Busan District Court 2015Guhap661 (Law No. 21, 2015)

The Plaintiff should be deemed to have held title trust with the instant shares and had the purpose of tax avoidance.

(1) The Plaintiff is the actual owner of the instant securities account, and it is reasonable to deem that the Plaintiff was the title trust of the instant shares to the instant corporation, and it is insufficient to deem that there was an obvious purpose irrelevant to tax avoidance. Therefore, the instant disposition of taxation is justifiable.

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

2015Nu22851 Revocation of Disposition of Imposition of Gift Tax

AA

○ Head of tax office

Busan District Court Decision 2015Guhap661 Decided August 21, 2015

March 4, 2016

April 8, 2016

1. The plaintiff's appeal is dismissed.

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

Cheong-gu Office

The judgment of the first instance court shall be revoked. On September 4, 2013, the imposition of the gift tax of 2005, which belongs to ○○○○○○, and the gift tax of 2006, which belongs to 2006, against the Plaintiff shall be revoked.

1. Details of the disposition;

A. On September 14, 2005, the Plaintiff opened BBB (the trade name before the change:CC Co., Ltd.; hereinafter referred to as “instant corporation”) under the name of the representative director, and purchased and sold ○ Securities Account; hereinafter referred to as “the instant securities account”). From September 21, 2005 to May 2, 2006, the Plaintiff purchased and sold 00 million won shares of listed corporations, such as ○○○○, a stock company (hereinafter referred to as “instant shares”) using the instant securities account with the instant securities account as listed below.

B. ○○ Director of the Regional Tax Office: (a) on the ground that the Plaintiff opened and acquired the instant securities account as described in the foregoing paragraph (a) and held title trust with the instant corporation, the former inheritance tax and donation

Tax Act (amended by Act No. 8828 of Dec. 21, 2007, hereinafter referred to as the "former Inheritance Tax and Gift Tax Act").

Pursuant to Articles 45-2 and 4, the Plaintiff notified the Defendant that gift tax should be imposed on the donated portion on December 31, 2005 and December 31, 2006.

C. Accordingly, on September 13, 2013, the Defendant imposed the gift tax on the donated portion ○○○○○ and December 31, 2006 on the Plaintiff on December 31, 2005 (hereinafter “instant disposition”).

D. On November 26, 2013, the Plaintiff appealed for a trial to the Tax Tribunal, but on November 26, 2014

11. The dismissal was made on 27.

[Ground of recognition] Unsatisfy, Gap evidence 1 to 4, Eul evidence 1 to 4

each entry and the purport of the whole of the arguments.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) Although the Plaintiff ordered DDR employees of the instant corporation to open the instant securities account under the Plaintiff’s name, the said employee opened the instant securities account under the name of the instant corporation. As long as the nominal owner of the instant securities account is the instant corporation, the instant securities account should be deemed to belong to the instant corporation pursuant to the Act on Real Name Financial Transactions and Confidentiality, and in light of the developments leading up to the establishment of the instant securities account under the name of the instant corporation as the number of employees’ actual employees, there was no agreement on title trust between the Plaintiff and the instant corporation.

2) Even if the Plaintiff trusted the instant shares to the instant corporation, the instant securities account was established by the number of employees, and the securities transaction tax, etc. was conducted through a securities company, which was withheld from the securities company, and the transfer income tax following the stock transfer was not imposed on the Plaintiff, who is not the major shareholder, and the tax evasion amount on the dividend income of the instant shares was low, cannot be deemed to have been the purpose of tax avoidance in light of the following:

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Whether a title trust exists

A) Relevant legal principles

The provision on deemed donation under Article 45-2 (1) of the Inheritance Tax and Gift Tax Act shall apply in cases where a real owner or a nominal owner makes registration, etc. in the future under an agreement or communication with the nominal owner with respect to property which requires the transfer or exercise of the right, and thus, where a real owner or a nominal owner unilaterally makes registration in the name of the nominal owner regardless of the intent of the nominal owner. In such cases, if the tax authority proves only that the real owner is different from the nominal owner, it shall be proved that the registration, etc. in the name of the nominal owner was made in the unilateral act of the real owner regardless of the intent of the nominal owner (see, e.g., Supreme Court Decision 2007Du

B) Determination

(1) In full view of the following circumstances, it is reasonable to deem that the actual owner of the instant securities account is the Plaintiff, taking into account the following circumstances, i.e., whether the instant securities account was owned by the instant corporation, whose nominal owner, and the evidence and evidence as mentioned above, as well as evidence Nos. 3, 4, and 6, which were acknowledged by adding the entire purport of the

① From the account in the name of the instant corporation to the instant securities account six times, the instant corporation accounted for the said money as the provisional payment to the Plaintiff of the instant corporation. On the contrary, the money deposited from the instant securities account to the account in the name of the instant corporation was accounted for as the collection of the provisional payment. Moreover, the instant corporation’s financial statements did not include the instant shares as short-term securities owned by the instant corporation, but did not account for the total amount of KRW 00,000,000 and the dividend income generated from the stock transaction using the instant securities account as the income of the instant corporation.

