In case of determining whether a transfer is made based on the statement, etc. of changes in stocks pursuant to Article 45-2 (3) of the former Inheritance Tax and Gift Tax Act, the date of deemed donation according to the purpose of gift tax (=the date of submission of

Even if Article 45-2(3) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007; hereinafter “Capital Increase Tax Act”) intends to evade taxes by stating the name of the owner of stocks, etc. differently from the actual owner in the specification, etc. of changes in stocks, etc., it is intended to impose gift tax even in cases where the change of ownership is not made due to the lack of the register of shareholders or the register of members, etc., to supplement the problems in which the main text of Article 45-2(1) of the Inheritance Tax and Gift Tax Act could not be applied. However, the above provision merely provides for the determination of the change of ownership based on the specification, etc. submitted to the head of a tax office having jurisdiction over the place of tax payment, and does not provide for the specific date to be deemed as the donation date based on the specification, etc. of changes in stocks, etc., even if the tax authority has used it as taxation data, this is merely a document stating the change in stocks, etc. as part of cooperative duty for tax purposes.

Article 45-2(1) and (3) (see current Article 45-2(4)) of the former Inheritance Tax and Gift Tax Act (Amended by Act No. 8828, Dec. 31, 2007)

Supreme Court Decision 2011Du11099 Decided May 16, 2014 (Gong2014Sang, 1241)

Plaintiff 1 and six others (Law Firm Han-ro, Attorneys Hong-soo et al., Counsel for the plaintiff-appellant)

The Head of Gangnam District Tax Office and five others (Government Law Firm Corporation, Attorneys Soh Ho-chul et al., Counsel for the plaintiff-appellant)

Seoul High Court Decision 2016Nu42687 decided December 21, 2016

All appeals are dismissed. The costs of appeal are assessed against the Defendants.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

Article 45-2 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007; hereinafter "the Inheritance Tax and Gift Tax Act") provides that with respect to the legal fiction of title trust property, where the actual owner and the nominal owner are different from each other, the value of the property shall be deemed to have been donated to the actual owner on the date when the registration is made to the nominal owner, notwithstanding Article 14 of the Framework Act on National Taxes. Article 45-2 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007; hereinafter "the Inheritance Tax and Gift Tax Act") provides that "in the application of the provisions of paragraph (1), where a list of shareholders or a register of members has not been prepared, the change of holders shall be determined by documents concerning shareholders, etc. submitted to the head of a tax office having jurisdiction over the place of tax payment and by detailed statement of changes in stocks, etc."

Even if the legal provision of this case seeks to avoid taxes by stating the name of the owner of stocks, etc. differently from the actual owner in the specification, etc. of changes in stocks, etc., it is intended to impose gift tax even in such a case by supplementing the problems in which the main sentence of Article 45-2(1) of the Inheritance and Gift Tax Act was not applicable (see Supreme Court Decision 2011Du11099, May 16, 2014). However, the legal provision of this case only provides for the determination of the change of ownership based on the specification, etc. of changes in stocks, etc. submitted to the head of the tax office having jurisdiction over the place of tax payment, but does not provide for what date is deemed the donation date based on the specification, etc. of changes in stocks, etc. In the meantime, even if the tax authority can utilize the specification, etc. as taxation data, this is merely a document stating the change in stocks, etc. as part of the performance of duty of cooperation for tax purposes, and thus, is essentially different from the list, etc. of stocks, which can be deemed as the date of transfer.

In the same purport, the lower court determined that the statement on the change of stocks, etc. in which the Plaintiffs stated the transfer of stocks should be deemed the deemed donation date submitted to the competent tax office on March 31, 2007. In so doing, contrary to what is alleged in the grounds of appeal, the lower court did not err by misapprehending the legal doctrine on the base date

Therefore, all appeals are dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Ki-taik (Presiding Justice)