It is difficult to see that stock trust is for tax avoidance.

Inasmuch as it was an oligopolistic shareholder regardless of the title trust, it does not seem that the Plaintiff was in title trust with a view to evading his secondary tax liability.

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

2014Guhap31425 Demanding revocation of disposition imposing gift tax

IsaA

The director of the Southern Incheon District Office

July 23, 2015

September 10, 2015

1. On February 1, 2013, the imposition of gift tax (including additional tax) imposed by the Defendant against the Plaintiff on the Plaintiff shall be revoked.

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

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. From July 23, 2012 to September 5, 2012, the commissioner of the Regional Tax Office notified the Plaintiff of the result of the tax investigation to the effect that the Plaintiff would levy gift tax of 000 won on the ground that the Plaintiff’s 00 shares acquired on February 7, 2010 (hereinafter “instant shares”) were donated to the Plaintiff by BB, and that the Plaintiff would be subject to taxation of 00 won of gift tax for the year 2010 (hereinafter “pre-announcement of the instant taxation”).

B. On September 28, 2012, the Plaintiff filed a claim against the Director of the Regional Tax Office for pre-assessment review against the Plaintiff, who was dissatisfied with the notice of pre-assessment of the instant taxation. On November 2, 2012, the Director of the Regional Tax Office rendered a decision of re-assessment as follows (hereinafter referred to as “decision of re-assessment”).

C. After the decision of re-audit of this case, the regional tax office issued a notice of the result of the second tax investigation to the effect that: (a) after conducting a tax investigation again (hereinafter referred to as “second tax investigation”); (b) the Plaintiff was deemed to have received title trust rather than having received a donation of the instant shares from BB; and (c) the Plaintiff would levy KRW 00 on the Plaintiff.

D. Accordingly, on February 1, 2013, the Defendant issued a disposition imposing a gift tax of KRW 000 on the Plaintiff in 2010 (hereinafter “instant disposition”).

E. On April 16, 2013, the Plaintiff was dissatisfied with the instant disposition and filed a request for review with the Board of Audit and Inspection, but was dismissed on April 3, 2014.

F. Meanwhile, the status of changes in AA’s shares is as listed below.

[Attachment]

성명 최대주주와의 관계 2002. 1. 2. 양도��양수 2010. 12. 31. 주식수(주) 지분(%)

On February 2, 2004, on February 7, 2010, the number of shares (%) in the number of shares on December 28, 2010

BB 4,000 40 4,000 40

CCC 3,000 30 3,000 30

DD 2,000 20 △△ 1,000 △△ 1,000

EE

Friendly Gu of the wife

husband

1,000 10 △ 1,000

FF 1,000 1,000 10

Eastern 1,000 1,000 10

GG

EE-E

ASEAN

1,000 1,000 10

Total 10,000 100 - - 10,000 10

[Ground of recognition] Facts without dispute, entry of Gap evidence 1 to 7, purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The instant disposition is unlawful since it violates the principle of prohibition of duplicate investigation as stipulated in Article 81-4(2) of the Framework Act on National Taxes or is based on the second tax investigation without any legal basis.

2) Notwithstanding that the title trust of the instant shares (hereinafter “title trust”) is not subject to gift tax because of the lack of tax avoidance purpose, the Defendant considered it as a title trust with tax avoidance purpose and made the instant disposition. Thus, the instant disposition is unlawful.

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

1) Whether procedural illegality is procedural

A) Changes in the regulations on deemed donation of nominal trust property

Article 32-2(1) of the former Inheritance Tax Act (amended by Act No. 4283, Dec. 31, 1990; hereinafter "the Inheritance Tax Act prior to the amendment") provides that if the de facto owner and the nominal owner are different from the registration, transfer, etc. (hereinafter "registration, etc."), the de facto owner shall be deemed to have donated the registration, etc. to the nominal owner on the date when the registration, etc. is made, the de facto owner shall be deemed to have been donated to the nominal owner when the registration, etc. is made (see, e.g., Supreme Court Decisions 87Nu193, Jul. 21, 1987; 86Nu486, Apr. 28, 1987; hereinafter referred to as "the Inheritance Tax Act"). The Constitutional Court has determined that Article 32-1 of the former Inheritance Tax and Gift Tax Act was unconstitutional since it did not violate the purpose of Article 32-2(1) of the former Inheritance Tax and Gift Tax Act.

B) The burden of proving the purpose of tax avoidance

In addition, the legislative purport of Article 45-2(1) of the Inheritance Tax and Gift 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 to Article 45-2(1) is applicable only where the purpose of tax avoidance is not included in the purpose of the title trust, and in this case, the burden of proving that there was no purpose of tax avoidance lies in the claimant. Therefore, as the nominal owner who bears the burden of proving the burden of proof, there was an obvious purpose unrelated to the tax avoidance to the extent that there was no objective of tax avoidance in the title trust, and there was no tax avoidance at the time of the title trust or in the future, by objective and objective evidence, to the extent that there is no doubt that the ordinary person is not doubtful (see, e.g., Supreme Court Decision 2004Du11220, Sept. 22, 206).

