Seoul Administrative Court 201Guhap4770 (No. 15, 2011)

National Tax Service Review Donation 2010-0075 ( November 12, 2010)

It shall be determined as at the time of reduction of stocks whether the person is a specially related person.

Although the former Act and subordinate statutes did not include “retirement executives”, the amendment of the Act and subordinate statutes cannot be deemed to be an employee at the time of capital reduction, and the imposition of gift tax by deeming an officer for whom five years have not passed after his retirement as a specially related person cannot be deemed to violate the principle of prohibition of retroactive legislation.

2011Nu3305. Revocation of the imposition of gift tax

Park XX et al.

The director of the tax office.

Seoul Administrative Court Decision 201Guhap4770 decided September 15, 2011

March 2012

April 13, 2012

1. The plaintiffs' appeal is dismissed.

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

The judgment of the first instance shall be revoked.

The Defendant’s disposition of imposition of KRW 000,00,000, which was imposed on Plaintiff Park Jong-A on January 2010, shall be revoked.

The Defendant’s disposition of imposing KRW 000,000, which was imposed on Plaintiff B, on January 2010, 201, shall be revoked.

1. Gift tax;

In full view of the purport of the entire pleadings, the following facts are recognized in each statement of Gap evidence Nos. 1, 2, 10, and Eul evidence Nos. 1 through 5 (including branch numbers), and the whole purport of the pleadings.

[1]

O. The 'the corporation of this case' is established on July 1, 1988, and the plaintiff Parkb is the representative director of the corporation of this case. The plaintiff Parkb is the plaintiff Parkb, and the plaintiff Parkb is the head of the plaintiff Parkb. The plaintiff Parkb worked as the director of the corporation of this case as the director of the corporation of this case and retired from the corporation of this case on November 9, 201.

O The instant corporation, as an unlisted corporation, was 280,087 shares issued at the time of August 9, 2005, but among them, the Plaintiff Parkba held 172,038 shares (61.42%) among which Plaintiff Parkba, who is his wife, 12,10 shares (4.32%), 47,849 shares (17.08%) and 48,090 shares (17.17%) respectively.

C. On August 9, 2005, the general meeting of shareholders of the instant legal entity adopted a resolution to reduce the capital amount of KRW 000,000, which is the total face value of the instant legal entity by acquiring the above 47,849 shares (the face value per share is 00 won) owned by the instant legal entity (hereinafter referred to as the “resolution to reduce capital”).

O Then, on August 12, 2005, the CC entered into a contract with the instant corporation to sell the above 47,849 shares at KRW 00 per share, and received the payment from the instant corporation in full.

O The corporation of this case acquired 47,849 share from Western and retired it, thereby reducing its capital amount to KRW 000 (hereinafter referred to as “the capital reduction”).

O) Accordingly, the total number of outstanding shares of the instant corporation decreased to 232,238 shares, and among them, the Plaintiff Park Poe-A, 172,038 shares (74.08%) and the Plaintiff Lee B,110 shares (5.21%) and KimD held 48,090 shares (20.71%) respectively.

[2]

Article 39-2 of the Inheritance Tax and Gift Tax Act, which was enforced on August 9, 2005, which was the date of the resolution for the reduction of capital of this case, provides that "the gift of profits from the reduction of capital" shall be stipulated as "the gift of profits from the reduction of capital", and the amount equivalent to such profits shall be deemed as the value of the gift of the major shareholder in cases where the major shareholder who has a special relationship with the former gains profits from the retirement of the shares of the former shareholder in order

O The defendant assessed the above 47,849 shares as KRW 00 per share as of the resolution date of the capital reduction of this case by the method stipulated in Article 63 of the Inheritance Tax and Gift Tax Act, and recognized that it and the plaintiffs were related to the special relation stipulated in Article 39-2 of the Inheritance Tax and Gift Tax Act.

O) Accordingly, on January 6, 2010, the Defendant imposed a gift tax of 000 won on the Plaintiff Park Jong-chul for the year 2005 (=determined tax of 000 won + additional tax of 000 won + additional tax of 000 won + additional tax of 000 won). The Defendant imposed a gift tax of 2005 (=determined tax of 000 won + additional tax of 000 won + additional tax of 000 won + additional tax of 000 won) on the Plaintiff Lee Young-B (hereinafter referred to as “instant disposition”).

