Early High Court Decision 2014J 2478 (Law No. 26, 2014)

It is insufficient to recognize that there was a clear purpose of tax avoidance or there was no tax avoidance at the time of title trust or in the future.

It is insufficient to recognize that the title trust of the instant shares had a clear purpose irrelevant to tax avoidance, or that there was no tax to be avoided in the future at the time of the title trust, and there is no other evidence to acknowledge this otherwise.

Donation of title trust property under Article 45-2 of the former Inheritance Tax and Gift Tax Act

2014Guhap61652 Revocation of Disposition of Imposition of Gift Tax

KimA

○ Head of tax office

December 10, 2015

. 28, 2016

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

On September 2, 2013, the Defendant revoked the imposition of ○○○○ (including additional tax) gift tax against the Plaintiff on September 2, 2013.

1. Details of the disposition;

A. On April 30, 2001, SS comprehensive architectural firm (formerly, WW comprehensive development corporation, RR City development corporation, hereinafter referred to as “instant company”) is established on April 30, 2001 and carries out construction business management and related research services, housing construction projects, and real estate sale and lease business.

B. KimB owned the entire shares from the time of the incorporation of the instant company to March 30, 2012, and practically controlled the instant company.

"The shares of the company in this case were transferred under the name of her friendly relative (GP, KimL, GL, etc.) of KimB including KimB after the establishment of the company in this case, and of O comprehensive architectural office (hereinafter referred to as "UG construction") of the company in this case and its affiliated companies (the former trade name: UU comprehensive architectural office, e.g., UU comprehensive architectural office, and hereinafter referred to as "UU construction"). The specific change in the name of shares was as stated in the list of "the name change in the company in this case"; d.CC. The director of the tax office determined that KimB was transferred to the plaintiff on September 5, 2009, 14,000 shares of the company in this case and 200 shares (hereinafter referred to as "the shares in this case") and notified the plaintiff of the transfer registration under the name of 14,000 shares in this case, and that the transfer registration was made under the above 201 of the Inheritance Tax and Gift Tax Act.

【The facts without any dispute, Gap 1 to 3, 7, and Eul 1 to 3 (including each number), the whole purport of the pleading

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

It is true that the instant shares were held in title in accordance with the orders of KimB, the actual operator of the instant company, and that it was made in the course of the instant company’s rehabilitation procedure for the purpose of complying with the instant shares owned by KimB from the retirement of major shareholders’ shares and compulsory execution by the creditors of KimB in the course of the instant company’s rehabilitation procedure, and is in accordance with other purposes irrelevant to tax avoidance. In addition, there is no tax to be avoided in the future at the time of the

B. Relevant statutes

Attached Form 2 shall be as listed in attached Table 2.

C. Determination

1) The legislative purport of Article 45-2(1) of the former Inheritance Tax and Gift Tax Act is to recognize an exception to the substance over form principle in order to realize tax justice by effectively preventing the act of tax avoidance using the title trust system. Thus, if it is recognized that the title trust was made for any reason other than the purpose of tax avoidance, and it is merely a minor reduction of tax incidental to the said title trust, it cannot be readily concluded that there was such a purpose of tax avoidance. However, in light of the legislative purport as above, only if the purpose of the title trust is not included in the purpose of tax avoidance, it is impossible to determine that there was a purpose of tax avoidance by applying the proviso of the said provision. Therefore, if it is deemed that there was an intention of tax avoidance, not only the other purpose but also the intent of tax avoidance, it cannot be said that there was no intention of tax avoidance. In such case, the burden of proving that there was no purpose of tax avoidance exists a person who asserts it (see, e.g.

Furthermore, as the nominal owner who bears the above burden of proof, there was an obvious purpose irrelevant to the tax avoidance to the extent that there was no tax avoidance purpose in the title trust, and the fact that there was no tax avoidance in the future at the time of the title trust or in the future is proved to the extent that it would not be doubtful if the ordinary person is not doubtful (see Supreme Court Decision 2004Du1120, Sept. 22, 2006). Whether there was such tax avoidance purpose or not should be determined at the time of the title trust of stocks at the time of the title trust, and it should not be determined at the time of the said title trust, and then whether the said tax has been evaded (see Supreme Court Decision 2012Du546, Nov. 28, 2013).

2) Comprehensively taking account of the following circumstances acknowledged by the aforementioned legal principles, it is insufficient to recognize that KimB made the title trust of the instant shares to the Plaintiff with a clear intention not to evade tax, or that there was no tax to be avoided at the time of the title trust or at the time of the future, and there is no evidence to acknowledge this.

① According to the proviso of Article 39(1) of the former Framework Act on National Taxes (amended by Act No. 9911, Jan. 1, 2010; hereinafter the same) and Article 39(1)2 of the same Act, the oligopolistic shareholder under Article 39(1) of the former Framework Act on National Taxes (amended by Act No. 9911, Jan. 1, 2010; hereinafter the same), as indicated in Appendix 1’s list of changes in the company’s stocks from around 2004 to around 209, shall be limited to the amount calculated by dividing the shortage (where the company’s assets are insufficient to cover national taxes, additional dues, and disposition fee for arrears imposed on or to be paid by the corporation) by the total number of stocks issued by the corporation or total amount of investment in the corporation

Article 20 of the former Enforcement Decree of the Framework Act on National Taxes (amended by Presidential Decree No. 22038, Feb. 18, 2010) (amended by Presidential Decree No. 22038, Feb. 18, 2010) adjusts the ratio of shares of specially related persons to 55% (10%, 10%, 25%, 10%, and 10%) of the ratio of shares of employees who are not specially related persons (10%, 10%, 25%, and 10%) through title trust, including the title trust of the shares in this case, on September 1, 2009. However, although the plaintiff was a specially related person as the fifth degree of ChoB KimB Kim, it is difficult to readily conclude that the tax authority did not have a special relationship, so even if not, the company in this case reduces the ratio of shares of oligopolistic shareholders after the adjustment of the ratio of shares of oligopolistic shareholders, and the company in this case has made its total reduction to 90.

③ The KimB is an old age older than 70 years old so that it can conceal inherited property with the above change of holders, and thus, it became possible to avoid inheritance tax on the shares of this case in the future.

3. Conclusion

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