C) Whether the defects of the second tax investigation, which are not essential, affect the illegality of the disposition of this case

In a case where the tax authority had failed to clarify all the taxation requirements required for the imposition disposition only by the first tax investigation and it was necessary to conduct an additional investigation, if there is a defect in the additional investigation, the imposition of gift tax according to the result of such investigation shall be deemed unlawful. However, if the first tax investigation already revealed all the taxation requirements necessary for the imposition disposition in the first tax investigation, and even if it constitutes an illegal duplicate tax investigation, it is difficult to deem that the disposition is necessary for the disposition, or it is a cause of such act, and thus, it cannot be seen

In light of the above legal principles, 00 National Tax Service, as seen earlier, found at the time of the first tax investigation that the Plaintiff was transferred the title of the instant shares without payment from BB on February 7, 2010, and deemed that there was a gift intent prior to the title transfer, and thus, it appears that the Plaintiff was given prior notice of the instant taxation. In other words, prior to the decision of re-audit, 00 regional tax office already stated that the name of the instant shares was transferred to BB and the Plaintiff was transferred without payment. The Defendant alone did not appear to have been able to conduct the instant disposition on the ground of title trust. Therefore, it is difficult to view that the second tax investigation was necessary for the Plaintiff, not the Defendant, to prove the existence of the purpose of tax avoidance in title trust. This is because it is difficult to view that the second tax investigation was conducted by the Plaintiff, without any further verification document of the Plaintiff’s title transfer from BB on the grounds that there was no further need to verify the existence of the purpose of tax avoidance in title trust, and the content of the Plaintiff’s certificate of tax evasion No. 2G evidence and reply (B).

Therefore, as long as the second tax investigation is not necessary for the disposition of this case, the disposition of this case cannot be deemed unlawful, even if the second tax investigation violates the principle of prohibition of duplicate investigation as asserted by the plaintiff.

2) Whether the purpose of tax avoidance is for tax avoidance

In applying the provision on deemed donation of a nominal trust property under Article 45-2(1) of the Inheritance Tax and Gift Tax Act, if it is recognized that the title trust was made for any reason other than the purpose of tax avoidance, and only the reduction of minor taxes incidental to such title trust takes place, it cannot be readily concluded that there was a tax avoidance purpose in such title trust (see Supreme Court Decision 2007Du1931, Apr. 9, 2009). Furthermore, it cannot be deemed that there is a different view solely on the mere basis that there is a possibility that there is a possibility that the future reduction of taxes may result in the absence of the purpose of tax avoidance (see Supreme Court Decision 2004Du7733, May 12, 206). Furthermore, whether there was a purpose of tax avoidance or not should be determined at the time of title trust, which is at issue, as of the date of title trust, and whether there was a tax evasion or not after such title trust (see Supreme Court Decision 2002Du31394, Apr. 29, 2007). 2007>

In light of the above legal principles, the title trust of this case is difficult to be deemed to have been for the purpose of tax avoidance, in full view of the following circumstances revealed by adding the background of the disposition as seen earlier, the grounds for recognition, and the purport of the entire pleadings. Accordingly, the prior disposition of this case on a different premise is deemed unlawful.

① The oligopolistic shareholder’s secondary tax liability is complementaryly imposed on a person who actually exercises the right to 51/100 or more of the total issued and outstanding shares of the relevant corporation, a person who actually exercises the corporation’s management, a spouse of the above-mentioned person, and his lineal ascendants and descendants living together with the former (Article 39 of the Framework Act on National Taxes and Article 22 of the Local Tax Act). As seen earlier, BB holds 40% of the shares of AA from the time of establishment of AA to the time of title trust of the instant shares, and CCC holding 30% of the shares of AA, regardless of the title trust of the instant shares, and thus, BB was an oligopolistic shareholder of AA to avoid its secondary tax liability.

② Furthermore, the instant company had no probability of establishing secondary tax liability due to the lack of any tax delinquency until now after its incorporation.

③ With respect to global income tax, dividend income may be reduced as much as the global income tax increased by the application of progressive tax rate by dividing the dividend income by way of title trust. However, AA did not pay dividends once after the date of establishment to the present, and all distributable profits are reserved in the company.

④ Not only did the Plaintiff transfer the shares of AA to a third party, but also the capital gains tax rate for the transfer of unlisted shares, such as AA, is the same rate of tax depending on the size of the company or the holding period of the shares (see Article 104(1)4 of the Income Tax Act). Therefore, it does not appear that the Plaintiff intended to evade capital gains tax on the shares of this case.

3. Conclusion

Therefore, the plaintiff's claim is reasonable, and it is decided as per Disposition.