Cho Jae-2018-Mining-525 ( October 28, 2018)

The plaintiffs' assertion that title trust was held in order to prevent business difficulties is difficult to believe, and the absence of tax avoidance purpose is not recognized otherwise.

As the taxpayer bears the burden of proving the non-existence of the purpose of tax avoidance, it is difficult to believe that the majority shareholder held the title trust in order to prevent business difficulties in the event of bad credit standing.

Article 45-2 of the Inheritance Tax and Gift Tax Act

Gwangju District Court-2018-Gu Partnership-1760 ( October 10, 2019)

○○ and one other

○ Head of tax office

November 08, 2018

.01.10

1. All of the plaintiffs' claims are dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposing KRW 11,050,072 (including additional taxes) for the portion of gift tax for the year 2009 on Plaintiff Kim ○ on October 10, 2017, and disposition of imposing KRW 147,366,850 (including additional taxes) for the total of KRW 136,316,778 (including additional taxes) for the portion of the gift tax for the year 2012 and the disposition of notifying the designation of joint and several taxpayers for each of the above gift tax against Plaintiff Park○-○ shall be revoked.

1. Details of the disposition;

가. ◇◇건설 주식회사(이하 '◇◇건설'이라 한다)는 2001. 5. 17. 토목건축공사업 등을 목적으로 설립된 회사이다.

B. Around June 15, 2009, Plaintiff Park○○ and △△△△○ acquired all shares 228,000 shares issued by △△△ Construction, and registered all shares in the name of another person, such as Plaintiff Kim○○○, under the name of another person. Around March 31, 2012, around March 31, 2012, the title of 41,040 shares held in title trust under the name of △○○ was changed to Plaintiff Kim○○. The details are as listed below.

209

2012

2013

Relation to Park ○-○

Stockholders

Number of Stocks

Stockholders

Number of Stocks

Stockholders

Number of Stocks

NewA

47,880

NewA

54,720

NewA

54,720

△△ Construction Personnel

Park AA

47,880

Park AA

47,880

Park AA

47,880

z.

The AA

47,880

The AA

41,040

The AA

41,040

Doz.

○ Kim

43,320

○ Kim

84,360

○ Kim

0

Do Governor and representative director before construction

the United Nations A

41,040

the United Nations A

0

Doz.

Section AA

84,360

△△ Construction Representative Director

Total

28,000

28,000

28,000

C. From June 29, 2017 to August 7, 2017, the director of the regional tax office of ○○○○, after conducting a tax investigation on △△ Construction, etc., confirmed that the shares of △△△ Construction are in title trust, and notified the Defendant of the result. The Defendant issued a notice of imposition of gift tax on October 10, 2017 under Article 45-2(1) and Article 45-2(5) of the Inheritance Tax and Gift Tax Act (amended by Act No. 9916, Jan. 1, 2010; hereinafter the same shall apply) on the ground that the shares of △△△△ Construction, which the Plaintiff Park○ entrusted to the Plaintiff Kim○○, on the ground that the shares of ○○○○○ was deemed as gift, the shares of △△△△ Construction, which belonged to the year 209, was designated to the Plaintiff ○○○, and imposed the gift tax on the Plaintiff 136,316,78 (including additional tax).

D. The Plaintiffs filed an appeal with the Tax Tribunal on March 28, 2018.

2. The plaintiffs' assertion

A. The Plaintiffs cannot be deemed as donation, since they held title trust without the purpose of tax avoidance.

B. Of the instant disposition, the part pertaining to the gift tax for the year 2012, among the instant disposition, was changed to the name of Plaintiff Kim○○, only to the trustee of the shares already held in title trust to the Si-A, and thus, cannot be deemed as a “title trust deemed as a gift” under Article 45-2

3. Related statutes;

It is as shown in the attached Form.

4. Determination

A. Whether the purpose of tax avoidance exists

1) The legislative intent of Article 45-2(1) of the Inheritance Tax and Gift Tax Act is to effectively prevent the act of tax avoidance using the title trust system, thereby realizing the tax justice. Thus, if the title trust was deemed to have been made for any reason other than the purpose of tax avoidance, and only a minor reduction of tax incidental to such title trust takes place, it cannot be readily concluded that there was "the purpose of tax avoidance". However, in light of the above legislative intent, only if the purpose of tax avoidance is not included in the title trust, it is impossible to determine that there was an intention of tax avoidance by applying the proviso of the above provision, so it cannot be said that there was no other main purpose and purpose of tax avoidance. Whether there was an intention of tax avoidance should not be determined at the time of the title trust. Meanwhile, the burden of proving that there was no purpose of tax avoidance exists a person claiming it, and there was no doubt that there was no other objective or objective purpose of tax evasion, such as tax evasion, to the extent that it did not have been proven that there was no other objective or objective purpose of tax evasion in the title trust (see 20.).

