Seoul Administrative Court-2016-Gu Partnership-54381 ( November 10, 2016)

Even if shares owned by a religious organization are trusted in trust to the believers, they shall be subject to gift tax.

(1) It seems that a religious organization’s shares held by a religious organization under title trust could be avoided from applying the progressive tax rate on dividend income, from the burden of secondary tax liability under the Framework Act on National Taxes, and from applying the deemed acquisition tax under the Local Tax Act. As such, a religious organization’s shares held by a religious organization may also be subject to gift tax.

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

2016Nu7877 Revocation of Disposition of Imposing gift tax

xO et al. and three others

O2 others than the director of the tax office

Seoul Administrative Court Decision 2016Guhap54381 decided November 10, 2016

April 14, 2017

May 19, 2017

1. All appeals filed by the plaintiffs are dismissed.

2. The costs of appeal are assessed against the Plaintiffs.

The judgment of the first instance shall be revoked. The imposition of each gift tax (including additional tax) stated in the details of notification of the gift tax by the Plaintiff against the Plaintiffs shall be revoked.

1. Quotation of judgment of the first instance;

The reasoning of this judgment is as follows, except for the modification of part of the judgment of the first instance as follows. Therefore, it shall be accepted in accordance with Article 8(2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act.

Article 45-2(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007) provides that “The purpose of this Act is to effectively prevent title trust by the actual owner of the property only in the name of another person for the purpose of tax avoidance, and realize the tax justice by effectively preventing the title trust act from being committed for the purpose of tax avoidance. Thus, if the title trust act was recognized to have been committed for any other purpose than the purpose of tax avoidance and only a minor reduction is generated as incidental thereto, it shall not be deemed that such title trust act had the purpose of tax avoidance. However, in light of the legislative purport as seen above, only if the purpose of the title trust is not included in the purpose of tax avoidance, it shall not be deemed that the act of title trust can not be deemed a donation. Therefore, if it is deemed that there was no other purpose of tax avoidance, the burden of proving that the act of title trust was committed shall be deemed as a donation.”

○ 5 pages 8 of the judgment of the first instance court shall be changed to “2, 25 copies”, and 5 pages 9 corporate tax, etc. shall be added to “at the time when the title trust (individual transfer) is performed” or “at the time of separate transfer”.

○ The 5th 10th 10th 10th 10th 5th 10th 5th 5th 5th 19th 5th 5th 19th 5th 5th 5th 5th 19th 5th 6th 5th 5th 6th 6th 6th 19

2. Conclusion

Therefore, the plaintiffs' claims shall be dismissed in its entirety due to the lack of reasonable grounds. Since the judgment of the first instance court with the same conclusion is justifiable, the plaintiffs' appeal is dismissed in its entirety due to the lack