Where stocks are acquired without compensation, unlike a sales contract, it shall constitute a donation.

It is appropriate to constitute a gift in the case of gratuitous transfer of shares, and the argument that the economic effect, such as the capitalization of the amount to be issued after issuance of shares, is merely a mere fact of the fulfillment of the suspension condition after issuance of shares due to a special circumstance or oral agreement on the side of a transaction, cannot be recognized as a consideration for the gift, and it is viewed as a gift in

The contents of the decision shall be the same as attached.

Article 2 of the Inheritance Tax and Gift Tax Act

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of KRW 734,721,730 against the Plaintiff on February 12, 2007 shall be revoked.

1. Details of the disposition;

A. On November 10, 1998, the Plaintiff and Lee ○○ established ○ Start-up Investment Company Co., Ltd. (hereinafter referred to as ○○○ Investment Company, △△△△△△△△△, Inc., on August 12, 1999; December 24, 2002; * Each trade name was changed to * on June 5, 2006; hereinafter referred to as 'the non-party company') with 50% equity shares of 10 billion won (the two million equity shares issued, the face value 5,00 won per share).

B. On July 15, 1999, Kim○ acquired the shares of the non-party company in KRW 5 billion, and KRW 1 million on August 20, 1999, each of the new shares was acquired in KRW 7.23 billion. On October 15, 1999, he acquired the non-party company's convertible bonds in KRW 3 billion, and on May 2, 2000, upon a claim for conversion of the above convertible bonds into shares, he acquired KRW 200,00 shares of the non-party company. Accordingly, the capital of the non-party company increased from KRW 10 billion to KRW 23.23 billion (total number of shares, KRW 4,646,00). The ratio of shares increased to KRW 21.52% on the part of the plaintiff, KRW 21.52% on the part of the non-party company, 21.25% on the part of the non-party company, and 96% on May 6, 2006.

C. On June 15, 200, Kim ○ transferred 535,503 shares among the shares of the non-party company owned by himself (hereinafter "the shares of this case") to the Plaintiff without receiving any separate payment. The Seoul Regional Tax Office, upon conducting a tax investigation with respect to the non-party company, assessed the value per share by Kim ○ as KRW 4,156 on the assumption that the shares of this case were transferred to the Plaintiff free of charge, and notified the Defendant that the Plaintiff received shares equivalent to KRW 2,225,50,468 from Kim △△△, and that the Plaintiff received the shares of KRW 2,25,550,468 from the non-party company. On February 12, 2007, the Defendant imposed a gift tax of KRW 1,022,308,260 among the "disposition on February 12, 207" as stated in the "Disposition on February 12, 2007."

D. After that, on June 17, 2008, the defendant decided to exclude the application of the premium rate (30%) to the largest shareholder, which is the premise of the imposition of the tax on February 12, 2007, on the ground that the non-party company falls under the loss directly from around June 17, 2008, on the ground that the non-party company falls under the loss directly from around February 12, 2007, the value per share of the shares of this case shall be assessed from the original 4,156 to 3,197 won, and the decision of ex officio reduction as stated in the following "the tax amount ex officio corrected on June 17, 2008" (the disposition of imposition of gift tax of the plaintiff 734,721,730 won is referred to as "the disposition of imposition in this case").

[Contents of Disposition]

Classification

Disposition of imposition on February 12, 2007

ex officio corrected tax amount on June 17, 2008

Details of increase and decrease

Jinay

Taxable Value of Gift Tax

2,225,550,468 won

1,712,003,091

-513,547,377

Reduction

Tax Base

2,225,550,468 won

1,712,003,091

-513,547,377

Reduction

calculated tax amount

73,020,187 won

524,801,236 won

-205,418,951

Reduction

Total determined tax amount (amount notified)

