Appellate Court 2016J 3519 Between 2019 and 28 (Consolidated) (No. 15, 2017)

It is illegal to consider the new shares of merger as a new title trust.

No deemed donation of new shares received through the merger shall be deemed as a new title trust, and no deemed donation of title trust may be made for any act of changing the name of the heir due to the death of the title trustee.

Article 45-2 (Presumption of Donation of Title Trust Property)

2017Guhap70847 Revocation of Disposition of Imposition of Gift Tax

00 00 and 3 others

00. Head of tax office and 5

on 04 04 04

on October 13, 2019

1. The disposition of each gift tax (including additional tax) that the Defendants made against the Plaintiffs (attached Form 1) shall be revoked.

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

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

가. 망 ◇◇◇은 아래와 같이 000 등에게 주식회사 ☆☆(이하 '☆☆'이라 한다)의 발행주식 x,xxx,xxx주, 주식회사 △△(이하 '△△'이라 한다)의 발행주식 xxx,xxx주, 주식회사 ▽▽(이하 '▽▽'이라 한다)의 발행주식 x,xxx주, ◎◎◎◎ 주식회사(이하 '◎◎◎◎'이라 한다)의 발행주식 xx,xxx주를 명의신탁하였다가, 199x. x. xx. 상속인으로 배우자인 서00과 자녀인 원고들을 두고 사망하였다.

Table Omission of the Table

나. △△이 200x. x. x. ◎◎◎◎을 흡수합병하였고, 망 ◇◇◇으로부터 ◎◎◎◎의 주식을 명의신탁받았던 000 등은 위 합병에 따라 아래와 같이 합병구주에 상응하는 합병신주를 배정받아 자신들 앞으로 명의개서를 마쳤다(이하 위 합병신주를 '이 사건 제1주식'이라 한다).

Table Omission of the Table

C. Meanwhile, as the net 00 died from x.x. x. 201x.x., the spouse's 00 and son's son's son's son's son's son's son's son's son's son's son's son's son's son'

Table Omission of the Table

D. The Director of the Regional Tax Office confirmed the fact that the Plaintiffs did not enter into a change of ownership due to inheritance even when they received the shares of the company at the time of inheritance, and notified the Defendants of the result of such investigation. The Director of the Regional Tax Office confirmed that the Plaintiffs did not enter into a change of ownership due to inheritance even if they received the shares of the company at the time of the opening of the Si/Gun/Gu from x.x. to x.x. x. x.

E. The Defendants deemed that (i) the Plaintiffs newly title trust of the shares indicated in the above paragraph (a) (excluding the shares in the name of 00, hereinafter the same shall apply) on January 1, 2005, on the ground that (ii) the Plaintiffs had acquired ownership of the borrowed-name shares at the seat of the time real estate rental on December 18, 2003 pursuant to Article 41-2(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780, Dec. 18, 2002) and Article 9 of the Addenda (amended by Act No. 7010, Dec. 30, 2003); and (iii) the Plaintiffs had re-registered the shares indicated in Article 5 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6781, Dec. 18, 200; x1, 2001; x1, 201.

F. The Plaintiffs appealed and filed an appeal. The Tax Tribunal decided to revoke the disposition imposing gift tax on the shares stated in the above paragraph (a) and dismissed the remainder of the appeal on January 12, 2017 on the ground that it is difficult to deem that there was an agreement on title trust between the Plaintiffs and west 00 in accordance with the purport of Supreme Court Decision 2014Du43653 Decided January 12, 2017.

G. According to the decision of the Tax Tribunal as above, the Defendants made a correction to or notification of the gift tax (including additional tax) ofx,x,x, andxx members to the Plaintiffs, the gift tax on the Plaintiffs (attached Form 1) was added to the sum of x,x,x,x,x,xx, andxx members as stated in the disposition details (attached Form 1) (i.e., the gift tax on the shares of the instant case 1 + the sum of x,x,x,x,x,x, andx members of the gift tax on the shares of the instant case xx,x,x, andx won) (specific disposition details of the gift tax on the shares of the instant case 2). (See attached Form 2; see attached Form 3; hereinafter referred to as “the disposition of this case”).

2. Whether the disposition is lawful;

A. Summary of the plaintiffs' assertion

The instant disposition is unlawful for the following reasons, and thus should be revoked.

1) In light of the purport of the Supreme Court Decision 2016Du30644 Decided January 31, 2019, which held that the relationship between the title truster and the trustee is not likely to be newly formed or changed due to the merger, and the shares of this case are merely substituted or modified objects that the plaintiffs acquired instead of the merger principal, and that “No gift tax shall be levied by applying the provision on the constructive gift of title trust in respect of the merger new shares allocated by merger to the title trustee as a result of the merger with the merger principal”, the Defendants may not be subject to gift tax by applying the legal provisions of this case to the shares of this case.

