207Guhap43488 Revocation of Disposition of Imposition of Gift Tax

○ ○

Head of Yeongdeungpo Tax Office

June 10, 2009

July 22, 2009

1. The Defendant’s imposition of gift tax of KRW 672,00,000 against the Plaintiff on April 6, 2007 shall be revoked.

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

The order is as set forth in the text.

1. Details of the disposition;

A. The director of the Seoul Regional Tax Office presumed on June 21, 2002 that the plaintiff acquired shares of the non-party 160,000 shares of the non-party 10 et al. (hereinafter "the non-party 1") from the non-party 10 et al. (hereinafter "non-party 10 et al.") as a result of the tax investigation on the OO Co., Ltd. (hereinafter "non-party 1") and notified the defendant of the tax assessment data by applying Article 160,00 shares of the non-party 160 et al. (hereinafter "the non-party 10,000 won per share x 160 won x 160,000 won for the acquisition fund of the non-party 20,000 won for the reason that the plaintiff did not have any income source for the acquisition fund of the non-party 1,000 won for taxation data of the non-party 4 et al.

B. On June 25, 2007, the Plaintiff, who was dissatisfied with the instant disposition, received a request for a trial from the National Tax Tribunal on June 25, 2007, and was dismissed on November 1, 2007.

【Ground for Recognition: Facts without dispute, Gap evidence 1, 2, Eul evidence 1-1, 2-2, Eul evidence 2, Eul evidence 3, Eul evidence 4-1, 2, Eul evidence 4-2, and Eul evidence 5 through 13, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The defendant's disposition of this case is unlawful for the following reasons.

1) The first argument

The Plaintiff did not intend to receive a donation of the acquisition fund of the instant shares. The Plaintiff merely acquired the instant shares by stealing the Plaintiff’s name in order to maintain corporate governance, and the Plaintiff did not exercise any right to the instant shares. Thus, there is no taxable object of gift tax, such as the donation of the instant shares or the funds to acquire the shares, since ○○, a substantial operator of the Nonparty Company, was not the Plaintiff.

2) The second assertion

Even if the instant shares were deemed to have been in title trust in the Plaintiff’s future, the instant shares were held in title trust for the purpose of maintaining the corporate governance structure of the non-party company, and thus, there was no purpose of tax avoidance, and thus, the said title trust cannot be presumed to have been donated. (In addition, even if the instant shares are presumed to have been donated, there is no sales example that objectively reflect the exchange value as the non-listed shares in the exchange value, and thus, it should have been considered as the tax base by evaluating the value of the instant shares in accordance with Article 5(5) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act, notwithstanding the fact that there was no sales example that objectively reflect the exchange value as a non-listed

(b) Related statutes;

It is as shown in the attached Table related Acts and subordinate statutes.

C. Determination

1) According to the evidence No. 5, evidence No. 6-1, No. 2, evidence No. 3, evidence No. 4-1, No. 2, evidence No. 5-1, and evidence No. 1, No. 5-13, witness O, OO, OO, and OO's testimony respectively, and the fact-finding on this ○○○○, respectively, conducted by the non-party company, the corporation, ○○○○, and ○○○○○○○, who was actually operating the company's shares, deposited the shares in the name of its employees in the process of combining each of the above companies with the non-party company, and thereafter partially retired from the company's office, the non-party No. 3 did not have any other jurisdiction over the non-party No. 4 to recognize that the non-party No. 5 did not actually transferred the shares to the plaintiff under the name of the transferor, the non-party No. 1's total shares issued by the non-party No. 3.

Therefore, the instant disposition, based on the presumption that the Plaintiff acquired the instant shares under Article 45 of the Inheritance Tax and Gift Tax Act (amended by Act No. 7010, Dec. 30, 2003) on the premise that the Plaintiff received the said shares, is presumed to have received the said shares from another person, is not recognized as the grounds for such disposition.

2) On this issue, the Defendant added the grounds for disposal to the purport that the Plaintiff is deemed to have donated the instant shares to ○○○○○, inasmuch as the Plaintiff was subject to the instant lawsuit, and the Plaintiff received title trust from ○○○○, thereby making it possible for the Plaintiff to take account of whether such disposal grounds are permissible or not.

In the appeal litigation seeking the cancellation of an administrative disposition, from the perspective of the substantive rule of law and the protection of trust to the people who are the other party to the administrative disposition, the agency can add or alter the grounds for disposition only to the extent that it is deemed to have the identity of the basic factual relations with the original disposition, and it is not allowed to assert as the grounds for disposition on the grounds of separate facts for which the identity of the basic factual relations is not recognized. The identity of the basic factual relations here is determined on the basis of whether the social factual relations, which form the basis of the disposition, are identical in the basic point of view (Supreme Court Decisions 98Du18565 delivered on March 9, 199; 2007Du13791, 13807 delivered on February 28, 2008; 207Du13807 delivered on February 18, 2008; Inasmuch as the original grounds for disposition of this case had no particular power to purchase the shares of this case from the other party.