1,022,308,261 won

734,721,730 won

-287,586,531

Reduction

Facts without dispute over the basis of recognition, Gap evidence 1-1 to Gap evidence 2, Gap evidence 3-2, Gap evidence 4, Eul evidence 1-2, Eul evidence 1-5, Eul evidence 19-1 through 3, the purport of the whole pleadings, and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

As seen in the above disposition, in acquiring the shares of the non-party company, when the investment funds of the non-party company are fully paid, the plaintiff and the non-party company and the non-party company were made oral agreements to return the shares to the plaintiff and the non-party company so that the ratio of shares held by the plaintiff, the non-party, and the non-party company can be 3.05%, 33.05%, 33.09%, and 33.09%, respectively. After that, the plaintiff transferred the shares of this case to the plaintiff as of June 15, 200. Although the plaintiff did not pay the purchase price directly in acquiring the shares of this case from the non-party company, the series of transactional relations between the plaintiff, the non-party company, and the non-party company were made between the plaintiff and the plaintiff, the donor, the non-party, and the non-party, the non-party company, and the non-party company, even if the purchase price was not directly paid for the acquisition of the shares of this case, it is unlawful.

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

(1) Article 2(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 6301, Dec. 29, 2000; hereinafter referred to as the "Act") provides that gift tax shall be imposed on a person who acquires property through another person's donation. The meaning of donation here does not have a direct definition provision under the Act, but does not significantly differ from that under the Civil Act. Therefore, in order to be subject to gift tax, there should exist the substance of gratuitous transfer of property. Thus, gift tax shall not be imposed where a quid pro quo donation exists between a donor and a donee (see Supreme Court Decision 95Nu4353, Sept. 15, 1995).

(2) Therefore, as to the instant case, the health team and the facts acknowledged earlier are revealed.

In other words, the above circumstances, i.e., ① the Plaintiff did not pay the price for the acquisition of the instant shares from Kim○○, and even if Kim○○, as alleged by the Plaintiff, upon meeting the conditions agreed upon by the Plaintiff at the time of the Plaintiff’s initial participation in issuing new shares and acquiring convertible bonds, he merely transferred part of the original acquired shares to the Plaintiff, which is not a fulfillment of the condition of suspension under which Kim○○ would transfer the instant shares to the Plaintiff free of charge, but it is difficult to deem that the Plaintiff made a contribution with a compensatory meaning in acquiring the instant shares. Furthermore, the Plaintiff’s gratuitous transfer of part of the acquired shares without compensation to other shareholders after the issuance of the shares at par value and from the beginning of the transfer of the shares by means of transferring the shares to the capital after the issuance of the shares above par value, cannot be deemed identical to the legal substance even if the economic aspect is different, and thus, the taxation disposition should also be treated equally. In light of the above, the Plaintiff’s offering the shares to Kim○○ without compensation.

(3) Therefore, the disposition of this case by the defendant on the premise that the plaintiff was given a donation of the shares of this case from Kim ○○, is legitimate, and the plaintiff's assertion is without merit.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.

Related Acts and subordinate statutes

former Inheritance Tax and Gift Tax Act (amended by Act No. 6301 of Dec. 29, 2000)

Article 2 (Gift Tax Taxables)

(1) Where any donated property falls under any of the following as of the date of donation due to a donation by a third party (excluding donation becoming effective due to the death of a donor; hereinafter the same shall apply), gift tax shall be levied on such donated property, as prescribed by this Act:

1. Where a person who acquires property by donation from a third party (hereinafter referred to as a " donee") is a resident (including a non-profit corporation, the head office or main office of which is located in Korea; hereafter the same shall apply in this paragraph and Articles 54 and 59), all of the donated property received, as a donation, by

Article 31 (Scope of Donated Property)

(1) Gift property under Article 2 shall include property belonging to the donee, all articles having economic value capable of realizing in money and all de facto or de facto rights having property value.