Ⅱ. The argument and judgment

The plaintiffs seek revocation of the disposition of this case. The plaintiffs' arguments are examined as follows.

1. Applicable statutes;

A. The plaintiffs' assertion

On December 11, 2001, the SCC entered into a donation agreement between the plaintiff Park In-bok and the plaintiff Park In-bok at the time of the first agreement with the plaintiff Park In-bok on December 11, 2001. To implement this, on April 29, 2004, the SCC entered into the second agreement with the plaintiff Park In-bok on April 29, 2004, and on April 4, 2005, the agreement was entered into between the plaintiff Park In-bok and the corporation of this case, and the resolution was adopted at the general meeting of shareholders of the corporation of this case on August 9, 2005.

Therefore, with respect to the special relationship under Article 39-2 of the Inheritance Tax and Gift Tax Act, the laws enforced as of December 11, 2001, which is the date of the first agreement, should be applied. According to such laws and regulations, the above special relationship betweenCC and the plaintiffs is not recognized.

However, the disposition of this case did not apply the law that was enforced as of December 11, 2001, which was the date of the first agreement with respect to the above special relation, but applied the law that was enforced as of August 9, 2005, which was the date of the resolution for the reduction of capital of this case, and recognized thatCC and the plaintiffs were in a special relationship, which is unlawful.

(b) Fact of recognition;

In full view of the purport of the entire pleadings, the following facts are recognized in each statement of Gap evidence Nos. 1 through 38 (including branch numbers).

[1]

CuCC was a director of the instant legal entity and worked as the head of the Busan Branch, and around October 2001, the Plaintiff Park Jong-A, the representative director of the instant legal entity, filed a complaint for embezzlement, etc., and retired from the instant legal entity on November 9, 2001.

O) After that, on December 11, 2001, the SPCC agreed with the Plaintiff LA, and on December 11, 2001, the SPCC transferred 119 △△ 24 shares issued by the instant corporation owned by it to the Plaintiff LA, and revoked the said complaint, and the Plaintiff LA agreed to pay 00 won to the SPP (a evidence 3; hereinafter referred to as the “first agreement”).

[2]

O In accordance with the first agreement, the Plaintiff ParkA paid KRW 1.4 billion to the SCC, and the SCC transferred KRW 71,775 out of the said KRW 119 △24 to the Plaintiff ParkA. The SCC did not transfer the remainder of KRW 47,849 and filed a second complaint against the Plaintiff ParkA for embezzlement, etc.

O) After that, on April 29, 2004, it re-consulted with the Plaintiff ParkA on April 29, 2004, it transferred the remainder of 47,849 shares to Plaintiff ParkA, and revoked the above complaint, and Plaintiff Park Jong-A paid 100 won to SeoCC in return for the transfer of shares and the cancellation of complaint, and agreed to make a notarial deed of the same amount of a promissory note with the SCC (hereinafter referred to as “the second agreement”) (hereinafter referred to as “the above agreement”).

[3]

O In accordance with the second agreement, on April 29, 2004, the Plaintiff Park Jong-A, jointly with the instant legal entity, drafted a promissory note with a total of KRW 1000 won for face value, and filed a complaint with the SCC on July 28, 2004 for the crime of attack, etc. without paying the above amount.

C. On August 17, 2004, Plaintiff Park Jong-A also filed a lawsuit seeking the exclusion of the executory power of the said promissory note notarial deed with the instant legal entity as Seoul Central District Court 2004Gahap66204.

O) On the other hand, the Western was detained on December 1, 2004 by the Seoul Central District Court 2004Kahap1149 of the Seoul Central District Court, which was the violation of the Act on the Aggravated Punishment, etc. of Specific Economic Crimes.

(O) On April 11, 2005, in the case of the above claim objection, the conciliation was concluded between Western and the plaintiff Park Jong-A and the corporation of this case (Evidence A 6, hereinafter referred to as "the conciliation of this case") with the following contents.

[4]

O On April 15, 2005, after the establishment of the instant conciliation, on April 15, 2005, Canada was sentenced to a two-year suspended sentence in the 2004 High Court Decision 2004 High Court Decision 2004 High Court Decision 1149.

