Suwon District Court 201Guhap407, 2011 07

early 2009 middle 4002 ( October 28, 2010)

No person liable for gift tax shall be a taxpayer because he/she does not fall under an unincorporated association, etc. deemed a corporation.

Since the descendants of the co-help group are referred to as "unincorporated associations that have certain organizations and are engaged in their activities for the purpose of co-prosperity and co-prosperity," the registration number for real estate registration of an association which is not a juristic person has only been given, it does not constitute "unincorporated associations, foundations or other organizations deemed a juristic person" and therefore, it cannot be a taxpayer for gift tax.

2011Nu29399 Revocation of a disposition imposing gift tax

XXXX

Head of Namyang District Tax Office

Suwon District Court Decision 2011Guhap407 Decided July 19, 2011

May 1, 2012

June 5, 2012

1. Revocation of a judgment of the first instance;

2. The Defendant’s disposition imposing gift tax of KRW 000 on the Plaintiff on July 2, 2009 shall be revoked.

3. All costs of the lawsuit shall be borne by the defendant.

The same shall apply to the order.

1. Gift tax;

The following facts are recognized in light of the overall purport of the arguments in Gap evidence 1 to 5 and Eul evidence 1 to 5 (including paper numbers):

[1]

On August 8, 1997, the registration of transfer of ownership was completed with respect to the land of this case in the name of Parkh-2,128 square meters (hereinafter referred to as the “instant land”) such as the Gyeonggi-do Myeong-gun 1-18 square meters of land of this case, the Gyeonggi-gun 1997. The registration of transfer of ownership was completed with respect to the land of this case and the registration of transfer of ownership was not completed.

On September 10, 2005, AB entered into a contract with ABCC to purchase the instant land in KRW 000.

[2]

OOn the other hand, on October 1, 2005, the dueB, his wife D, EE, EF, EF, and EGG, which are children of the due diligence and YongD, have written the Plaintiff’s door-to-door.

The contents of the O's letter are as follows: (a) the purpose of the plaintiff is to cultivate noble spirit and to cultivate the spirit of the deceased and to foster the spirit of the deceased members; (b) the plaintiff's member is a lineal ascendant or descendant of 34 years old-year-old descendant; (c) the location of the plaintiff is 4-7 in the documents for both the Gyeonggi-do Yangyang-gun, the Gyeonggi-do, the representative of the plaintiff and one auditor; and (d) the plaintiff's meeting is the general and extraordinary general meeting.

On October 1, 2005, the general assembly of the plaintiff was held, and decided to acquire the land in this case as the property of the plaintiff, and the JungB and his wife and three children.

OO on October 19, 2005, the plaintiff was assigned a registration number for real estate registration of an association which is not a corporation pursuant to the Registration of Real Estate Act by the head of Bupyeong-gu Gun.

[3]

As seen above, the OB entered into a contract with the Ansan on September 1, 2005 to purchase the instant land at KRW 000,000, and the purchase price was paid by the PB’s wife.

OGD paid the purchase price as the check it held, and paid 000 won to △△△△△, and paid 00 won on November 3, 2005, 2000 won after collecting the money that it borrowed to YY Savings Bank in the name of OO, a representative director, YY Savings Bank.

O on October 27, 2005, the registration of ownership transfer was completed in the name of the plaintiff with respect to the land of this case.

[4]

C. On July 2, 2009, the Defendant recognized that YongD donated the purchase price of the instant land to the Plaintiff, and issued a disposition imposing gift tax of KRW 000 to the Plaintiff (hereinafter “instant disposition”).

O filed an appeal with the Tax Tribunal on September 28, 2009 on the instant disposition, and the Tax Tribunal dismissed the appeal on October 28, 2010.

2. The plaintiff's assertion and judgment

The Plaintiff sought revocation of the disposition of this case on which gift tax was imposed on him, and the Plaintiff, a clan, claiming that the Plaintiff cannot be a taxpayer of gift tax. Therefore, the Plaintiff’s assertion should first be examined.