(4) Where the donated property (excluding money) is returned by the reporting deadline under the provisions of Article 68 under an agreement between the parties concerned after donation, it shall be deemed that the donation had not been made from the beginning: Provided, That the same shall not apply to the case where the tax base and amount of tax were determined under the provisions of Article 76

(5) Where a donee returns the donated property (excluding money) to the donor or re-donates the donated property to the donor within 3 months after the time limit for report expires pursuant to the provisions of Article 68, gift tax shall not be levied on such returned or re-donations.

Article 60 (General Rules, etc. of Appraisal)

(1) The value of property on which an inheritance tax or a gift tax is levied under this Act shall be the market price as of the date the inheritance commences or the date of donation (hereinafter referred to as the "date of appraisal"). In such cases, the value appraised by the method of appraisal stipulated in Article 63 (1) 1 (a) and (b) (excluding cases falling under the provisions of Article 63

(3) In the application of paragraph (1), where it is difficult to compute the market price, the price assessed according to the methods prescribed in Articles 61 through 65 shall be based on the type, scale, transaction conditions, etc. of the relevant property

Article 63 (Appraisal of Securities, etc.)

(1) Securities, etc. shall be appraised according to the methods prescribed in the following subparagraphs:

1. Appraisal of stocks and investment shares:

(c) Stocks and equity shares not listed on the Korea Stock Exchange other than those under item (b) shall be appraised according to the method prescribed by the Presidential Decree in consideration of the assets and profits

Article 68 (Reporting of Tax Base of Gift Tax)

(1) Any person liable to pay the gift tax pursuant to the provisions of Article 4 shall, within three months from the date of donation, report the taxable value and tax base of the gift tax pursuant to the provisions of Articles 47 and 55 (1) to the head of the competent tax office having jurisdiction over the place of tax payment, as prescribed by the Presidential Decree: Provided, That the time limit for the report on the settlement of the tax base of the gift tax pursuant to the listing, etc. of unlisted stocks pursuant to the provisions of Article

(2) In cases under paragraph (1), a report shall be submitted to the head of a tax office having jurisdiction over the place of tax payment, along with the kinds, quantity, appraised values of donated property, documents proving various deductions, etc. prescribed by Presidential Decree.

Enforcement Decree of the former Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 17039 of Dec. 29, 2000)

Article 54 (Appraisal of Unlisted Stocks)

(1) The weighted average value of stocks and equity shares not listed on the Korea Securities and Futures Exchange pursuant to Article 63 (1) 1 (c) of the Act (hereafter in this Article and Article 56-2, referred to as “unlisted stocks”) and net asset value per share shall be based on the values appraised by the following formula (hereafter in this Article and Article 56-2, referred to as “net value”) and net asset value per share, respectively: Provided, That in cases of a corporation in possession of real estate and multi-owned assets (referring to a corporation falling under Article 158 (1) 1 (a) of the Enforcement Decree of the Income Tax Act), the ratio of net value per share to net

The value per share = The weighted average amount of net profits and losses per share for the latest three years ± the rate determined and publicly announced by the Commissioner of the National Tax Service in consideration of the circulation rate of three-year corporate bonds guaranteed by the financial institutions (hereinafter referred to as the “net profit and loss exchange rate

(2) The net asset value per share under paragraph (1) shall be the value appraised by the following formula:

The value per share = the net asset value of the corporation ± the net asset value of the corporation ± (hereinafter referred to as the “net asset value”).

(5) In applying paragraph (2), the total number of outstanding stocks shall be determined by the total number of outstanding stocks as of the evaluation base date.

former Framework Act on National Taxes (amended by Act No. 6303 of Dec. 29, 2000)

Article 14 (Real Taxation)

(1) Where the ownership of income, profit, property, act or transaction subject to taxation is merely nominal and a person to whom such ownership belongs exists, tax-related Acts shall apply to such person to whom such person actually belongs as a taxpayer.

(2) The provisions on the calculation of tax base in tax-related Acts shall apply to income, profit, property, act or transaction, notwithstanding the name or form of such transaction. The end shall be applied according to the substance.