Since the new grounds for disposition are presumed to have been donated to the Plaintiff, ○○○, a real owner, is presumed to have donated the instant shares, since the title holder and the actual owner of the instant shares acquired by the Plaintiff are different, and the new grounds for disposition are that ○○○, a real owner, donated the instant shares themselves to the Plaintiff, and thus, each of the above grounds for disposition are different from the object, tax base, and applicable provisions of the instant shares. As such, each of the above grounds for disposition are different, depending on the changes in the grounds for disposition as seen above, the issue of the Plaintiff’s dispute over the illegality of the instant disposition is different and the Plaintiff’s trust in relation to the grounds for disposition of the instant case is impaired. In light of the fact that each of the above grounds for disposition is different from basic facts, each of

3) Therefore, the Defendant’s new ground for disposition cannot be the ground for disposition under which the legality of the instant disposition is supported, and as seen in the foregoing Section 1, the existing ground for disposition under which the instant disposition was taken is not recognized. Thus, without considering the remainder of the Plaintiff’s remaining assertion, the Defendant’s disposition of this case is unlawful.

3. Conclusion

Thus, the plaintiff's claim is justified.

Judges OOOO

Judges OOO

Judges ○○

Related Acts and subordinate statutes

◆ 상속세 및 증여세법

Article 41-2 (Presumption of Donation of Property under Title Trust) (Amended by Act No. 6780, Dec. 18, 2002)

(1) In case where the actual owner and the nominal owner are different in the property (excluding any land and building; hereafter in this Article the same shall apply), which requires a registration, etc. for the transfer or exercise of the rights, the value of the relevant property shall be deemed to have been donated by the actual owner on the date when it is registered, etc. as the nominal owner, notwithstanding the provisions of Article 14 of the Framework Act on National Taxes: Provided, That this

1. Where assets are registered, etc. in the name of another person without any purpose of tax avoidance;

2. Where conversion is made to the name of the actual owner during the period until December 31, 1998 (hereafter referred to as the "period of grace" in this Article) with respect to the stocks, etc. entered in the register of shareholders or the register of members in the name of another person or the change of title is made pursuant to a trust or agreement prior to January 1, 1997 among the stocks or equity shares (hereafter referred to as the "stocks, etc." in this Article): Provided, That the same shall not apply to cases where the conversion is made to the name of a person in a special relationship with the shareholders (including investors) of the corporation that issued the relevant stocks, etc. or to the name of a minor as of January 1, 1997.

(2) If a registration has been made, etc. in the name of another person, or if the title of stocks, etc. is not converted into the name of the actual owner during the grace period under paragraph (1) 2, it shall be presumed that

(3) The provisions of paragraph (1) 2 shall apply only to a case where a person who has converted stocks, etc. into a title of actual owner submits the contents of conversion to the corporation which issued the relevant stocks or to the head office or head office of the invested corporation, as prescribed by the Presidential Decree.

(4) Paragraph (1) shall not apply to cases where a fact that is a trust property under the Trust Business Act or the Securities Investment Trust Business Act is registered, and where a non-resident registers it in the name of a legal representative or administrator.

(5) For the purpose of paragraphs (1) 1 and (2), the term “tax” means the national and local tax as provided in subparagraphs 1 and 7 of Article 2 of the Framework Act on National Taxes, and the customs as provided in the Customs Act.

(6) The scope of persons having special relation under paragraph (1) 2 shall be prescribed by the Presidential Decree.

Article 45 (Presumption of Donation of Funds, etc. for Acquisition of Property)

(1) Where it is difficult to recognize that a person acquired property by his/her own means in view of occupation, age, income, property status, etc. and prescribed by the Presidential Decree, it shall be presumed that the person who acquired the property concerned has received a donation of acquisition fund from another person when he/she

(2) Where it is difficult to recognize that a person has repaid (including partial repayment; hereafter in this paragraph, the same shall apply) his/her debts with his/her own ability in light of occupation, age, income, property status, etc., as prescribed by Presidential Decree, he/she shall be presumed to have received a donation for repayment from another person when the debt is repaid.

(3) The provisions of paragraphs (1) and (2) shall not apply in cases where the funds for acquisition or repayment are below the amount prescribed by the Presidential Decree in consideration of occupation, age, income, property status, etc. and where sufficient vindication exists on the source of the funds for acquisition or repayment.

◆ 상속세 및 증여세법 시행령

Article 34 (Cases where it is difficult to Recogniz that Property was Acquired with Self-Support) (Amended by Presidential Decree No. 18177, Dec. 30, 2003)

(1) The term “cases as prescribed by the Presidential Decree” in Article 45 (1) and (2) of the Act means cases where the sum of the amounts verified under the following subparagraphs falls short of the value of the acquired property or the amount of repayment of debts: Provided, That this shall not apply to cases where the sum of such proved amounts falls short of the smaller of the value of the acquired property or the amount equivalent to 20/100 of the amount of repayment of debts,

1. Amount of income on which a return has already been filed or received tax (including cases of non-taxation, reduction or exemption; hereafter the same shall apply in this Article);

2. The value of inherited or donated property which has been reported or has been taxed;

3. The amount of money received for the disposal of the properties or the amount of money received for the disposal of such properties, and used directly for the acquisition of relevant properties or the redemption of debts;

(2) The term "amount prescribed by the Presidential Decree" in Article 45 (3) of the Act means the amount determined by the Commissioner of the National Tax Service in consideration of the age, householder, occupation, property attitude, socioeconomic status, etc., in which the total amount of funds for acquiring the relevant property or funds for repayment of the relevant debts is not less than 30 million won within ten years before or after the date of acquiring the relevant