Whether the Plaintiff is a person who gives up subscription to new shares

It is reasonable to interpret that "a person who has a special relationship with the person who has waived the acceptance of the new shares" means a person who has a relationship falling under any of the subparagraphs of Article 19 (2) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act with the person who has renounced the acceptance of the new shares.

Article 39 of the Inheritance Tax and Gift Tax Act: Donation of Benefits from Capital Increase

2013Guhap1801 Global Income and Revocation of Disposition

Ma○○ 1

00 Other 1

December 13, 2013

on October 26, 2014

1. A. Defendant ○○○ Head of the tax office revoked the imposition of KRW 000 on October 10, 2012, the gift tax of which on October 10, 2012 belongs to Plaintiff ○○○○.

B. On October 11, 2012, the head of ○○ Tax Office revoked the disposition imposing a gift tax of KRW 000,000, which was imposed on Plaintiff Yellow○ on October 11, 2012.

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;

A. The Plaintiff ○○○ is the representative director and the largest shareholder of ○○ Housing Industry Co., Ltd. (hereinafter “○○ Housing Industry”), an unlisted corporation that runs the housing construction business, etc., and the Plaintiff ○○○ is the director and the shareholder of the ○○ Housing Industry. Meanwhile, the Plaintiff ○○ is the form of Plaintiff ○○○○.

B. On April 7, 1999 and June 20, 2003, the Plaintiff ○○ and the ○○○○○ have concluded each of the partnership businesses and operated the ○○ Housing Industry jointly accordingly. However, due to the difference of business opinions, the Plaintiff ○○ and the ○○○○ had written a separate agreement on the division of the business that was being promoted on May 30, 2007, in which the Plaintiff ○○ and the ○○○○ separately operated the business. After that agreement, the ○○○ resigned from the representative director of the ○○ Housing Industry on October 12, 2007, and the ○○○ withdrawn from the ○○ Housing Industry around January 2009.

C. The director of the Seoul Regional Tax Office conducted a tax investigation on the change of shares for the business year 2009 of the ○○ Housing Industry, and notified the Defendants, a disposition authority, of the relevant materials, on the premise that the Plaintiffs had a special relationship with the ○○○○○○○, which was disposed of by the Plaintiffs on June 25, 2009 of the ○○ Housing Industry, due to the lower of the Plaintiffs’ price per share than KRW 27,875 per share after the Plaintiffs’ subscription price of new shares was presented on the ground of the 10,000 won and then the lower of the 27,875 won per share.

D. Accordingly, on October 10, 2012, the head of Yongsan Tax Office issued a correction and notification of KRW 257,836,010 of the gift tax for the year 2009 with respect to the Plaintiff Lee Jong-○ on October 10, 2012. On October 11, 2012, the head of Gangnam District Tax Office issued a correction and notification of KRW 15,792,790 of the gift tax for the year 2009 (hereinafter the Defendants’ imposition of gift tax for each year 2009).

E. On December 17, 2012, the Plaintiffs filed an appeal against the instant disposition, but the Tax Tribunal dismissed the Plaintiffs’ appeal on April 19, 2013.

[Ground of recognition] Facts without dispute, Gap evidence 1-1, 2, Gap evidence 2, 3, 5, Eul evidence 1 and 2, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiffs' assertion

Despite the fact that the plaintiffs are not persons with a special relationship with the original ○○○ under Article 39(1)1 (b) of the former Inheritance Tax and Gift Tax Act, the disposition of this case on a different premise is unlawful.

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

(1) On January 2, 2009, Plaintiff ○○○○○ acquired 120,000 shares of the ○○ Housing Industry from ○○○○○○ from ○○○○○ on the basis of the acquisition of KRW 360,00,00, and the shares ratio of Plaintiff ○○○○○’s ○○ Housing Industry was changed from 40% to 60%.

(2) On May 21, 2009, the ○ Housing Industry decided to issue 180,000 new shares per share at 10,000 won at the board of directors to raise the investment funds for new projects.

(3) On June 2009, ○○○ filed an application for provisional disposition against ○○ Housing Industry for the prohibition of issuance of new shares (Seoul Central District Court 2009Kahap2352), but the Seoul Central District Court dismissed the application for provisional disposition on June 24, 2009.

