Appropriateness of the disposition imposing gift tax pursuant to title trust

It is determined that the title trust relationship has been established by ratification, after knowing the acquisition of shares, or at least immediately after the appointment as the representative director.

Donation of title trust property under Article 41-2 of the former Inheritance Tax and Gift Tax Act

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 1,618,400,000 against the Plaintiff on September 15, 2004 is revoked.

1. Details of the disposition;

A. The non-party ○○ Co., Ltd. (hereinafter referred to as “○○”) is a corporation that was established on July 13, 2001 and is engaged in taking over an enterprise subject to restructuring, normalizing its management, and selling it.

B. The non-party ○○○ Co., Ltd. (hereinafter referred to as “○○○”) was a listed company engaged in the power distribution team and the business of manufacturing the automatic control team. However, on November 23, 2001, when the company reorganization procedure was in progress, the company offered capital increase and acquired 2,000,000 shares out of the issued shares under the name of the Plaintiff (hereinafter referred to as “the shares of this case”), and the capital increase was paid by ○○.

C. On December 5, 2001, immediately after the capital increase, the Plaintiff was appointed as the representative director of ○ Electricity and held office until August 30, 2002.

D. On May 24, 2002, the Plaintiff: (a) deposited 300,000 of the instant shares out of ○○ Securities Branch Securities Account in kind; and (b) transferred the purchase price of KRW 553,000,000 to his bank account on May 28, 2002 and used it individually.

E. In accordance with Article 41-2 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780, Dec. 18, 2002) on September 15, 2004, the Defendant imposed and notified the Plaintiff of KRW 1,618,40,000 on the ground that the instant shares are property whose name was entrusted by ○○○○○○ upon the Plaintiff (hereinafter “instant disposition”).

F. On October 15, 2004, the Plaintiff dissatisfied with the instant disposition and filed a request for a trial with the National Tax Tribunal on October 15, 2004, but was dismissed by the National Tax Tribunal on March 17, 2006.

[Reasons for Recognition] Evidence No. 1, Evidence No. 1 to No. 2-3, the purport of the whole pleadings

2. Determination on the legality of the instant disposition

A. The plaintiff's assertion

As the non-party, who was the ○○○’s de facto manager, was arbitrarily listed in the name of the Plaintiff as the shareholder of ○○ Electric, by stealing the name of the Plaintiff, the non-party, who was the ○○○○○○’s de facto manager, and thus, it is unreasonable to impose gift tax on the Plaintiff

(b) Related statutes;

○ Donation of title trust property under Article 41-2 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6780 of Dec. 18, 2002)

(1) In case where the actual owner and the nominal owner are different in the property (excluding the land and buildings; hereafter in this Article the same shall apply), which requires a registration, etc. for the transfer or exercise of 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:

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

2. Where, among the stocks or equity shares (hereafter in this Article, referred to as “stocks, etc.”), with respect to the stocks, etc. entered in the stockholders’ list or the stockholders’ list in the name of another person or the transfer of which is made pursuant to a trust or agreement prior to January 1, 1997, the title of the real owner is converted to that of the real owner during the period not later than December 31, 1998 (hereafter in this Article, referred to as the “suspension period”): Provided, That the same shall not apply to the case where the title is converted to the person in a special relationship with stockholders (including investors) of the corporation which issued the relevant stocks

(2) Where a registration, etc. of property has been made in the name of another person or where a title, such as a grace period under paragraph (1) 2 is not converted into the name of the actual owner, it shall be presumed that there exists

(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 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 nonresident registers it in the name of a legal representative or administrator.

(5) The term "taxes" in paragraphs (1) 1 and (2) means the national tax 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 Act of a person in a special relationship under paragraph (1) 2 shall be prescribed by Presidential Decree.

C. Determination

In full view of evidence No. 1, No. 7, No. 9-1 and No. 2, and witness testimony of ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○ was well aware of the instant shares before and after the acquisition of the ○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○○’s shares, the Plaintiff was in a situation where the Plaintiff, an expert in the foregoing system, was urgently required to promptly normalize the ○○○○○○’s shares.

Therefore, the defendant's disposition of this case is legitimate on the premise that the plaintiff received a title trust from others, and the plaintiff's assertion disputing this is without merit.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit. It is so decided as per Disposition.