It is reasonable to deem that the actual owner of the company held a title trust of the developed shares to the plaintiffs.

It is reasonable to see that the actual owner of the company held a title trust of the shares developed to the plaintiffs, and a part of the witness's testimony contrary thereto is difficult to believe.

The legal fiction of donation of title trust property under Article 45-2 of the Inheritance Tax and Gift Tax Act

2017Guhap24463 Revocation of Disposition of Imposition of Gift Tax

Gu○○ and 3

○○ Head of Tax Office 3

on January 23, 2018

on October 018 06, 201

1. All of the plaintiffs' claims are dismissed.

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

Cheong-gu Office

The head of ○○○ Tax Office imposed a gift tax of KRW 107,340,60 on Plaintiff ○○ on May 11, 2017; imposed a gift tax of KRW 107,340,60 on Plaintiff ○○○; imposed a gift tax of KRW 50,890,010; imposed a gift tax of KRW 41,51,200 on May 12, 2017; imposed a gift tax of KRW 22,683,300 on September 15, 2017; imposed a gift tax of KRW 81,142,290 on Plaintiff ○○ on Plaintiff ○○ on May 11, 2017; imposed a gift tax of KRW 93,49,200 on Plaintiff ○○ on May 11, 2017; imposed a penalty tax of KRW 93,400,200, respectively (including penalty tax).

1. Details of the disposition;

A. The Plaintiffs acquired shares (hereinafter referred to as “instant shares”) of ○ Industry Development Co., Ltd. (hereinafter referred to as “○○ Industry Development”), ○○ Comprehensive Construction Co., Ltd. (hereinafter referred to as “○○ Comprehensive Construction”), ○○ Development Co., Ltd. (hereinafter referred to as “○○ Development”), and ○○ Development Co., Ltd. (hereinafter referred to as “the instant three Co., Ltd.”) as shareholders and registered as shareholders, as follows.

B. From June 30, 2016 to March 31, 2017, the director of ○○ Regional Tax Office: (a) conducted an investigation of tax offense against the instant stock company and an investigation of the source of funds for the acquisition of the Plaintiffs’ shares; (b) determined that the beneficial shareholder, Kim ○, a beneficial shareholder of the instant stock company, held that the instant shares were nominal in trust with the Plaintiffs, and notified the Defendants thereof.

C. Accordingly, the Defendants determined and notified the gift tax and additional tax to the Plaintiffs as follows (e.g., this)

n. ‘Disposition of this case’

D. The Plaintiffs are dissatisfied with the instant disposition and on June 28, 2017, June 29, 2017, June 29, 2017, and June 30, 2017; and

On November 13, 2017, the Tax Tribunal requested an inquiry, but was dismissed on September 19, 2017 and May 28, 2018.

[Ground of recognition] Facts without dispute, Gap evidence 1, 2, Eul evidence Nos. 5-23, 30, 31 (which include each number; hereinafter the same shall apply) and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiffs' assertion

1) The 22,500 shares of ○○ Development is not a nominal trust with the Plaintiff Kim○○, but a gift tax imposed on the Plaintiff Kim○○ on September 15, 2017 by the head of the instant tax office, among the dispositions taken on different premise, shall be revoked on September 12, 2012, on the ground that the Plaintiff Kim○○ acquired ○○ Construction Co., Ltd. in order to jointly carry out an apartment development project, and on November 21, 2012, KRW 12,6850,00 out of the total amount of KRW 100,000,000,000,000,000 won, out of KRW 253,770,000,000,000 from the total amount of KRW 10,000,000,000.

2) The Kim○-do held the shares of this case in title trust with the intent to facilitate economic activities by making the bad credit standing or likely to be subject to compulsory execution by creditors. In fact, the stock company of this case did not have to make a distribution to shareholders, and there was no tax avoidance purpose, and there was no tax avoidance purpose, since the stock company of this case did not have any record of making a distribution to shareholders, and thus, there was no tax avoidance purpose. Accordingly, even if the title trust of the shares of this case was not deemed as a donation pursuant to the proviso of Article 45-2(1) of the Inheritance Tax and Gift Tax Act, the disposition

3) The gift tax imposed by the pertinent provision on the constructive gift of title trust property is not a tax, but an administrative order punishment. The addition to the penalty tax of a punitive nature to such gift tax violates the principle of equality in light of the property rights guarantee, the principle of no taxation without law, and the principle of no taxation without law, and the principle of no taxation without law, and the principle of equality following the violation of the Act on the Registration of Real Estate under Actual Titleholder’s Name (hereinafter “Real Estate Real Name Act”), so penalty tax among the instant disposition