2) In light of the following circumstances that are acknowledged by comprehensively taking account of the aforementioned evidence and the respective descriptions of Gap evidence Nos. 5 through 8, and 10 through 13 as a whole, there is insufficient evidence to acknowledge that there was no purpose of tax evasion in the title trust made to plaintiff Kim ○, and there is no other evidence to acknowledge otherwise.

A) As seen earlier, it is presumed that Plaintiff Park ○ was the purpose of tax evasion pursuant to the main sentence of Article 45-2(2) of the Inheritance Tax and Gift Tax Act, since Plaintiff Park ○○ was title trust with Plaintiff Kim ○-○.

B) Before acquiring shares as above, the Plaintiff Park ○ had operated ○ Construction Co., Ltd. until July 27, 2007, and he/she owned approximately 22.8% of the shares and approximately 14.9% of his/her spouse, but did not pay for the total amount of KRW 95,408,130, including corporate tax, up to now.

C) As seen earlier, Plaintiff Park○-○, as seen earlier, was in title trust with the Plaintiff Kim○, etc., and part of the shares issued by △△ Construction was title trust with the Plaintiff Kim○, but there was no trustee in a special relationship with the Plaintiff Park○, except Park Jong-young, and all of them had a shareholding ratio of less than 50%. Accordingly, when the Plaintiff Park○-○ was based on the name of shares, even if △△ Construction failed to pay corporate tax, it did not impose secondary tax liability on the investors under Article 39 of the Framework Act on National Taxes (amended by Act No. 9911, Jan. 1, 2010; hereinafter the same) even if △△△ Construction failed to pay corporate tax, etc., even if △△△ Construction failed to pay corporate tax, etc. by the time of the instant disposition, it cannot be said that there was no purpose of tax evasion solely because there was no tax evasion due to the fact that △△ Construction did not have been in the name of the oligopolistic shareholder, but it did not have been established the oligopolistic shareholder’s title trust.

D) Plaintiff ○○○○ was able to avoid the comprehensive income tax according to the progressive tax rate, even if the future dividend income accrues as the shares of △△ Construction were distributed in title trust to several persons including Plaintiff Kim○○, thereby resulting in a lower tax rate. Meanwhile, even if △△ Construction did not distribute dividends until the time of the instant disposition, it cannot be said that there was no tax avoidance purpose on the sole basis of the fact that there was no tax evaded by △△ Construction as it did not actually receive dividends.

E) The Plaintiffs asserted that there was an obvious purpose irrelevant to tax avoidance, since they trusted shares to the trustee with good credit standing in order to smoothly operate ○○○ Construction, as the title truster, was not good. The Plaintiffs’ assertion that the actual Plaintiff Park ○ was recorded in the defaulters’ list and did not have good credit standing, such as being declared bankrupt. Therefore, there is room to deem that there was a principal purpose for smooth operation of ○○ Construction. However, there is room to deem that there was a primary purpose for smooth operation of ○○○. However, even if Plaintiff Park○ had been able to conduct a business on the ground that it was more credit than the actual representative director or shareholder than the actual representative director, it was difficult to deem that ○○○ was unable to properly operate ○○○○ Construction or was unable to conduct a business at all at all on the same time, in light of the following, it is reasonable to deem that the Plaintiffs had the intent to avoid tax evasion.

F) Meanwhile, the change of the title trustee or the receipt of capital increase in the name of the trustee with respect to the shares held in title trust for the above purpose can be deemed as having made the title trust on the same intent as the initial title trust. Therefore, it cannot be readily concluded that there was no purpose of tax evasion.

B. Whether a change in trustee constitutes a title trust deemed a donation under Article 45-2 of the Inheritance Tax and Gift Tax Act

1) According to Article 45-2(1) of the Inheritance Tax and Gift Tax Act, in the case of title trust, only the title holder on the date registration, etc. is deemed to have received a donation from the actual owner, and does not separately stipulate the case where the title trustee is changed.

2) However, in light of the following: (a) the risk of tax evasion was removed due to the extinction of existing title trust relationship; (b) the value of the gift refers to the gratuitous transfer of property in relation to a specific donee; and (c) the identity of the gift cannot be maintained upon the change of the donee, the change of the title trustee should be deemed as a new risk of tax evasion.

3) Therefore, even if the title trustee is changed, it is deemed as a donation pursuant to Article 45-2 of the Inheritance Tax and Gift Tax Act.

