Since the company acquired shares by the method of direct distribution from a third party, the disposition imposing tax on the value of the donated property is legitimate.

Article 39(1)1 of the Inheritance Tax and Gift Tax Act does not require that the size of the value of donated property to a new purchaser should be more than a certain size. Thus, if a company acquired stocks from a third party by means of direct distribution, the disposition imposing tax on the value of donated property regardless of the size of the value of donated property generated is lawful.

Inheritance Tax and Gift Tax Act Article 39 (Donation of Benefits)

2013Revocation of disposition of revocation of gift tax imposition

LAA

XX Head of tax office

2015.08.20

2015.09.03

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s imposition of KRW 000 on September 10, 2012 against the Plaintiff was revoked on June 13, 2007.

1. Details of the disposition;

A. The Plaintiff participated in the capital increase issued on June 13, 2007 by a third party (hereinafter “instant capital increase”) and acquired 522,450 shares per share (hereinafter “instant shares”) from KRW 1,225 won per share (500 won per share), 640,001,250 won. Meanwhile, the existing shareholders of the instant company did not receive the allocation of new shares during the instant capital increase.

B. As a result of the investigation of a change in shares in 207 and 2008 with respect to the instant company, YYA assessed the value of shares of the instant company as KRW 1,611, out of KRW 2,704, the average of the closing price after capital increase with the above capital increase, and KRW 1,611, which is the theoretical right price of KRW 1,61, the appraised value of KRW 1,61, and KRW 1,225, which is the price per share of the instant shares acquired by the Plaintiff (386 won per share), and determined that the Plaintiff acquired the benefit of KRW 201,665,700 (=52,450 x 386 won) through a third party allotment, and notified the Defendant of the taxation data.

C. On September 10, 2012, the Defendant imposed and notified gift tax of KRW 000 on the Plaintiff on September 10, 2012.

D. On April 19, 2013, the Plaintiff filed an objection and filed an appeal with the Tax Tribunal, but was dismissed on August 7, 2013.

[Ground of recognition] Facts without dispute, Gap evidence No. 1, Eul evidence No. 1 (including paper numbers), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Unless the difference between the appraised value of the instant shares and the Plaintiff’s acquisition price of the instant shares falls under 30% or more of the appraised value of the instant shares, taxation cannot be made. The difference between the appraised value of the instant shares (1,611 won) and the Plaintiff’s acquisition price of the instant shares (1,225 won) falls short of 483 won, which is 1,611 won and 30% of the Plaintiff’s acquisition price of the instant shares. Accordingly, the instant disposition is unlawful since it does not fall under the requirements

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

Article 39(1)1 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 8828, Dec. 31, 2007; hereinafter “Inheritance Tax and Gift Tax Act”) provides that in case where a corporation issues new stocks to increase its capital at a price lower than the market price and obtains profits from such new stocks, the amount equivalent to the relevant profits shall be deemed the value of donated property to the person who has acquired such profits. The same item (c) stipulates that “the profits a person who is not a shareholder of the relevant corporation received new stocks directly from the relevant corporation by receiving the new stocks from the relevant corporation” is merely one of such profits, and does not require that the size of the value of donated property generated to the

In the instant case, the Plaintiff’s acquisition of the instant shares by the method of direct allotment from the instant company to a third party is identical as seen earlier, so it is possible to impose taxation on the donated property regardless of the size of the donated property that the Plaintiff incurred pursuant to Article 39(1)1 (c) of the Inheritance Tax and Gift Tax Act. Accordingly, the Plaintiff’s assertion on a different premise is without merit.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.