O) On August 9, 2005, the general meeting of shareholders of the instant corporation entered into the instant resolution and entered into a contract with the instant corporation on August 12, 2005 to sell the said KRW 47,849 per share to KRW 000 per share between the instant corporation, and the said share transfer was entered into at the time of the agreement (Evidence 8).

C. Determination

[1]

(1) Tax liability is established when the assessment of tax base and the application of the tax rate prescribed in the tax law are possible due to the existence of facts or actions satisfying the taxation requirements as stipulated in the tax law, which is attributable to the taxpayer.

According to Article 21 of the Framework Act on National Taxes, which was enforced from December 11, 2001 to August 9, 2005, the date of the resolution on the reduction of capital of this case, which was the date of the first agreement, the duty to pay gift tax is established when property is acquired by gift.

(2) The Inheritance Tax and Gift Tax Act, which was in force on December 11, 2001, which was the date of the first agreement, provides that gift tax shall be imposed on donated property under Article 2(1) of the △△△, and Article 39-2 of the △△△ stipulates that where a corporation retires stocks or equity shares of some shareholders in order to reduce its capital, it shall be deemed that the amount equivalent to the benefit was donated to a large shareholder in a special relationship.

(3) The Inheritance Tax and Gift Tax Act, which was in force on April 29, 2004, which was the second agreed date, was in force on April 29, 2004. Article 2(1) of the △△△△, provides that gift tax shall be imposed on donated property as before. Article 2(3) of the △△△△, which provides that, “The gift” means a transfer of tangible and intangible property free of charge (including a transfer at a very low price) by direct or indirect means (including a transfer at a very low price) or an increase in the value of another person’s property through the contribution, and Article 39-2 of the △△△△△△△△△, which was stipulated as “the gift from capital reduction” in order for the corporation to reduce its capital, the amount equivalent to the interest shall be deemed as the value of donated property of the large shareholder in case where a large shareholder who has a special relationship with the former to retire his shares or equity shares due to the retirement of his shares or equity shares.

(4) The above provisions of the Inheritance Tax and Gift Tax Act did not change to the Inheritance Tax and Gift Tax Act, which was enforced on April 11, 2005 or on August 9, 2005, the resolution date of capital reduction of this case, which was the date of the completion of the conciliation of this case.

[2]

(1) On December 11, 2001, the Seocho entered into the first agreement with the Plaintiff LA on December 11, 2001. The content of the agreement was that: (a) the △△ Group transferred 119 △ 24 shares issued by the instant corporation owned by it to the Plaintiff LA; (b) revoked the Plaintiff’s complaint against the Plaintiff; and (c) the △△ Group paid KRW 00 won to the Plaintiff.

According to the above agreement, the first agreement bears both the obligation to pay for the transfer of shares and the cancellation of a complaint and the payment of money by the plaintiff Park Jong-A. Thus, since the obligation to transfer the property to the plaintiff Park Jong-A without compensation is not an unlimited obligation, the first agreement cannot be deemed to have been concluded between the plaintiff Park Jong-A and the first agreement date, as of December 11, 2001, which is the date of the first agreement.

(2) After the first agreement, SCC entered into the second agreement with the Plaintiff Park Jong-A on April 29, 2004;

The contents of the agreement are as follows: (a) the △△ Group transferred 47,849 shares issued by the instant corporation to the Plaintiff ParkA; (b) revoked the Plaintiff ParkA’s complaint; and (c) f::. The Plaintiff ParkA paid 000 won to the SCC in return for the transfer of shares and the cancellation of the complaint; and (c) written a promissory note of the same amount.

According to the above agreement, the second agreement also bears both the obligation to pay for the transfer of shares and the cancellation of a complaint, the payment of money, and the preparation of a promissory note notarial deed, etc., and it does not necessarily bear the obligation to transfer the property to the Plaintiff ParkA without compensation. Thus, it cannot be deemed that the donation contract was concluded between the Plaintiff and the Plaintiff ParkA as of April 29, 2004, which is the date of the second agreement.

