Whether it meets the requirements for the deduction of family business donation (work period)

The Plaintiff had already terminated the period of five years from the donation date of the instant shares, and there was a sufficient time for the Plaintiff to take office as the representative director by December 1, 2015, which was five years from the donation date of the instant shares, and there was no justifiable reason, such as the Plaintiff’s temporary retirement for childcare, and the Plaintiff was reinstated after completion of the temporary retirement for childcare, and there was about 1 year and 11 months to take office as the

The contents of the judgment are the same as attachment.

2018Guhap72933 Revocation of Disposition of Imposition of Gift Tax

SAA

BB Director of the Tax Office

November 2019

on December 22, 2019

1. The plaintiff's claim is dismissed.

2. Litigation costs shall be borne by the Plaintiff

Cheong-gu Office

The Defendant’s disposition of imposition of gift tax of KRW 416,716,330 against the Plaintiff on April 15, 2018 is revoked.

1. Details of the disposition;

A. On December 1, 2010, the Plaintiff donated 17,394 shares (30% of shares, hereinafter referred to as the “instant shares”) issued by SeoCC (hereinafter referred to as “instant corporation”) from SeoCC, its father, 17,394 shares (hereinafter referred to as “instant shares”).

B. The Plaintiff’s Restriction of Special Taxation Act (amended by Act No. 1040, Dec. 27, 2010) (amended by Act No. 1040, Mar. 31, 2011)

Pursuant to Article 30-6(1)(hereinafter referred to as the "Rules on Special Taxation for Family Business Succession"), the gift tax was reported and paid KRW 82,547,498 by applying the tax rate of 10% after deducting KRW 500 million from the value of donated property.

C. On October 19, 2016, the Plaintiff was appointed as the representative director of the instant corporation.

D. The defendant is the representative director of the corporation of this case within five years from the date of donation of stocks of this case.

Article 30-6(2) of the former Restriction of Special Taxation Act and the former special taxation system on the grounds that they have not been appointed.

Article 27-6 of the Enforcement Decree of the Korean Commercial Code (amended by Presidential Decree No. 22516, Dec. 7, 2010; hereinafter the same) excluded the application of the special taxation on family business succession pursuant to Article 27-6 of the Enforcement Decree of the Korean Commercial Code (amended by Presidential Decree No. 22516, Apr. 20, 2018; hereinafter the same) to correct and notify the Plaintiff of the gift tax amounting to KRW 416,716,330 (including the penalty tax) on December 1, 2018 (hereinafter

E. The Plaintiff appealed and filed a tax appeal on June 14, 2018, but the Tax Tribunal dismissed the Plaintiff’s claim on September 4, 2018.

[Ground of recognition] Facts without dispute, Gap evidence 1 through 4, Eul evidence 6 (including additional number, if any; hereinafter the same shall apply), Eul evidence 1, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. Summary of the plaintiff's assertion

1) Considering the legislative intent of guaranteeing the former Restriction of Special Taxation Act, the Enforcement Decree of the same Act, the language of the Enforcement Rule, and the minimum period of management class, the provision on special taxation on family business succession should be excluded only when the donee fails to take office as the representative director within five years from the date of donation of stocks, etc. The Plaintiff’s payment of the shares constitutes “justifiable cause” in the foregoing case’s childbirth leave and childcare leave from March 1, 2013 to December 31, 2013. Thus, when counting five years from the date of donation of the shares in this case, the Plaintiff’s payment of childcare leave and childcare leave from March 1, 2013 to December 31, 2013 excluded the Plaintiff’s total period of childcare leave and childcare leave from the date of donation of the shares in this case by the representative director of the corporation in this case, and thus, the Plaintiff’s disposition was unlawful on the ground that the Plaintiff was taken office within five years from the date of donation.

2) Article 30-6(1) and (2) of the former Enforcement Decree of the Restriction of Special Taxation Act only comprehensively delegates the scope of “family business succession” to the Enforcement Decree, and there is no provision as to whether the requirements for the appointment of the representative director are required. This is invalid against the principle of statutory reservation (the principle of reservation, the principle of no taxation without law or the principle of no taxation without law) that the National Assembly should determine and delegate the scope of the principle of no comprehensive delegation. Based on such principle, Article 27-6(1) and (2) of the former Enforcement Decree of the Restriction of Special Taxation Act are invalid. Article 30-6(1) and (2) of the

2 If paragraph 2 does not violate the legal reservation principle or the prohibition of blanket delegation, the enforcement of the former Restriction of Special Taxation Act

(1) Article 27-6(1) and (2) of the Decree requires a donee who succeeds to a family business to take office as a representative director is null and void as it goes beyond the delegation scope of the parent law. Accordingly, null and void provisions are deemed null

The instant disposition was unlawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Determination as to the Plaintiff’s assertion of justifiable grounds

A) Whether a reasonable ground exists where a representative director has not been appointed within five years from the date of donation

(1) Under the principle of no taxation without law, the interpretation of tax laws and regulations shall be interpreted in accordance with the text of the law, barring special circumstances, and shall not be extensively interpreted or analogically interpreted without reasonable grounds. In particular, it accords with the principle of equity in taxation to strictly interpret the provisions that clearly indicate preferential provisions among the requirements for reduction and exemption (see, e.g., Supreme Court Decision 2012Du14804, Oct. 25, 2012).