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

C. Determination

1) Whether the Kim○-do held the title trust of the shares of ○○ Development to the Plaintiff Kim○-hwan

The title trust relationship is not necessarily established by the explicit contract between the truster and the trustee, but may also be established by implied agreement. Whether there was an implied agreement on the title trust ought to be reasonably determined in light of social norms by comprehensively taking into account all the circumstances, including the relationship between the truster and the trustee, the motive and background behind the trustee’s custody of the property, and the transaction details and mode between the truster and the trustee (see, e.g., Supreme Court Decision 2007Do6463, Oct. 23, 2008).

[Reference]

In full view of the following circumstances acknowledged by the respective statements and arguments stated in the above evidence and evidence Nos. 25, 26, 28, 40, 43, and 44, it is reasonable to deem that the Kim○-do held the title trust of the development shares of the Plaintiff Kim○-do, and the witness Kim○-do’s testimony is difficult to believe. Accordingly, this part of the allegation by the Plaintiff Kim○-do is without merit.

① ○○ Development acquired ○ Construction Co., Ltd. at KRW 153,700,000,000 and carried out an apartment construction project after its business registration on January 14, 2013. The acquisition fund was paid at KRW 150,370,000,000 used by Kim○-do, and was paid at the next passbook in the name account.

② The Plaintiff Kim Jong-tae stated that ○○ Development’s above acquisition capital of KRW 153.7 million and operating capital of KRW 12,6850,000,000, which is half of KRW 253.7 billion and KRW 100,000,000, which are half of KRW 100,000,000 from KRW 0,000,000 and KRW 21,000,000 in custody, were collectively invested. However, in light of the following, the above Plaintiff’s above assertion cannot be accepted.

- In the course of the tax offense investigation on February 2, 2017, Plaintiff Kim Jong-tae stated that his spouse and wife Hah-nam Hah is the source of the investment fund, and is contrary to the allegations above.

- The financial transaction details that ○○○○ Co., Ltd. withdrawn KRW 99 million from ○○○○○○○ Co., Ltd. in cash on July 2, 2012, and the financial transaction details that ○○○○○ withdrawn KRW 10 million from ○○○ Bank on July 9, 2012, KRW 50 million on September 11, 2012, KRW 60 million on September 27, 2012, it is difficult to recognize that ○○○ borrowed the said money from ○○○○○ Won and Kim○○○, and even if borrowed, it is difficult to deem that the said money was used as ○○○ Development Fund.

- Moreover, there is no evidence to acknowledge that 100 million won of operating capital for ○ Development was additionally required or used for a legal entity, and it is difficult to view that the Plaintiff Kim Il-tae bears half of operating capital for ○○ Development.

③ In the course of the investigation on February 2, 2017, Plaintiff Kim Jong-tae stated that he/she was participating in a policy or important decision-making with overall control over the business as the representative director of ○○ Development, and that he/she was entitled to participate in a policy or important decision-making. In light of the fact that: (a) the amount of acquisition price of ○○ Construction Co., Ltd.; (b) the amount of acquisition price of ○○ Construction Co., Ltd.; (c) whether other shareholders are actual shareholders; and (d) the ○○ Development Co., Ltd., the ○○○ Development Co., Ltd., the ○○ Development Co., Ltd, reported ○○ Development’s actual market share with Kim○-do and stated to the effect that ○○ Development will operate the ○○○ Development

④ During the investigation process over several occasions, ○○○ Development shares were trusted in title with the consent of Plaintiff Kim○-hwan (see, e.g., evidence No. 26 and 40), and there is no ground to deem that at the time Kim○-do had any motive or reason to make a false statement.

⑤ There is no evidence to acknowledge joint investments, such as an investment agreement, between Plaintiff Kim○-do and Kim○-do regarding ○○ Development.

2) Whether there was a purpose of tax avoidance

The legislative intent of Article 45-2(1) of the Inheritance Tax and Gift Tax Act is to recognize an exception to the substance over form principle with the purport of effectively preventing the act of tax avoidance using the title trust system and realizing the tax justice. As such, the proviso of the same Article can only be applied to a case where the purpose of tax avoidance is not included in the purpose of the title trust, and in such a case, the burden of proving that there was no purpose of tax avoidance exists, not the purpose of tax avoidance. In this context, the fact that there was no purpose of tax avoidance can be proven by means of proving that there was a purpose other than the purpose of tax avoidance. However, as the title holder who bears the burden of proof, there was an obvious purpose irrelevant to the tax avoidance to the extent that there was no purpose of tax avoidance in the title trust, and the fact that there was no tax evasion at the time of the title trust or in the future should be proved to the extent that it would not have any doubt (see, e.g., Supreme Court Decision 200Du16982, Jan. 16, 2014).