In addition, the second agreement was made after the second agreement was made by the Plaintiff Park Jong-A, pursuant to the first agreement, to provide KRW 1.40 million to the Seocho, and the other 47,849 shares did not transfer the remaining 71,775 shares to the Plaintiff Park Jong-A, while the second agreement was made after it filed a second complaint by the Plaintiff Park Jong-A, and compared with the first agreement of the △△, the shares to be transferred by the CC were reduced from 119 △△24 to 47,849 shares, while the amount to be paid by the Plaintiff Park Jong-A was increased from 00 won to 00 won, and the consolation money was added to the name of money.

In light of the contents and developments of the agreement, the second agreement merely appears to have concluded a new agreement in the state of failure to implement the first agreement properly, and cannot be deemed to have modified only the content while maintaining the first agreement. Moreover, it cannot be deemed that the Western transferred the face value to the Plaintiff Park Poe in return for the significantly low price of the above 47,849 share (00 per share).

(3) On April 11, 2005, after the second agreement, the instant conciliation was concluded betweenCC and the Plaintiff ParkA and the instant legal entity. The content of the conciliation was null and void in the past of the △△△△, and the instant agreement was transferred 47,849 shares at the same time with the payment of KRW 00,000 to the Plaintiff ParkA or his designated person, and the instant legal entity was jointly and severally paid KRW 00,000 to the Plaintiff Park Jong-A and the instant legal entity, and the Plaintiff Park Jong-A and the instant legal entity revoked the complaint against the Western.

According to the above mediation, the instant mediation also imposes on both parties the obligation to pay for the waiver of rights and the transfer of shares and the cancellation of a complaint, etc. The obligation of CC to transfer the property to the Plaintiff YA or the corporation of this case without compensation. Thus, it cannot be deemed that the donation contract was concluded between the Plaintiff YA and the corporation of this case as of April 11, 2005, which is the date the instant mediation is established. In addition, the instant mediation was made jointly with the corporation of this case in accordance with the second agreement, and the Plaintiff YA prepared a notarial deed of KRW 100 won in total with the face value of 100 won with the corporation of this case without paying the above amount. On the other hand, it is necessary that CC filed a lawsuit for objection to the exclusion of executory power of the said promissory note, and the Plaintiff 200 and the corporation of this case should pay the amount of 00 billion won with the corporation of this case, which should not be paid by the Plaintiff 400 and the corporation of this case.

In light of the contents and developments of the conciliation, the instant conciliation is deemed to have newly agreed upon the second agreement following the first agreement between the Western and the Plaintiff Park Jong-A, but the said agreement was not implemented properly, and the Plaintiff Park Jong-A was also deemed to have been included in the instant legal entity whose representative director is the instant legal entity, and it cannot be deemed to have changed only the content while maintaining the first agreement or the second agreement. Moreover, it cannot be deemed that the SCC transferred its face value to the Plaintiff Park Jong-A in return for the significantly low price of the said 47,849 shares per share.

(4) On August 9, 2005 after the formation of the instant mediation, the instant capital reduction resolution was made by the instant corporation’s shareholders’ general meeting of the instant corporation by acquiring and retiring the above 47,849 shares owned byCC, thereby reducing the capital of the instant corporation. Accordingly, the instant capital reduction was made by the instant corporation upon entering into a contract with the instant corporation to sell the said 47,849 shares at KRW 100 per share with the instant corporation, stating that the said transfer of shares was based on the instant mediation. The instant corporation acquired 47,849 shares from SCC as above and retired them, thereby reducing the amount of capital to KRW 000.

In light of the developments leading up to capital reduction, this case’s capital reduction was concluded with the effect that both the first agreement and the second agreement, which was the past agreement between the Seocho and the corporation of this case, shall be null and void, and the said 47,849 shares were sold to the corporation of this case, the representative director of which was the Plaintiff Park Jong-A, and the said 47,849 shares was retired by the corporation of this case. It cannot be deemed that the first agreement and the second agreement were implemented.

[3]

(1) According to the above, from December 11, 2001, which was the date of the first agreement of △△△, until April 29, 2004, the date of the second agreement, and April 11, 2005, which was the date of the mediation of this case, the date of the second agreement, the date of the establishment of the mediation of this case, the amount of "donation" under the taxation requirement of the Inheritance Tax and Gift Tax Act (including the case of transfer for the significantly low price), "the amount of deemed donation due to capital reduction", or "the amount of profit due to capital reduction" under the capital reduction, it was not possible to establish the liability to pay gift tax, since there was no act or act, and only at the time of August 9, 2005, which was the date of the resolution of the capital reduction of △△△△△△△△, the amount of capital reduction falling under "the donation of profit due to capital reduction" under the taxation requirement of Article 39-2 of the Inheritance Tax and Gift Tax Act can be established.