[1]

(1) Before the amendment on December 30, 2003 and the enforcement on January 1, 2004, the Inheritance Tax and Gift Tax Act (hereinafter “Gift”) provides that, in cases where a person who acquires property through a third party’s donation is a resident, gift tax shall be imposed on all donated property. Such resident includes a non-profit corporation. Article 4(6) of the △△△△△, an unincorporated association, foundation or other organization provides that the gift tax shall be imposed on all donated property.

According to the above provisions, "unincorporated associations, foundations or other organizations" can become a non-profit corporation that is liable to pay gift tax.

(2) However, the Inheritance Tax Act amended on December 30, 2003 and enforced on January 1, 2004, provides that where a person who acquired property by another person’s donation is a resident, gift tax shall be imposed on all donated property, and such resident shall be included in a non-profit corporation. Thus, in the same manner as before the above amendment, Article 4(6) of the Act provides for the notification to a donor and Article 4(7) of the △△△△, and newly established an unincorporated association, foundation, or other organization without a legal personality, deemed a non-profit corporation pursuant to Article 13(4) of the Framework Act on National Taxes, to be subject to the gift tax.

According to the above provisions, "an unincorporated association, foundation, or other organization" is deemed a corporation pursuant to Article 13 (4) of the Framework Act on National Taxes" among "unincorporated associations, foundations, or other organizations" can be deemed as a non-profit corporation liable for gift tax.

[2]

(1) AB entered into a contract with ACC on September 1, 2005 to purchase the instant land; ABD’s wife paid the purchase price to ACC by November 3, 2005; and on October 27, 2005, the Plaintiff’s ownership transfer registration for the instant land was completed.

(2) As above, the gift tax law, which was enforced at the time of the conclusion of the contract, payment, and transfer of ownership, was the same as the amended on December 30, 2003, and under such gift tax law, it can be deemed as a non-profit corporation that is deemed as a corporation pursuant to Article 13(4) of the Framework Act on National Taxes.

(3) However, Article 13(4) of the Framework Act on National Taxes provides that the obligation on the national taxes of an unincorporated organization deemed as a juristic person pursuant to Article 13(1) and (2) of the Framework Act on National Taxes must be performed by its representative or manager, and Article 13(1) of the above Act defines the “unincorporated association, foundation, or other organization” as “unincorporated organization”.

(4) Therefore, if the Plaintiff falls under an unincorporated association, foundation, or other organization deemed a corporation pursuant to Article 13(4) and (1) and (2) of the Framework Act on National Taxes, the Plaintiff may be liable to pay the gift tax.

[3]

(1) Article 13(1) of the Framework Act on National Taxes provides that Article 13(1) of the Framework Act on National Taxes shall apply to an unincorporated association, foundation, or other organization which falls under any of the following:

1. Any association, foundation or other organization established with permission or authorization of the competent authority or registered with the competent authority under Acts and subordinate statutes, which has not been registered;

2. Foundations which hold any basic property contributed for the public interest, but not registered.

(2) According to the above, on October 1, 2005, the △△△△△ and three of its wife and three of their children drafted the Plaintiff’s door-to-door rules, and the contents of the △△△△ rules are to cultivate the Plaintiff’s purpose as well as to cultivate sublime spirit and the door-to-door members, and the Plaintiff’s members are to be lineal ascendant and descendant of the 34-year-old descendants. The Plaintiff’s location was to be the 4-7 years-old in each of the documents of Gyeyang-Gun, the Plaintiff’s representative and one auditor, and the Plaintiff’s general meeting was to be the △△△△△△△△△△△△ and the Plaintiff’s three children were to acquire the instant land as the Plaintiff’s property, and the Plaintiff was granted the Plaintiff’s registration number on October 19, 2005, not the Plaintiff’s real estate registration number as the △△△△△△△ corporation.

