Plaintiff (Law Firm Closts, Attorneys Park Ha-young et al., Counsel for the plaintiff-appellant)

Head of Central Tax Office

September 11, 2019

Seoul Administrative Court Decision 2017Gudan79946 decided June 25, 2019

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance is revoked. The Defendant’s imposition of capital gains tax of KRW 25,625,310 for the Plaintiff on June 2, 2016, the capital gains tax of KRW 57,932,949 for the year 2011, and the capital gains tax of KRW 228,619,941 for the year 201 shall be revoked.

1. Quotation, etc. of the judgment of the first instance;

The reasoning of the judgment of the court of first instance is as follows: (a) the relevant part of the judgment of the court of first instance is amended as follows 2; and (b) the reasoning of the judgment of the court of first instance (excluding the part of the judgment “3. conclusion”) is as stated in the grounds of the judgment of the court of first instance (excluding the part of the judgment “3. conclusion”), and (c) it is cited as it is in accordance

2. Revised parts

○ 6 to the right side of “one day below” plus “(the avoidance of progressive rates under the aggregate return of capital gains, the overlapping application of the basic deduction, the reduction of reduction and exemption, etc.)”

3. Supplement and addition of judgments;

The Plaintiff asserts as follows. In order to apply the penalty tax for non-declaration, there must be active actions that make it impossible or considerably difficult to impose and collect taxes for the purpose of tax evasion. The Plaintiff did not have the purpose of tax evasion, and there was no active deceptive act for the purpose of tax evasion, and there was no fact that the title trust itself has been concealed or induced by active means. Moreover, the determination of whether to impose unfair non-declaration or general non-declarational penalty tax for each year to which the title trust was reverted should be made. The amount of transfer income tax for the year 2010 and 2014 of the Non-Party’s report and the return after the deadline for transfer income tax under the name of the Plaintiff and the Defendant’s decision, the transfer income tax, transfer income, and calculated tax were both identical, and the amount of capital gains tax for the year 2011 was not unjustly reduced by fraud or other unlawful means. In the case of 2011, the difference between the transfer income tax amount due to the omission of the aggregate return (from 2010 to 2014). Therefore, the portion exceeding the amount of the general non-declaration penalty tax is unlawful.

However, as the court of first instance cited by this court, it is difficult to believe the Plaintiff’s assertion about the process of title trust as if it were determined in the judgment of the court of first instance, and rather, it appears that the Plaintiff had an intention to avoid tax burden due to holding a large number of real estate in title trust to the Nonparty. In fact, the Plaintiff had gained a result of partly evading capital gains tax from the expropriation of the instant land. The Plaintiff reported and paid capital gains tax under the name of the Nonparty after the expropriation of the instant land, thereby having actively performed an act as if the Nonparty was the actual owner of the instant land. Even if the capital gains tax for 2010 and 2014 reported and paid by the Plaintiff under the name of the Nonparty was similar to the amount of capital gains tax to be reported and paid under the name of the Plaintiff, it was difficult to view that the instant land title trust itself had the intention of tax avoidance, in view of the fact that the instant land expropriation and reporting and payment of capital gains tax for 2010 and 2014 under the name of the Nonparty were conducted as a series of acts.

4. Conclusion

Thus, the plaintiff's claim shall be dismissed as it is without merit. Since the judgment of the court of first instance is just with this conclusion, the plaintiff's appeal is dismissed as it is without merit.

Judges Kim Dong-ok (Presiding Judge)