Examination-2014-5247 ( November 18, 2013)

No such provision shall apply mutatis mutandis to item (b) of the Enforcement Decree applicable mutatis mutandis under item (a) of the same subparagraph without such provision.

Article 29 (3) 3 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act that applies mutatis mutandis under item (a) of the same subparagraph without any provision for the calculation of "the changed value after the change" under subparagraph 5 (b) of Article 31-9 (2) of the Enforcement Decree of the former Inheritance Tax and Gift Tax

Article 31-9 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act (Donation of Other Benefits)

2014-Gu Partnership-1282 Revocation of Disposition of Imposition of Gift Tax

AA

o Head of the tax office

on October 26, 2016

on 07 July 2016

1. The Defendant’s imposition of gift tax on October 22, 2014 by either OO or OO or a sum of O or OO(O or a sum of O or O) 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. Facts of recognition;

A. both SBB (hereinafter “BB”) and SCC (hereinafter “CCC”) are companies engaged in the manufacture, sale, etc. of electronic components. The Plaintiff owned 11.7% equityO shares as a shareholder of BB as of December 27, 2011. Meanwhile, the Plaintiff’s father, EE, and FF are the Plaintiff’s mother, FF, and GG are the Plaintiff’s children, and GG are the Plaintiff’s children.

B. On October 24, 201, BB and CCC issued BB’s shares to FF (73% holding) and EE (27% holding), a shareholder of CCC, and entered into an all-inclusive share swap agreement under which BB is a shareholder of CCC (hereinafter “instant agreement”), and the main contents are as follows: BB and CCC at the time were as follows: (a) pursuant to Article 63(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 11130, Dec. 31, 201; hereinafter “former Inheritance Tax and Gift Tax Act”); (b) assessed the value of shares of two companies as either OO or OOO, and determined the share swap ratio as 1:584683, May 5, 883.

BB (hereinafter referred to as the "B") and CCC (hereinafter referred to as the "B") shall enter into an all-inclusive share swap contract under Section B of Section 2 of Chapter IV of the Commercial Act for the purpose of maximizeing shareholder's value through financial soundness and enhancing management efficiency as follows:

§ 1. (Methods of Blanket Share Swaps)

A and B shall make a share swap on the date of share swap pursuant to the provisions of Article 2 (hereinafter referred to as the “share swap date”). By means of an all-inclusive share swap, A shall become a complete parent company of B, and Eul shall become a complete parent company of B.

A shall become a complete subsidiary of A.

Article 2 (Share Swap Date)

Subject to the approval under section 5 of this Agreement by shareholders of Gap and Eul

The date of stock exchange between B shall be December 27, 201: Provided, That where it is necessary for the procedures for stock exchange, it may be changed by mutual consultation between A and B.

Article 3 (Share Swap Ratio, Matters concerning Issuance of New Stocks and Amount to be Paid to Shareholders)

(1) The share swap ratio between A and B is 1: 5.584683.

(2) In accordance with the share swap ratio, A shall issue new OO shares among registered common shares listed in the shareholder registry of B as of the date of share swap and deliver them to the shareholders listed in the shareholder registry of B as of the date of share swap. As for the remaining OO shares, A shall pay an OO share as a grant for share swap in cash to the shareholders listed in the shareholder registry of B as of the date of share swap.

Article 4 (Total Amount of Capital and Reserves to be Increased)

(1) The capital of Party A increased due to a share swap shall be an OO, provided that the capital may be changed according to the share swap ratio under section 3 and the amount of the share swap grant.

(2) The reserve funds of Gap arising from the share swap shall be the OO.

Provided, That the reserve funds of Gap shall be based on the capital state of Eul on the date of share swap.

applicable accounting standards may be changed according to the applicable accounting standards.

Article 5 (General Meeting of Shareholders Approval for Share Swap)

A and B shall obtain the approval of this Agreement in accordance with Article 360-3 of the Commercial Act.

A general meeting of shareholders shall be held on November 24 of each year: Provided, That it is necessary to proceed with the procedures for share swap.