(3) According to the above circumstances, the plaintiff is an unincorporated association with a specific organization for the purpose of fostering the descendants of the joint ancestor and promoting their common prosperity.

In addition, the registration number for the registration of real estate under the Registration of Real Estate Act is to record the registration number for the registration of real estate in addition to the name or title of the right holder when the registration of the right is made. Thus, even if the plaintiff has been granted the registration number for the registration of real estate of "unincorporated association" by the head of Bupyeong-gu, this does not constitute "the establishment with the permission or authorization of the competent authorities" or "the registration with the competent authorities under the law" as provided by Article 13 (1) 1 of the Framework Act on National Taxes

(4) If so, the plaintiff does not constitute an unincorporated association, foundation or other organization deemed a corporation pursuant to Article 13(4) and (1) of the Framework Act on National Taxes. Thus, the plaintiff cannot be a taxpayer for gift tax.

[4]

(1) Article 13(2) of the Framework Act on National Taxes provides that Article 13(2) of the Framework Act on National Taxes shall apply to an unincorporated organization, other than an association, foundation, or other organization deemed a corporation under paragraph (1), which satisfies the following requirements and has obtained approval from the chief of the competent tax office, deeming it as a corporation and subject to the Framework Act on National Taxes

1. It shall have provisions relating to the organization and operation of an association, foundation or other organization and appoint a representative or manager;

2. An association, foundation or other organization shall independently own and manage profits and property in its own account and name;

3. It shall not distribute its profits to its members.

(2) As seen earlier, the Plaintiff is deemed to be an unincorporated association in which the descendants of the joint ancestor have a specific organization and are engaged in activities for the purpose of jointly prosperity while worshiping their ancestor. Since the Plaintiff was granted a registration number for the real estate registration of an unincorporated association from the head of Pyeongtaek-si, it does not constitute “a person who has filed an application with the head of the competent tax office for approval” as provided by Article 13(2) of the Framework Act on National Taxes.

(3) If so, the plaintiff does not constitute an unincorporated association, foundation or other organization deemed a corporation pursuant to Article 13(4) and (2) of the Framework Act on National Taxes. Thus, the plaintiff cannot be a taxpayer of gift tax.

[5]

(1) As above, according to Article 13(4), (1), and (2) of the Framework Act on National Taxes, an unincorporated association, foundation, or other organization deemed a corporation pursuant to Article 13(4), (1), and (2) may be liable to pay gift tax. Since the Plaintiff does not fall under the above cases, the Plaintiff may not impose gift tax on the Plaintiff. Accordingly, the instant disposition against which gift tax was imposed on the Plaintiff is unlawful.

(2) On the other hand, in the Income Tax Act, an unincorporated association, foundation, or other organization, other than an organization deemed a juristic person pursuant to Article 13(4) of the Framework Act on National Taxes, provides that "any association, foundation, or other body, other than an organization deemed a juristic person pursuant to Article 13(4) of the Framework Act on National Taxes shall be deemed a resident and subject to the Income Tax Act."

However, as seen earlier, the Plaintiff is not an individual, but a "unincorporated association that has a specific organization and works for the purpose of promoting the common prosperity while succeeding descendants of the joint ancestor worship." The instant disposition imposes gift tax on the Plaintiff.

Therefore, even if there is a possibility that the Plaintiff may impose the income tax on the Plaintiff because the Plaintiff falls under the “organization other than the organization deemed a corporation pursuant to Article 13(4) of the Framework Act on National Taxes” or there is a possibility that income tax or gift tax may be imposed on the JungB and his wife and three children who prepared the Plaintiff’s door-to-door covenant, the instant disposition that imposed the gift tax on the Plaintiff cannot be maintained as it is.

3. Conclusion

Thus, the plaintiff's claim seeking the cancellation of the disposition of this case will be accepted on the grounds of its reasoning, and since the judgment of the court of first instance is unfair on the grounds of its conclusion, it is so decided as per Disposition by cancelling the judgment of the court of first instance and accepting the plaintiff