2) In light of the purport of Supreme Court Decision 2014Du43653 Decided January 12, 2017, which held that, upon the death of the decedent, the heir succeeds to the comprehensive rights and obligations, and it is difficult to view that the title trust relationship between the Plaintiffs and the network book 00 was automatically succeeded to 00 upon the death of the network, and that there was an agreement on new title trust. This is also difficult to view that there was an agreement on new title trust, and that, “where shares are inherited due to the death of the title truster after the transfer of ownership was made in the future, it shall not be subject to the application of the provision on deemed donation of transfer of ownership, if the shares are inherited due to the death of the title truster after the transfer of ownership was made in the name of the title trustee, the Defendants cannot impose gift

B. Relevant statutes

[Attachment 4] The entry is as shown in the relevant statutes. (Omission)

C. Determination as to shares No. 1 of this case

1) In a case where a person who was under title trust of the extinguished company due to the merger and acquisition of absorption shares issued by the surviving company and the transfer of title is completed in the future, a new title trust relationship, different from the previous title trust relationship between the title truster and the title trustee with respect to the new shares for the merger and acquisition of a new property separate from the former one for the merger and acquisition of a new property, may be formed. However, inasmuch as the legal provision of this case permits the imposition of gift tax by deeming the relevant property from the actual owner as being donated to the title holder as an exception to the substance over form principle in order to prevent the act of title trust for the purpose of tax avoidance, it shall be applied only to the extent necessary and appropriate to prevent the act of tax avoidance. (2) In a case where the new shares for the first time are allocated to the title trustee corresponding to the initial shares for the merger and acquisition of the new shares for which tax was imposed or may be imposed, separately applying the legal provision of this case without restriction to the said merger and acquisition of the new shares for the first time after the merger and acquisition of the new shares for the merger and acquisition of a new shares are unreasonable.

2) 망 ◇◇◇으로부터 ◎◎◎◎의 주식을 명의신탁받았던 김00 등이 200x. x. x. 흡수합병에 따라 ◎◎◎◎ 발행주식에 상응하는 이 사건 제1주식을 배정받고 자신들 앞으로 명의개서를 마친 사실은 앞서 본 바와 같다. 이러한 사실을 위 법리에 비추어 살펴보면, 피고들은 이 사건 제1주식에 관하여 이 사건 법률조항을 적용하여 증여세를 과세할 수 없다 할 것이다.

3) On this point, the Defendants asserted that the disposition of this case on which the Defendants first applied the legal provision of this case to impose gift tax on the shares No. 1 of this case by applying the legal provision of this case is justifiable, inasmuch as the period of exclusion expires without imposing gift tax on the shares No. 1 of this case by thoroughly concealing the first title trust by the Plaintiffs. However, in light of the following circumstances, even if the gift tax was not imposed on the first title trust shares after the expiration of the period of exclusion, the above conclusion does not change, and thus, the Defendants’ above assertion on the different premise cannot be accepted.

(1) As long as the initial title trust, which is made for the purpose of tax evasion, is deemed a donation in accordance with the provisions on the deemed donation of title trust, the merger district in which the first title trust was made to Kim 00, etc. falls under the shares eligible for taxation as the first deemed donation.

② It is unreasonable to impose gift tax without limitation on shares No. 1 of this case on the ground that the exclusion period for imposition of gift tax has expired for the first title trust shares, which are the first title trust shares, may result in contradictions that deny the effect of deemed donation on the first title trust shares in relation to the imposition of gift tax.

③ In a case where there is a considerable interval between the time when the initial title trust was made and the time when the merger took place, when the title trustee applies the instant legal provisions to the new shares acquired due to the merger, it is inconsistent with the equity in relation to the imposition of excessive amount of gift tax, compared with the case where the principal owner of the merger under title trust first donated to the trustee or deemed as a donation and the gift tax was imposed.

④ In particular, even though the merger shares are not a substitute or modified object of the merger principal, there is similarity between them, and the merger is more characteristic than the profit and loss transaction, and the merger is in accordance with the merger contract between the merged company and the merged company, and thus, the title truster or trustee has to accept it without any room for any particular choice. Therefore, there is a greater need to restrict the application of the legal provisions of this case.

⑤ If gift tax can be imposed by applying the legal provisions of this case to new shares issued through a merger, in cases where the exclusion period for imposition of the first title trust shares has expired, there is a fundamental problem that the tax authority is able to choose at will the subject of gift tax in consideration of the lapse of the exclusion period for imposition, and whether the exclusion period for imposition expires.

(6) Since it is not desirable to keep the legal relationship in unstable state under the tax law, the Framework Act on National Taxes provides that the tax liability itself shall lapse unless there is any disposition of tax imposition within the exclusion period for the authority of the tax authority that determines the tax liability, and thus, the determination of whether to impose gift tax on the newly issued stocks of merger with the first nominal trust share after the exclusion period has expired is contrary to the purport of the Framework Act on National Taxes for which the exclusion period has expired.