(4) The ○○○ and the ○○○ did not participate in the capital increase for new shares and allocated 54,000 shares and 3,600 shares each among them were rejected to accept and forfeited, and the Plaintiff ○○ and Y○○ accepted 108,00 shares and 14,400 shares each assigned to them and completed the payment of shares. The current shareholder status of the ○○ Housing Industry that was held before and after the capital increase for new shares are as follows.

[Ground of recognition] Unsatisfy, entry of Gap evidence 6 and 7 (including branch numbers for those with additional numbers), the purport of the whole pleadings

D. Determination

We examine whether the plaintiffs are specially related persons under Article 39(1)1 (b) of the former Inheritance Tax and Gift Tax Act with the original ○○○ and the former ○○.

Article 39(1)1 (b) of the former Inheritance Tax and Gift Tax Act (hereafter the same shall apply in this Article and Article 39-2) provides that a corporation may increase its capital (including the amount of investment; hereafter the same shall apply in this Article and Article 39-2).

Equity ratio of shares after capital increase due to the increase in the number of shares held by the person who has issued the name of shareholders;

Allocation shares, testamentary donee, and thereafter

○○○○ 36,000 Shares 108,000 Shares 144,000 Shares 60% 78.9%

○○○○○○ 18,000 Jeju 54,000 Jeju 18,000 Jeju 300% 9.87%

Yellow ○○ 4,800 Jeju 14,400 Jeju 19,200 Jeju 8% 10.53%

Egypium 1,200 Jeju 3,600 Jeju 1,200 Jeju 200.66%

Total60,000 Shares 180,000 Shares 182,400 Shares 100% 100%

In issuing new shares, when new shares are issued at a price lower than the market price (referring to the price assessed under the provisions of Articles 60 and 63; hereafter the same shall apply in this paragraph and Article 40), the shareholders of the relevant corporation give up all or part of the right to receive the allocation of new shares and do not allocate the forfeited shares, the profits acquired by the person who has a special relationship with the person who has given up the receipt of the relevant new shares shall be deemed to be the value of the donated shares, and the scope of the persons having a special relationship shall be prescribed by the Presidential Decree.

Accordingly, Article 29 (1) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that "a person in a special relationship" or "a person who has no accepted new stocks or forfeited stocks" or "a person who has a relationship under any of the subparagraphs of Article 19 (2) with another person who has a relationship under any of the subparagraphs of Article 19 (2)." Article 19 (2) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that "a person who maintains his livelihood with the property of the stockholder, etc. (including subparagraph 2), a person who is in a relationship under any of the following items with an enterprise group as provided in the Ordinance of the Ministry of Strategy and Finance (including the officers of the relevant enterprise), a person who invests more than 7 percent of the total number of stocks issued by the relevant enterprise group, a person who actually controls the enterprise group, a person who is in a relationship under subparagraph 1 (c) with a stockholder, etc. under subparagraph 3 (a) and a non-profit corporation under subparagraph 1 through 3 (a), a shareholder, etc. and a majority of the company under subparagraph 1 through 6 (a).:

In light of the language, structure, etc., it is reasonable to interpret that the "person who has a special relationship with the person who has renounced the relevant new shares" refers to the person who has a relationship falling under any of subparagraphs of Article 19(2) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act on the basis of the person who has renounced the relevant new shares.

In the instant case, the Plaintiffs did not have a relationship falling under any of the subparagraphs of Article 19(2) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act with the original ○○○○ and the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, and thus, the Plaintiffs cannot be deemed to constitute a person with a special relationship under Article 39(1)1 (b) of the former Inheritance Tax and Gift Tax Act with the original ○○○ and the former

As to this, the Defendants asserted to the effect that, at the time of issuing new shares in this case, the Plaintiffs were the largest shareholders, etc. of the ○○ Housing Industry, and the ○○○, an existing shareholder who renounced the preemptive right, was an employee of the ○○ Housing Industry, and that there was a special relationship pursuant to Articles 29(1), 19(2)2, and 13(7)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act, but the Defendants’ aforementioned assertion is based on not only the person who renounced the relevant new shares but also the taxpayer (the Plaintiff). Therefore, it is contrary to the language and text of the relevant statutes and the structure, and it is not acceptable because the concept of “executive” appearing in Article 13(7)1 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act is arbitrarily incorporated into the concept of “employee” under Article 19(2)2 of the same Enforcement Decree of the same Act.

3. Conclusion

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