In light of the following circumstances acknowledged by the aforementioned evidence and the purport of the entire pleadings, the evidence submitted by the Plaintiffs alone is insufficient to acknowledge that there was no purpose of tax avoidance at the time of title trust of the instant shares. There is no other evidence to acknowledge this otherwise. Therefore, this part of the Plaintiffs’ assertion

① The ○○ Kimdo held the instant shares in title trust to the Plaintiffs and became one of the oligopolistic shareholders as stipulated in Article 39 subparag. 2 of the Framework Act on National Taxes, and thus, became exempt from the secondary tax liability of oligopolistic shareholders.

② Even if the instant shares were held in title trust with the Plaintiffs, the lower tax rate was applicable to the future dividend income, and it cannot be readily concluded that there was no tax evasion purpose on the sole basis that there was no tax evasion due to the failure to distribute dividends to the shareholders at the time of the instant case.

③ The Plaintiffs asserted that Kim ○-do had held the title trust of the instant shares because it was aimed at facilitating economic activities by making himself in bad credit standing or likely to be subject to compulsory execution from creditors. However, it is difficult for Kim ○-do to know what is specifically related to the transfer of the names of the instant shares to the Plaintiffs and the Kim ○-do’s smooth economic activities, and there is no evidence suggesting that any compulsory execution measures may be limited to the obligees at the time when the title trust was held (the Plaintiffs merely asserted that ○○○ Construction Co., Ltd. and Kim ○-○, a joint and several surety, merely held the title trust because an individual’s economic situation was unexpectedly omitted, and there is no evidence that ○○-○ Construction Co., Ltd. and Kim ○-○

Even if following the assertion, it is so long as there was no tax avoidance purpose in the title trust.

It is difficult to see that there was a clear purpose of tax avoidance and non-related.

3) Whether additional tax is unconstitutional

Although gift tax imposed by the provision on deemed donation of title trust property is one of the taxes prescribed by the Act, although it has the nature of penalty surcharges (see, e.g., Supreme Court Order 2004HunBa40, 2005HunBa24, Jun. 30, 2005; Constitutional Court Order 2002HunBa66, Nov. 25, 2004); and even if there is an incidental punitive function, it should be regarded as tax. Furthermore, tax and additional tax are ① tax is imposed on the national level as a member of the community of the state without consideration according to its economic ability; ② tax is imposed on the financial interest and value that is currently owned or generated; ② tax is imposed on the financial interest and value that is a monetary administrative system to secure tax cooperation obligation; ② tax is imposed on the national property right that is a result of nonperformance of obligation or an additional tax that is a result of nonperformance of obligation; and ③ tax is imposed upon the taxpayer to the extent that it does not violate its own ability to impose penalty tax (see, e.g., Supreme Court Decision 20001).

On the other hand, in specifically examining whether a legal provision is an arbitrary legislation contrary to the principle of equality, whether (1) the provision is treating the same group in essence differently.

There is a question as to whether there is discrimination or not and whether such discrimination is arbitrary or not. ① Whether two comparative groups are essentially identical in relation to the standards depends on the interpretation of relevant constitutional provisions and the meaning and purpose of the relevant statutory provisions. ② In relation to the standards, arbitrary or non-discrimination in relation to the standards refers to lack of reasonable grounds (see, e.g., Constitutional Court Order 2003HunBa78, Dec. 16, 2004). However, the provision on constructive gift of title trust property imposes gift tax in order to prevent tax evasion on the ground of title trust and to achieve the tax justice and tax equity, while the Real Estate Real Name Act uses the real estate registration system as well as prevention of tax avoidance. The purpose of legislation is to prevent anti-social acts such as evasion of law, and to promote normalization of real estate transactions and stability of real estate prices. There is a difference in the method of regulation and punishment, and there is no difference in the personal scope subject to sanctions, and thus, it cannot be deemed that it is inherently identical two compared groups.

Therefore, this part of the plaintiffs' assertion is without merit.

3. Conclusion

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

shall be ruled.