D. Determination as to the second shares of this case

1) In applying the instant legal provision, an agreement on title trust between the actual owner of the stocks held in title trust and the title trustee should exist, and this constitutes a taxation requirement, and the tax authority bears the burden of proof. Moreover, deeming title trust as a donation under the instant legal provision to be a gift under the said legal provision accords with the substance and name of the ownership of the property and imposes gift tax in the absence of the substance of the donation in order to achieve policy goals, such as preventing tax evasion, etc. As such, the said provision imposes tax regardless of the existence of an act or fact, which serves as the constituent element of the tax imposition, and thus, ought to be strictly construed in interpreting and applying the relevant statutes (see, e.g., Supreme Court Decision 2014Du43653, Jan. 12, 2017).

2) As the net 00 x.x. deceased on 201 x.x. 200, the heir 00 and 00 x.x.x. x. x. of this case, their change of holders in the future was as seen earlier, and the entry of No. 3, 4, 5, and 11 as well as the fact-finding on 00 securities corporations in the name of the deceased 00 x. The fact-finding that the deceased 00 x. x. 00 x was 0 years old and 00 x were 10 years old and 20 years old and reported to the plaintiffs, and that the issue was 00 / 10 years old and reported to the inheritance and title trust of this case to the general tax office.

3) However, examining the following circumstances in light of the aforementioned legal principles, it cannot be deemed that there was an agreement between the Plaintiffs and 00, and 00, which form a new title trust relationship, was comprehensively succeeded to the status of the deceased 00 trustee due to the death of the deceased 00.

① If a person who received a title trust dies, the title trust relationship remains as is between the property inheritor. Even if there was no agreement on a new title trust between the Plaintiffs and 00, and 00, the existing title trust agreement, which existed in the past, still remains valid in relation to the relationship between 00 and 00 (see, e.g., Supreme Court Decision 201Da9498, Jan. 24, 2013). Therefore, it appears that there is no special reason to conclude a new title trust agreement with the Plaintiffs, who terminated the existing title trust relationship after the death of 00, and that there is no special reason to conclude a new title trust agreement with 00 and 00, the heir.

② The transfer of title in the future 00 and 00 for the shares 2 in this case is intended to disclose the title trust relationship which was automatically succeeded on the ground of inheritance. It is merely a follow-up measure by such transfer of title that 00 newly opened a securities account in the name of itself and 00 for the Plaintiffs. The above statement made by Plaintiffs 00, 000, 00, and 00 for the shares 2 in this case at the time of the tax investigation is the purport of the existence of a title trust relationship with the Plaintiffs as to the shares 2 in this case. Thus, it is difficult to deem that there was an agreement to establish a new title trust relationship separately from the existing title trust relationship with the Plaintiffs, 00, and 00 for the above circumstance alone, even if it is recognized that there was any agreement on the title trust between the Plaintiffs, 00, and 00, which is not a new title trust agreement to form a new title trust relationship, but it is merely a mere confirmation of the existing title trust relationship, or an inheritance, as a title trustee).

③ As alleged by the Defendants, even if there is a heir in addition to 00, 00, and 00, and the change of ownership is not made according to the statutory share of inheritance, the transfer of ownership is completed through the division of inherited property, and the inheritance tax is reported and paid. Thus, such circumstance alone does not change.

4) In addition, considering the following circumstances, the Defendants cannot impose gift tax on the shares of this case by applying the legal provisions of this case to the shares of this case. Thus, the instant disposition taken on a different premise must be revoked in an unlawful manner.

① If shares held in title trust are inherited, the existing title trustee had already been subject to the provision on deemed donation of title trust on the date of the initial entry of change of title holders and was able to be taxed or taxed. The reason why the title trustee died of such shares and the title trustee applied the above provision without any restriction to his/her heir is unreasonable.

② It is difficult to view that a new act was performed to form such a legal relationship, beyond having legally succeeded to a title trust relationship with an inheritor due to inheritance, with respect to the shares held in title trust.

③ When applying the respective provision to the existing title trustee and his/her successors respectively, it would be excessively harsh, as well as to impose excessive amount of gift tax, compared to cases where shares or the acquisition fund thereof were given to the existing trustee at the beginning, compared to cases where the shares or the acquisition fund was given to the existing trustee.

④ As to this, the Defendants asserted that the disposition of this case imposing gift tax on the second stocks of this case by first applying the legal provision of this case upon the death of the deceased 00 was justifiable, but such assertion is not reasonable as seen earlier.

3. Conclusion

Therefore, the plaintiffs' claims of this case are with merit. It is so decided as per Disposition by admitting them.