stipulate that the determination of a domicile, residence, resident, and non-resident shall be governed by the Enforcement Decree of the Income Tax Act.

Article 2 (1) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 19890, Feb. 28, 2007; hereinafter the same) provides that "the address shall be determined on the basis of objective facts of living relationship, such as the family living together in Korea, the existence of assets located in Korea, etc." Paragraph (3) provides that "if a person has an occupation which requires him to continue to reside in Korea for not less than one year, a family living in Korea has a family living together in Korea, and it is recognized that he will continue to reside in Korea for not less than one year in view of his occupation and property status, it shall be deemed that the person has an address in Korea." Paragraph (4) provides that "if a person with a foreign nationality or a person with a foreign permanent residence under the foreign laws has an occupation which usually requires him to reside in Korea for not less than one year, and if he does not have any family living in Korea, and it is not recognized that he will mainly reside in Korea in view of his occupation and property status."

2) Whether it is a domestic resident of ParkCC

In full view of the following facts and circumstances, it is reasonable to view ParkCC as a resident under the Inheritance Tax and Gift Tax Act, apart from the fact that ParkCC may acquire permanent residency on October 17, 1996 and be deemed as a resident of the United States.

(a) Zu300 ParkCC has continued to have the domicile on its resident registration cards even after departure from the plaintiffs and the United States around July 1994 (SPP as spouse of August 25, 1993).

B) Since around 1999, ParkCC was registered as an internal director of WW Co., Ltd. (the representative: RedF), which is a domestic corporation, and has been paid more than KRW 100 million each year from around 2006. There is no evidence to acknowledge the fact that ParkCC had a different income in the United States, in addition to the above benefits. WWCC confirmed that it is performing the business of deposit management and investment, company fund management, etc. from January 23, 2006.

In addition, from May 31, 1993 to April 9, 2003, ParkCC was registered as a director of Z&C Co., Ltd. (the completion of liquidation on May 3, 2016).

C) ParkCC received national pension contributions and medical insurance fees from the year-end year-end year-end year-end year-end year-end year-end year-end year-end year-end year-end year-end year-end year-end year-end year-end year-end year-end year-end year-end year-end year-end year-end year-end year-end year-end year-end year-end year-end year-end year-end year-end year-end year-end year-end year-end year-end year

D) The RedF has operated WW Co., Ltd. from April 22, 1986 to April 200. From around 2000 to around 2005, income of RedF was approximately KRW 750 million (200), KRW 80 million (2001), KRW 120 million (202), KRW 140 million (203), KRW 180 million (200,000), KRW 220 million (20 million), and KRW 200 million (205). The RedF jointly acquired several real estate in Korea in addition to the apartment located in the old Hdong in Seoul Special Metropolitan City. The RedCC jointly acquired the instant real estate (including the instant land).

3) Whether the plaintiffs are domestic residents

In light of the following facts and circumstances, the HongF’s residence in the United States is not for temporary study, but for permanent study, and it is difficult to view that the Plaintiffs have a substantial basis for living in the Republic of Korea to the extent that they are liable for tax payment. Accordingly, the Plaintiffs cannot be seen as residents under the Inheritance Tax and Gift Tax Act, in full view of the facts acknowledged earlier, and the following facts and circumstances, which can be acknowledged by comprehensively taking account of the descriptions of Gap 10 through 19, 23 through 30, and the purport of the entire pleadings.

A) The Plaintiffs left the Republic of Korea in around 1994, but were only 12 years old (Plaintiff HongA) and 5 years old (Plaintiff HongB) at the time of departure from the United States. The Plaintiffs acquired the permanent residence of the United States on October 17, 1996.

B) The Plaintiff HongA’s resident registration record card was cancelled on May 12, 199. The Plaintiff HongA graduated from a middle school, high school, or university in the United States, and reported and paid income tax to the United States since 2005 by working or starting a business in the United States.

The period of domestic stay of Plaintiff HongA is 42 days (2,150 days of stay in a foreign country), 168 days (1,614 days of stay in a foreign country) from 2001 to 2005, 164 days (364 days of stay in a foreign country), 2007 to 2011, 279 days (1,547 days of stay in a foreign country) and 2012 to 2016 days (1,818 days of stay in a foreign country).