(2) However, Article 39-2 of the Inheritance Tax and Gift Tax Act stipulated the special relation as one of the taxation requirements with respect to the donation of profits by the person A, and thus, it cannot be applied to the laws that were enforced on December 11, 2001, which was the date of the first agreement with respect to such special relation, before the date of resolution for reduction of capital of this case.

(3) Therefore, as of December 11, 2001, which was the date of the first agreement, the donation contract was concluded between Colombia and Plaintiff Park Jong-A as of December 11, 2001, and on the premise that both the second agreement, the instant mediation, and the instant capital reduction resolution were to be aimed at implementing the first agreement, the Plaintiffs’ assertion on this part is without merit to apply the law that was enforced as of December 11, 2001, which was the date of the first agreement with the Plaintiffs with respect to the special relationship betweenCC and the Plaintiffs.

2. Retroactive taxation:

A. The plaintiffs' assertion

The Act and subordinate statutes, which was enforced on August 9, 2005, which was the date of the resolution for the reduction of capital, stipulated the "absent officer for whom five years have not passed since his retirement" with respect to a special relationship under Article 39-2 of the Inheritance Tax and Gift Tax Act. The △△△ was amended on December 30, 2003 and enforced on January 1, 2004, and the Act and subordinate statutes prior to such amendment and enforcement were defined as "absent officer with respect to the above special relationship" and were excluded.

On November 9, 2001, prior to the above amendment and implementation,CC retired from the corporation of this case. If it recognizes the special relationship betweenCC and the plaintiffs by applying the statute enforced at the time of August 9, 2005, which was the date of the resolution for reduction of capital of this case, it constitutes a violation of the prohibition of retroactive taxation, since it recognizes the previous special relation as having no special relation.

However, in the instant disposition, the statute that was enforced on August 9, 2005, which was the date of the resolution for the reduction of capital of this case, recognized the special relationship betweenCC and the plaintiffs, which was unlawful.

B. Determination

(1) Article 18(2) of the Framework Act on National Taxes, which was enforced on November 9, 2001 at the time when the Western retired from the corporation of this case or on August 9, 2005, which was the date of the resolution of Gap of this case, provided that with respect to income, profit, property, act or transaction for which the obligation to pay national taxes was established, no tax shall be levied retroactively by a new tax law after its establishment.

The principle of non-payment of tax laws or the principle of prohibition of retroactive taxation is for legal stability and protection of the trust of the parties, and the time when tax liability is established is the base point of time.

This principle, in the event of the enactment or amendment of tax-related Acts and subordinate statutes, is not applicable to the pertinent laws and regulations regarding the taxation requirements that are closed prior to the entry into force, or it does not restrict the application of new Acts and subordinate statutes to the taxation requirements that have been continued before or after the entry into force (Supreme Court Decision 2008Du2736 Decided October 29, 2009).

(2) However, according to the above, from December 11, 2001, which was the date of the first agreement of △△△, until April 29, 2004, the date of the second agreement, and April 11, 2005, the date of the mediation of this case, which was the date of the second agreement, the date of the establishment of the mediation of this case, the liability to pay gift tax can be established on the ground that there was no fact or act falling under the "donation" under the taxation requirement of the Inheritance Tax and Gift Tax Act (including a case of transfer for the significantly low price), "donation due to capital reduction", "donation due to capital reduction", or "donation due to capital reduction", and therefore, the liability to pay gift tax could not be established only after the fact or act of Article 39-2 of the Inheritance Tax and Gift Tax Act, which was the date of the resolution of the capital reduction of △△△△△△ case, which was at the time of August 9, 2005.