(2) Article 30-6 (1) of the former Restriction of Special Taxation Act provides that "where a resident aged 18 or older takes the donation of stocks or equity shares (which shall not exceed 3 billion won of the taxable value of gift tax; hereafter referred to as "stocks, etc." in this Article) from his/her parents who have engaged in the family business under Article 18 (2) 1 of the Inheritance Tax and Gift Tax Act for the purpose of succeeding to the pertinent family business for at least ten consecutive years on or before December 31, 2010 and succeeds to the family business as prescribed by Presidential Decree, the gift tax shall be levied at the rate of 50 million won after deducting the taxable value of gift tax from the taxable value of the gift tax and at the rate of 10/100,000." Article 30-6 (2) of the former Restriction of Special Taxation Act provides that "where a person who has received stocks, etc. under paragraph (1) fails to succeed to the family business as prescribed by Presidential Decree or who has succeeded to the family business without any justifiable reason prescribed by Presidential Decree, it does not impose gift tax on the value of stocks, etc."

A person engaged in a family business within five years from the date of donation by the deadline for filing a gift tax base;

section 27-6(2) of the former Enforcement Decree of the Restriction of Special Taxation Act provides that "if any" means

not succeeding to the family business under Article 30-6 (2) of the Act, the succession to the family business shall be made pursuant to paragraph (1).

The term "if not," is defined as "."

In full view of these provisions, in order for a donee to be subject to the special taxation of gift tax under Article 30-6 (1) of the former Restriction of Special Taxation Act, stocks, etc. were donated by the donee on or before December 31, 2010, and the donee was engaged in the family business within five years from the date of donation by the deadline for filing a gift tax base under Article 68 of the Inheritance Tax and Gift Tax Act; and the donee of stocks, etc. was not succeeded to the family business as prescribed by Presidential Decree (i.e., a person who was engaged in the family business within the deadline for filing a gift tax base under Article 68 of the Inheritance Tax and Gift Tax Act and was not assigned to the representative director within five years from the date of donation, or was appointed within five years from the date of donation (i.e., even if a person succeeded to the family business as prescribed by Presidential Decree, he/she was engaged in the family business within five years from the date of donation and was assigned to the representative director within five years from the date of donation, the above special taxation of gift tax shall not be applied to the gift tax:

(3) Therefore, insofar as the Plaintiff did not take office as the representative director within five years from December 1, 2010, which is the date of donation of shares of this case, the Defendant’s disposition of this case is justifiable, regardless of whether there exist justifiable grounds, and the Defendant’s assertion on a different premise is without merit.

B) Assumptive determination as to whether the Plaintiff has justifiable grounds

Meanwhile, Article 27-6 (5) of the former Enforcement Decree of the Restriction of Special Taxation Act provides that "the case falling under any of the following subparagraphs shall be included in the case of Article 30-6 (2) 1 of the Act" and one of the reasons is "1. A donee fails to be appointed as a representative director within five years from the date of donation of stocks, etc. or fails to maintain the representative director by ten years."

However, Article 30-6 (2) 1 of the former Restriction of Special Taxation Act provides that "where a person who received stocks, etc. fails to engage in the family business without any justifiable reason prescribed by Presidential Decree within 10 years from the date of donation of stocks, etc., as prescribed by Presidential Decree, or suspends or closes the family business, the gift tax shall be imposed on the value of such stocks, etc. pursuant to the Inheritance Tax and Gift Tax Act." Article 27-6 (5) of the former Enforcement Decree of the Restriction of Special Taxation Act provides that "where the donee fails to engage in the family business without any justifiable reason prescribed by Presidential Decree within 10 years from the date of donation of stocks, etc. after he/she succeeded to the family business as prescribed by Presidential Decree, or his/her family business is suspended or closed, "where the donee fails to take office as the representative director within five years from the date of donation of stocks, etc." includes "where the donee fails to take office as the representative director within five years from the date of donation of stocks, etc.", it may be interpreted as subject