② The Plaintiff transferred 00 million won from stock transaction, which occurred from stock transaction via the instant securities account, to an individual account under the Plaintiff’s name. The dividend income of the instant shares was owned by the Plaintiff, and substantial profits arising from the instant stock transaction were reverted to the Plaintiff.

③ On August 2013, the Plaintiff filed a revised tax return on the dividend income (○○○○○, KRW 000,000, KRW 007,000) of the instant shares as the income of the Plaintiff’s individual income, following the completion of the tax investigation by the ○○ Regional Tax Office.

(2) Next, in light of the following circumstances, it is reasonable to deem that there was a title trust agreement between the Plaintiff and the instant corporation, in light of the following circumstances, as to whether the Plaintiff had an agreement on title trust in the establishment of the instant securities account under the name of the instant corporation, as well as the written evidence No. 2, as well as the witness EE’s testimony in addition to the overall purport of the pleadings.

① As seen earlier, the actual owner of the instant securities account is the Plaintiff. The nominal owner of the instant securities account is the instant corporation, and the actual owner and the nominal owner are different. Meanwhile, it is insufficient to recognize that the witness EE testimony alone was insufficient to establish that the instant securities account was opened in the name of the instant corporation by the employee of the instant corporation, and there is no evidence to acknowledge otherwise.

② In the instant application for the establishment of the instant account, the seal impression of the instant corporation was affixed, and the Plaintiff’s business registration certificate and the corporate seal impression issued as of September 9, 2005 attached to the Plaintiff’s business registration certificate, and the officers and employees in charge of the accounting affairs of the instant corporation are superior EE, in addition to the general director DDD who opened the instant securities account. EE was in charge of the accounting affairs of the instant corporation’s provisional payment for the Plaintiff, which is funds related to the purchase and sale of the instant shares. The instant corporation borrowed ○○ billion from the instant securities account to the instant securities account and used again to repay the instant corporation again, and deposited the instant securities account with the Plaintiff’s personal account under the name of the Plaintiff. In light of the fact that the Plaintiff and the Plaintiff opened the instant securities account under the name of the Plaintiff, not the Plaintiff’s personal account after the establishment of the instant securities account, it was reasonable to view that the instant securities account was opened under the name of the Plaintiff.

③ As alleged by the Plaintiff, the instant corporation is a so-called one company, which is the representative director and the substantial one shareholder, and thus, it seems that the Plaintiff could have relatively easily concluded self-transaction, such as the title trust agreement to open the instant securities account under the name of the instant corporation for one’s own stock transaction.

2) Whether there was an objective of tax avoidance

A) Relevant legal principles

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 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 be applied only 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 nominal owner 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 avoidance in the future at the time of the title trust or in the absence of taxes (see, e.g., Supreme Court Decision 2004Du1120, Sep. 22, 2006).

B) Determination

Article 45-2(1) of the former Inheritance Tax and Gift Tax Act has the character of "tax", not "tax", in that it imposes gift tax on the substance of donation, with a view to effectively preventing the act of tax avoidance using the title trust system and realizing the tax justice. In light of the overall purport of the pleadings, in light of the following circumstances revealed in light of the aforementioned evidence, it is insufficient to find that the testimony of the witness EE alone was insufficient to recognize that the Plaintiff, by opening the instant securities account in the name of the pertinent corporation, that there was an obvious purpose of tax avoidance or that there was no tax evasion or that there was no tax evasion at the time of the title trust or that at the time of the title trust, to avoid the comprehensive income tax on the dividend income of the instant shares.

① After opening a securities account in the name of the instant corporation for personal investment, the Plaintiff borrowed funds from the instant corporation to engage in the instant stock transaction. As seen earlier, the Plaintiff appears to have been aware that the instant securities account was opened in the name of the instant corporation. It is difficult to find out the reason why the instant securities account was opened in the name of the Plaintiff, not in the Plaintiff’s name, or for the purpose of personal investment, or for a clear purpose that is irrelevant to tax avoidance.

② Even if the dividend income from the instant shares was ○○○○○○ in 2006 and ○○○○ in 2007, the Plaintiff did not file a global income tax report on the dividend income. Accordingly, the tax evasion amount was ○○○○○ in 2006 and 2007, and it is difficult to deem that the said amount alone was merely a minor tax reduction. In addition, the Plaintiff’s failure to file a tax return on the interest income after making monetary transactions with a specific individual in 2006 and 2007 was confirmed in the tax investigation by the ○○○ Tax Office in 2006 and 2007, including it, and the filing of a revised global income tax return on the global income tax for 206 and 207, including that, if the interest income accrued in 206 and 207 were to be aggregated, exceeding KRW 40 million, which is the standard amount for the global income taxation to which the progressive tax rate applies.

③ As to the dividend income of the instant shares, the corporate tax of the instant corporation was not reported and paid. Even if the instant corporation reported and paid the corporate tax on the dividend income, it is probable that the Plaintiff may avoid paying the global income tax.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and the judgment of the court of first instance is just in its conclusion, and the plaintiff's appeal is dismissed as it is without merit. It is so ordered as per Disposition.

The decision shall be rendered as above.