In the case of Gap and Eul, it may be changed after consultation with them.

Article 8 (Effectuation of Contracts)

This contract shall take effect at the same time as it is concluded, provided that this contract shall become void if the approval is not obtained at the general meeting of shareholders of both A and A in accordance with Section 5.

C. The relationship between BB and CCC shareholders and the holding status of shares before and after the comprehensive share swap under the instant contract are as listed below.

(d) The director of a mid-term regional tax office shall conduct an investigation on the change of stocks with respect to BB from July 21, 2014 to September 23, 2014, and calculate the value per share before the exchange of BB as the one most adjacent to the base date for assessment on December 27, 2011, and the value per share after the exchange is calculated by applying the same subparagraph under Article 31-9 (1) 5 (a) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act by applying the same subparagraph mutatis mutandis to the value per share after the exchange x (O value per share x the number of issued stocks x 7O value per share x the number of issued stocks x the number of issued stocks 】 the value of donated stocks 】 the value of donated assets 】 the value of donated assets 】 3O00 per share 】 the value of donated assets 】 the value of donated assets to the Plaintiff under Article 31-9 (1) 5 (b) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act.

E. Accordingly, on October 22, 2014, the Defendant imposed each gift tax on the Plaintiff as indicated in the order (hereinafter collectively referred to as “instant disposition”).

F. On November 26, 2014, the Plaintiff dissatisfied with the instant disposition and filed a petition for examination with the Commissioner of the National Tax Service.

B. On February 16, 2015, the Commissioner of the National Tax Service dismissed the above request for review and notified the Plaintiff thereof. The notification was served on the Plaintiff around March 5, 2015.

[Ground of recognition] Facts without dispute, Gap evidence 1 through 6, Eul evidence 1 and 3, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The instant disposition should be revoked on the grounds that it is unlawful for the following reasons.

(1) The value per share before the exchange of BB stocks shall be calculated as an unfair and supplementary method of assessment.

(2) Even if it is reasonable to calculate the value per share before the exchange of shares BB at the market price, the amount before the change is made under Article 31-9 (1) 5 (b) of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act.

Since all of the values after the change apply the same evaluation method, each value shall be the same as the OO of the market, and different values after the change shall be the same as the OO of the market, there is no legal basis for calculating the amount after the change by applying Article 29 (3) 3 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act as

(3) For an all-inclusive share swap, the precedent where a shareholder of a complete parent company obtains a benefit from the shareholders of the complete parent company cannot be applied as it is. Thus, apart from the taxation under Articles 35 (Gift of Benefits from Transfer at Low Price and High Price) through 39 (Gift of Benefits from Transfer) of the former Inheritance Tax and Gift Tax Act, in this case, the disposition of this case cannot be taken by applying Article 42 of the same Act.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Judgment as to (1) Claim

In the case of unlisted stocks with less market value, where there is a fact that they are traded, the value of the stocks shall be evaluated by considering the transaction value as the market value and shall not be evaluated by the supplementary evaluation method stipulated in the former Inheritance Tax and Gift Tax Act. However, the market value means the objective exchange value formed by the general and normal transaction. As such, in order to be recognized as the market value, the circumstances should be acknowledged that the relevant transaction is made in a general and normal manner and the objective exchange value as at the date of donation should be appropriately reflected (see, e.g., Supreme Court Decision 2010Du26988, Apr. 26, 2

(4) In the case of the above 20-10-60-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-8-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6-6--6-6-6-6-6-6-6-6-6-6-6-7-8-7-7-7-7-7-7-7-7-7-7-7-7-7-7-7-7-7-7-7-7-7-7-7

