Plaintiff (Law Firm Awon, Attorneys Tae Tae-hun et al., Counsel for plaintiff-appellant)

Goyang Tax Office (Law Firm Grandmark, Attorney Lee In-tae, Counsel for the plaintiff-appellant)

December 21, 2016

Suwon District Court Decision 2015Guhap7239 Decided June 14, 2016

1. The plaintiff's appeal is dismissed.

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

1. Purport of claim

The Defendant’s imposition of gift tax of KRW 5,593,200 for the Plaintiff on February 10, 2014, KRW 70,604,540 for the gift tax of KRW 199 for the year 2006, and KRW 994,874,210 for the gift tax of KRW 209 for the year 2009 (including additional tax) shall be revoked.

2. Purport of appeal

Of the judgment of the first instance court, the part against the Plaintiff ordering revocation is revoked. The Defendant revoked each imposition (including additional tax) of KRW 66,159,948, and the gift tax of KRW 959,342,950 for the year 2006 for the Plaintiff on February 10, 2014 for the gift tax of KRW 66,159,948, and the gift tax of KRW 959,342,950 for the year 2009 (including additional tax) (the Plaintiff did not appeal for the portion dismissed in the judgment of the first instance according to the Defendant’s revocation and correction at his authority). As such, the scope of the judgment of this court

1. Details of the disposition;

The court's explanation on this part is identical to the corresponding part of the judgment of the court of first instance (as stated in the second to third chapter 11 of the second chapter on the grounds of appeal), and therefore, it accepts it as it is in accordance with Article 8 (2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act (Provided, That "94,874,210 won" of the third part and "959,342,950 won" of the third part on the grounds of appeal and "959,342,950 won (including additional tax)" shall be added.

2. Whether each of the dispositions of this case is legitimate

A. The plaintiff's assertion

Nonparty 1’s title trust to the Plaintiff of the instant shares was merely a continuous acquisition of the shares of the instant company, which was acquired or offered with new shares after the acquisition of 2,00 shares in the name of the Plaintiff at the time of incorporation of the instant company under the Plaintiff’s name when Nonparty 1 closed down the business of Nonparty 1 in 1999, and there was no other purpose to avoid taxes. In light of the fact that the Plaintiff and Nonparty 1 should add up their shares at the time of determining the oligopolistic shareholder as the husband and wife, it is not possible to avoid the secondary tax liability or deemed acquisition tax by the oligopolistic shareholder due to the title trust of the instant shares, and the instant company did not avoid dividend income tax, etc. because there was no difference in the dividend payment.

B. Relevant statutes

○ former Inheritance Tax and Gift Tax Act (Amended by Act No. 9916, Jan. 1, 2010)

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

(1) Where the actual owner and the nominal owner are different in property (excluding land and buildings; hereafter the same shall apply in this Article) which requires a registration, etc. for the transfer or exercise of rights, the value of such property shall be deemed donated to the actual owner by the nominal owner on the date when it is registered, etc. as the nominal owner (where the property is subject to a change of ownership, referring to the date following the end of the year following the year in which the date of acquisition of ownership falls), notwithstanding Article 14 of the Framework Act on National Taxes: Provided, That

1. Where any property is registered in another person's name without the purpose of tax avoidance, or transfer is not made in the name of the actual owner who acquired the ownership;

(2) Where any property is registered, etc. in the name of another person, and a transfer is not made in the name of the actual owner, or where the name of stocks, etc. is not converted in the name of the actual owner during the grace period, it shall

C. Determination

1) The legislative intent of Article 45-2(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 9916, Jan. 1, 2010; hereinafter “former Inheritance Tax Act”) is to recognize an exception to the principle of substantial taxation with the purport of effectively preventing the act of tax avoidance using the title trust system and realizing the tax justice. Thus, the proviso of the same Article can only be applied unless the purpose of the title trust is not included in the purpose of the tax avoidance, and it cannot be deemed that there was an intention of the tax avoidance. In this case, the burden of proving that there was no purpose of the tax avoidance. The burden of proving that there was no purpose of the tax avoidance can be proved by the method of proving that there was another purpose of the tax avoidance, not by the purpose of the tax avoidance. However, as the nominal owner with the burden of proof, there was an obvious purpose irrelevant to the tax avoidance in the title trust, and that there was no tax avoidance in the future at the time of the title trust or tax avoidance in the future, 2013.4.297.

2) In light of the following, Nonparty 1, who operated the “○ Industry” in 199, established the Plaintiff as the representative director at the time of closing the business in 199, Nonparty 1 acquired the instant company’s new shares under the name of the Plaintiff. Nonparty 1, at the time of acquiring the instant company’s shares from other shareholders in 2006, was transferred in the name of the Plaintiff when acquiring the instant company’s shares from other shareholders in 2006, and the shares were acquired in the name of the Plaintiff when offering new shares of the instant company in 209. However, at the time of offering new shares, Nonparty 1 received shares in the name of the Plaintiff when offering new shares of the instant company in 209. However, as seen earlier, the fact that Nonparty 1 paid shares upon lending the company’s land as security at the time of offering new shares was either acknowledged or can be acknowledged by taking full account of the overall purport of the pleadings in the statement in

3) However, comprehensively taking account of the overall purport of the arguments in Gap evidence Nos. 6 and Eul evidence Nos. 3 through 5, the non-party 1 was in arrears with approximately 30 million won (including additional dues), including value-added tax and global income tax, at the time of incorporation of the company of this case on March 24, 199. However, according to the fact that the non-party 1 did not pay national taxes thereafter on April 21, 2010, it is difficult to find out the fact that the non-party 2 did not have acquired shares of this case on April 23, 2010, and that the non-party 1 did not have any specific purpose of acquiring shares of 90,50,000 won (including additional dues) under the name of the non-party 20,000,0000 won before the expiration of the period of 80,000,0000 won in the name of 10,000 won.

4) Therefore, insofar as the Plaintiff cannot be deemed to have sufficiently proved that there was no tax avoidance purpose at the time, the Defendant’s respective dispositions of this case are lawful.

3. Conclusion

Therefore, the plaintiff's claim of this case seeking the revocation of each disposition of this case is dismissed as it is without merit. The judgment of the court of first instance is just and it is dismissed as the plaintiff's appeal is without merit. It is so decided as per Disposition.

Judges Cho Jong-tae (Presiding Judge)