The plaintiff HongA is married in around 2011 to own a house located in the United States and reside together with his spouse. The plaintiff RedY was generated by his her son Y in 2016, and HongY is a U.S. national. The plaintiff HongA is currently subscribed to the U.S. medical insurance.

(C) The Plaintiff HongB’s resident registration record card was cancelled on December 16, 2005 as locally obtained the U.S. citizenship around 2012. The Plaintiff HongB obtained the U.S. citizenship. The Plaintiff HongB graduated from both elementary schools, middle schools, high schools, and universities in the United States, and is currently in the U.S. “MMM UNiv Schloo”. The period of stay in the Republic of Korea of HongB was July 74, 2002 (291 days of overseas stay), May 57 (308 days of overseas stay), 2004 (306 days of overseas stay), July 71, 2005 (294 days of overseas stay), 16 days of stay in the Republic of Korea (301 days of overseas stay), 2006 (30 days of overseas stay), 201 days of stay in the Republic of Korea from 301 days to 349 days, 2017 (206 days of overseas stay in the Republic of Korea).

D) At the time, the Defendant asserts that the Plaintiffs were residing together with ParkCC, and that the Plaintiffs’ living expenses were paid from the RedF, and that the Plaintiffs constituted a domestic resident who is a domestic resident and has domestic assets with the same parent as the domestic resident.

갑 23, 24, 25호증의 기재에 의하면, 원고 홍AA은 이 사건 토지 취득 당시 박CC와 함께 거주하지 않고 미국 XXXXX 소재 아파트를 임차하여 거주한 사실을 인정할 수 있다. 또한 을 22호증의 기재에 의하면, 원고 홍AA 명의의 양도소득세과세표준 신고 및 납부계산서(양도 주식: ZZ이앤씨 주식회사 주식, 취득일자: 1985. 1. 1., 양도일자: 2004. 5. 14.)가 2005. 5. 31. 제출된 사실을 인정할 수 있으나, 취득일 당시 원고 홍AA의 나이가 불과 3세였던 점을 고려하면, 원고들의 주장과 같이 그 주식의 실질 주주는 홍FF이었음을 알 수 있다. 그 밖에 피고가 주장하는 사유(원고들의 생활비가 홍FF으로부터 지급되었다거나 원고들이 국내에 재산을 보유하고 있다는 사실 등)를 인정할 증거가 없다.

The Plaintiffs depart from the Republic of Korea to the United States and graduate from the school, and are living in the United States (such as labor, business, entrance, marriage, etc.). Also, considering the period during which the Plaintiffs were staying in Korea and the period during which they were staying abroad, the Plaintiffs do not seem to have a ground for their living in Korea.

Therefore, even if the Plaintiffs received living expenses and school expenses from their parents at the time of the acquisition of the instant land, such circumstance alone does not necessarily lead to readily concluding that they are domestic residents. However, since the amount of taxes can be one of the factors for determining privateF residents, the tax is the quid pro quo of public goods (security, national defense, etc.) provided by the State, the determination of whether they constitute a domestic resident liable to pay taxes ought to be made in consideration of various circumstances, such as family relations, resident’s occupation and existence of domestic assets, the period of stay in Korea, the period of stay in Korea, and the anticipated that they will reside in Korea. Even if the grounds alleged by the Defendant are recognized, it is difficult to see the Plaintiffs as residents

4) Sub-committee

The ParkCC is a resident under the Inheritance Tax and Gift Tax Act, but the Plaintiffs cannot be deemed as a resident under the Inheritance Tax and Gift Tax Act. If a resident donates an overseas property to a nonresident, the donee does not have any obligation to pay gift tax (Articles 2(1)2 and 4(2) of the former Inheritance Tax and Gift Tax Act). The instant disposition is unlawful.

4. Conclusion

All of the plaintiffs' claims are reasonable, and it is so decided as per Disposition.

(i)

Warrant 4, 5 pages 4, 5 of Warrant 5 dated 5, 2018

2) On January 18, 2017, the head of HH Tax Office imposed a gift tax on Plaintiff HongB on the Plaintiff on January 18, 2017, and revoked ex officio on the ground of the violation of jurisdiction during the instant lawsuit. The Defendant imposed a gift tax on Plaintiff HongB on June 27, 2018 (the preparatory brief 3,4 pages dated 5, 2018).