However, even if the donee does not take office as the representative director within five years from the date of donation of stocks, etc. as alleged by the plaintiff, it can be considered whether there exists a justifiable reason. However, the burden of non-taxation, reduction or exemption requirements is against the person liable for tax payment who asserts grounds for non-taxation, non-taxation, reduction or exemption (see, e.g., Supreme Court Decision 98Du16095, Jul. 7, 200). The following circumstances, namely, the proviso to Article 14-4 of the former Enforcement Rule of the Restriction of Special Taxation Act (amended by Ordinance of the Ministry of Strategy and Finance No. 182, Dec. 31, 2010) provides that "if the donee does not take office as the representative director within five years from the date of donation of stocks of this case, the plaintiff does not have any inevitable reason that the five-year period from the date of donation of the stocks of this case terminated, and the plaintiff does not have any other evidence that the plaintiff had taken office as the representative director for reinstatement of the stocks of this case by 10 months after reinstatement.

2) Determination on the assertion of violation of Article 30-6 of the former Restriction of Special Taxation Act and Article 27-6 of the former Enforcement Decree of the Restriction of Special Taxation

A) Whether Article 30-6(1) and (2) of the former Restriction of Special Taxation Act violates the principle of statutory reservation or the principle of no taxation without law

Provisions on special taxation for family business succession have a mutually advantageous character that grants tax reduction to the donee who succeeds to family business. Unlike the laws that restrict the rights of the people or impose new obligations, legislators are granted more broad freedom of legislative formation. Therefore, legislators are reasonable in light of all the legislative purposes, situations of beneficiaries, national budget, etc.

Unless it seems that the content of the enacted legislation is considerably lacking rationality, it cannot be said that it violates the Constitution.

C. Constitutional Court Order (see, e.g., Constitutional Court Order 2004HunMa914, Jul. 26, 2007)

In light of the above legal principles, the special provision on taxation for family business succession is prescribed as a requirement for the application of special provision in cases where a resident receives stocks, etc. from a parent aged 60 or older who has operated a family business continuously for 10 or more years in order to maintain the continuity of a small and medium enterprise and succeeds to a family business, and the details of family business succession are specified by delegation of the Enforcement Decree to the Enforcement Decree, and the contents of such law are not considerably unreasonable. Therefore, the Plaintiff’s assertion that Article 30-6(1) and (2) of the former Restriction of Special Taxation Act violates the principle of statutory reservation or the principle of prohibition of comprehensive delegation is

B) Whether Article 27-6(1) and (2) of the former Enforcement Decree of the Restriction of Special Taxation Act is illegal beyond the scope of delegation by the mother law

In a case where a subordinate statute delegates a certain matter to a subordinate statute, when determining the scope of delegation of the parent law or whether the subordinate statute complies with the limits of delegation, the following should be comprehensively taken into account: (a) whether the subordinate statute is an essential matter to be governed by the principle of parliamentary reservation; (b) whether the legislative purpose and content of the pertinent provision; (c) the structure of the relevant provision; and (d) the relationship with other provisions; and (e) whether the delegation provision itself has exceeded the bounds of literal meaning even though the delegation provision expressly provides for the limitation of delegation by using terms that can accurately understand the meaning thereof; (d) whether the subordinate statute belongs to the scope of delegation that can be predicted from the mother law itself; and (e) whether the subordinate statute can be evaluated as a new legislation beyond the stage of concreteizing the delegation by expanding or reducing the scope beyond the meaning of the terms used in the delegation provision (see, e.g., Supreme Court en banc Decision 2012Du23808, Aug. 20, 2015).

The purpose of the former Restriction of Special Taxation Act stipulating the special taxation of gift tax on the succession of a family business is to provide tax support for the donation of a certain family business so that the small and medium enterprises can maintain the continuity of small and medium enterprises and promote economic vitality, the succession of a family business needs to be accompanied by ownership succession, and the special taxation on family business succession is a provision of mutually advantageous nature for the purpose of special taxation, and the special taxation on family business succession is a provision of the former Enforcement Decree of the Restriction of Special Taxation Act in relation to the "where a family business does not succeed to a family business according to delegation under Article 30-6 (2) of the former Restriction of Special Taxation Act", it can be sufficiently predicted that the former Enforcement Decree of the Restriction of Special Taxation Act provides that the succession or donor will be the same as the requirements for complete succession of a family business such as the appointment of a representative director, etc. to the extent that it can be recognized that the heir or donor succeeded to the family business, and the former Enforcement Decree of the Restriction of Special Taxation Act also stipulates the requirements for full succession of a family business within the scope of such delegation.

Therefore, the Plaintiff’s assertion that the instant disposition based on the invalid provision is unlawful is without merit.

3. Conclusion

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

shall be ruled.