C. Therefore, the instant disposition is lawful.

5. Conclusion

Therefore, the plaintiffs' claims are dismissed in entirety as it is without merit. It is so ordered as per Disposition.

shall be ruled.

Relevant statutes

Administration Inheritance Tax and Gift Tax Act (amended by Act No. 9916 of January 1, 2010)

Article 4 (Gift Tax Liability)

(1) A donee is liable to pay gift tax pursuant to this Act: Provided, That a donee is a profit-making corporation.

in the case of a profit-making corporation, the gift tax payable by such corporation shall be exempted and pursuant to Article 45-2.

Where a profit-making corporation, the nominal owner of gift tax, is exempted from gift tax, the actual owner (excluding profit-making corporations)

(a) is liable to pay the gift tax concerned.

(4) Where a donee falls under any of the following subparagraphs, a donor shall be subject to gift tax payable by the donee:

shall be jointly and severally liable for payment: Provided, That Articles 35, 37 through 41, 41, and

Articles 3 through 41-5, 42 and 48 (Contributors shall be responsible for the operation of the relevant public-service corporation)

(2) If there is no such provision, such provision shall apply only to such cases as prescribed by the Presidential Decree

subsection (1) of this section.

1. Where it is difficult to secure a taxation right because the domicile or residence is unclear;

2. Disposition on default on the grounds that it is deemed incapable of paying gift tax.

Where it is difficult to secure a taxation right even if it exists;

(5) In cases falling under paragraph (2) and Article 45-2, a donee shall fall under any of subparagraphs of paragraph (4).

Even if not, the donor is jointly and severally liable to pay with the donee.

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

(1) Property (excluding land and buildings; hereinafter the same shall apply) which requires registration, etc. for the transfer or exercise of rights.

Where the actual owner or the nominal owner is different in this Article, the Framework Act on National Taxes shall apply.

Notwithstanding the provisions of Article 14, the day when the property is registered, etc. under the nominal owner.

If property is a property, the day immediately following the last day of the year following the year on which the date of acquisition falls.

(c)the value of the property shall be deemed to have been donated by the title holder to the actual owner, provided that:

The same shall not apply to the following cases:

1. Registration, etc. of property or acquisition of ownership in another person's name without the purpose of tax avoidance;

Where a transfer is not made in the name of the owner;

(2) Where any property is registered, etc. under another person's name, no transfer shall be made under the name of the actual owner.

(2) the period during which such stocks, etc. are not held as the actual owner

e. The object of tax avoidance shall be presumed to be the object of tax avoidance.

director Framework Act on National Taxes (Amended by Act No. 9911, Jan. 1, 2010)

Article 39 (Secondary Liability for Tax Payment of Contributors)

(1) A corporation (stocks pursuant to Article 9 (13) 1 of the Financial Investment Services and Capital Markets Act).

property of a corporation listed on the securities market (excluding corporations listed on the securities market) is imposed on such corporation or

If the national tax, additional dues, and disposition fee for arrears are not fully appropriated, the payment of such national tax shall be made.

Any person who falls under any of the following subparagraphs as of the date on which the obligation is established shall pay for the shortage:

such secondary tax liability: Provided, That in the case of an oligopolistic stockholder under subparagraph 2, the lack thereof;

(1) the corporation's total number of outstanding shares of the corporation (excluding nonvoting shares; hereafter the same shall apply in this section).

C)the number of oligopolistic shareholders held (no voting stocks) with the amount divided by or out of the total investment;

excluding the amount of investment or investment (in the case of oligopolistic stockholders under subparagraph 2 (a) and (b), the oligopolistic stockholder concerned

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to the extent of the amount calculated by multiplying the number of stocks or amount of investment in substantial rights

section 3.

1. General partners;

2. An oligopolistic stockholder who falls under any of the following items:

(a) Stocks in excess of 50/100 of the total number of issued stocks or total amount of investment of the relevant corporation; or

A person who exercises a substantial right over equity shares;

(b) Management of a corporation, regardless of its name, such as honorary chairperson, president, vice president, senior secretary, managing director, director, or others;

person who actually controls such person;

(c) The spouse (including the person in de facto marital relations) of the persons under items (a) and (b);

and lineal ascendants and descendants who make their living with them

(2) The term " oligopolistic stockholder" in paragraph (1) 2 means a stockholder or one partner with limited liability and Presidential Decree thereof.

A relative or other person having special relation as prescribed in this Presidential Decree, who holds the total stocks or amount of investment.

person whose aggregate amount exceeds 50/100 of the total number of outstanding shares of or total amount of investment in the corporation

(hereinafter referred to as " oligopolistic stockholder") means an oligopolistic stockholder.