(2) Judgment on the claim

Article 35 (1) 2 and (2) of the former Inheritance Tax and Gift Tax Act provides that "the donation of profits from the provisional transfer" shall be made to the "the donation of profits from the issuance of new shares at low prices" among the donations of profits from capital increase under each item of Article 39 (1) 1, while Article 42 (1) provides that "the donation of other profits" shall be made to the "the donation of profits from the issuance of new shares at low prices", and the provisions of Articles 33 through 39, 39-2, 39-3, 40, 41, 41-3 through 41-5, 44 and 45 provide that "the former Inheritance Tax and Gift Tax Act shall not apply to the case where profits from the transfer of shares are acquired above the standards prescribed by Presidential Decree, such as the conversion or conversion of shares from the price of shares at the time of conversion or conversion into shares (including the conversion into shares at the time of conversion into shares or conversion into shares, etc. after conversion into shares from the same price of shares:

Meanwhile, according to Article 360-2 of the Commercial Act, a company can become a company that owns the total number of shares issued by another company by an all-inclusive share swap (hereinafter referred to as "wholly owning parent company", and another company as "wholly owned subsidiary"). (Article 360-2) If an all-inclusive share swap is conducted, shares of the company that becomes a wholly owned subsidiary are transferred to a company that becomes a wholly owning parent company on the date of the share swap, and shareholders of the company that becomes the wholly owned subsidiary are allocated new shares issued by the company that becomes the wholly owning parent company for the share swap (Article 360-2).

As can be seen, an all-inclusive share swap under the Commercial Act is a combination of transactions where shares of a company becoming a complete subsidiary are transferred to a company becoming a complete parent company, and where shareholders of a company becoming a complete parent company receive an allocation of new shares related to consideration for shares of a company becoming a complete parent company from the company becoming a complete parent company, and become shareholders of a company becoming a complete parent company. Therefore, whether shareholders of a company becoming a complete subsidiary obtain profits through an all-inclusive share swap or whether the assessed value per share of shares of a company becoming a complete subsidiary is higher than the assessed value under the Inheritance Tax and Gift Tax Act, or whether the assessed value of new shares allocated by a company becoming a complete parent company was lower than the assessed value under the Inheritance Tax and Gift Tax Act, rather than the assessed value under the Inheritance Tax and Gift Tax Act, the difference between the assessed value of the shares of a company becoming a complete parent company becoming a complete parent company and the assessed value of the new shares allocated by a complete parent company becoming a complete parent company, the criteria for determining whether a comprehensive share swap can be applied through an all-inclusive share swap.

In full view of the structure and characteristics of the comprehensive exchange transaction of shares, and the legislative purport and system of the provisions related to the Inheritance Tax and Gift Tax Act including the above provisions, gift tax shall be imposed on the profits earned by the shareholders of a complete parent company through an all-inclusive share swap by applying Article 42(1)3 of the former Inheritance Tax and Gift Tax Act to "the donation of profits from the transaction that increases the capital of the corporation". Article 31-9(2)5(b) of the former Inheritance Tax and Gift Tax Act provides that the difference between the appraised value of shares before and after the change shall be appraised as the donated value before and after the change. In this case, in the case of non-listed shares such as BB shares in this case, the value of shares shall be assessed according to the market price pursuant to Article 60(1) of the former Inheritance Tax and Gift Tax Act, and there is no ground to view that the method of calculating shares before and after the comprehensive share exchange is different. Furthermore, the interpretation of the tax laws and regulations shall be interpreted as the interpretation, and it shall not be permitted to extend or increase the gift tax without reasonable reason.

Therefore, there is no evidence to deem that the value of BB shares held by the Plaintiff was appraised before and after the comprehensive exchange of shares under the contract of this case, that is, the market price was changed, and thus, Article 29(3)3 of the former Enforcement Decree of the Inheritance Tax and Gift Tax Act cannot be applied. Thus, the Plaintiff’s assertion pointing this out is

3) Sub-decisions

In the end, since the defendant's calculation method of the plaintiff's donated property was erroneous, the disposition of this case imposed according to the calculation method should be revoked illegally (as long as the disposition of this case is unlawful, the plaintiff's assertion that the plaintiff's main office and the defendant's ancillary disposition corresponding thereto are not judged separately)

3. Conclusion

Thus, the plaintiff's claim of this case is accepted on the ground of the reasons.