(3) If so, at the time of retirement from the corporation of this case on November 9, 2001, the obligation to pay the gift tax was not established by the plaintiffs. Accordingly, since the law was amended and enforced at the time of August 9, 2005, which was the date of the resolution of the capital reduction of this case, it constitutes an officer for whom five years have not passed since the date of the resolution of the capital reduction of this case, and as the special relation betweenCC and the plaintiffs was recognized, it cannot be said that Article 39-2 of the Inheritance Tax and Gift Tax Act imposes the gift tax on the plaintiffs based on "the donation of profits due to capital reduction" under the provision of tax law, even if it is not in violation of the principle of non-payment of tax law or the principle of prohibition of retroactive taxation.

(4) Therefore, this part of the plaintiffs' assertion that applying the law that was enforced on August 9, 2005, which was the date of the resolution for the reduction of capital of this case, recognized the special relation betweenCC and the plaintiffs violates the prohibition of retroactive taxation is without merit.

3. Special relationship.

A. The plaintiffs' assertion

Even if the statute that was enforced at the time of August 9, 2005, which was the date of the resolution for capital reduction of this case, is not an employee of the plaintiffs, and therefore, it is not recognized as a special relationship betweenCC and the plaintiffs.

However, in the instant disposition, while applying the law that was enforced on August 9, 2005, which was the date of the resolution on the reduction of capital of this case, it was unlawful as it recognized the special relationship betweenCC and the plaintiffs.

B. Determination

(1) Article 39-2 of the Inheritance Tax and Gift Tax Act, which was enforced on August 9, 2005, which was the date of the resolution for the reduction of capital of this case, provides that “the donation of profits from the reduction of capital,” as seen earlier, shall be made by prescribing “the donation of profits from the reduction of capital,” and the amount equivalent to such profits shall be deemed as the value of donated property to the relevant large shareholder in cases where the large shareholder, who was in a special relationship with him, has obtained profits from the retirement of some shareholders (Article 1

Article 29-2(1) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that the shareholders holding 1/10 or more of the total number of shares issued by the relevant corporation with respect to the above major shareholders shall be the △△△△. Paragraph (1) of the same Article provides that the aforementioned special relationship shall be the relationship under each subparagraph of Article 19(2) of the Enforcement Decree of the same Act, and Article 19(2)2 of the △△△△△ prescribed the “employee” and Article 29-2(3) of the same Act provide that the calculation of the above profits shall be based on the date

(2) In addition, Article 13(4)1 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that "an officer (referring to a person who was an officer under Article 43(6) of the Enforcement Decree of the Corporate Tax Act and a person who was an officer for whom five years have not passed after retirement; hereinafter the same shall apply)," and Article 43(6) of the Enforcement Decree of the Corporate Tax Act provides that "an officer" shall be all members of the board of directors, such as the corporation's director, and Article 13(6)2 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that "an employee (including an employee of a corporation under control by investment; hereinafter the same shall apply) under the Ordinance of the Ministry of Finance and Economy," and Article 13(8)2 and Article 19(2)7 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that "a corporation under control by investment" as mentioned above, shareholders and their relatives shall invest more than 50/100 of the total number of shares issued.

(3) As above, Articles 13(4)1 and 13(6)2 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act provide that "executive" and "employee" shall be defined as "executive", and Articles 29-2 and 19(2) of the Enforcement Decree of the above Act provide that "employee" shall be defined as "employee" under Article 13 of the above Act. In light of the above, "employee" under Article 19(2)2 of the Enforcement Decree of the above Act, which is defined as a special relationship, includes a major shareholder who holds more than 1/100 of the total number of issued and outstanding shares as of the date on which the capital reduction resolution for △△△ was adopted and whose relative has invested more than 50/10 of the total number of issued and outstanding shares.

(4) However, on November 9, 2001, SCC worked as a director of the instant corporation as the head of the Busan Branch, retired from the instant corporation. On August 9, 2005, the date of the resolution for the reduction of the capital of the instant corporation, as of August 280, 2005, SCC owned 47,849 shares (17.08%) among the total number of shares issued by the instant corporation, 172,038 shares (61.42%) and 12,110 shares (4.32%) respectively.

Therefore, as of August 9, 2005, the date of the resolution for the reduction of capital of this case, at least 1/100 of the total number of shares issued by the plaintiff Park Jong-A and his wife as of August 9, 2005, and at the same time the plaintiff Park Jong-A and his wife invested at least 50/10 of the total number of shares issued and outstanding, and at the same time with respect to the corporation of this case as of August 9, 2005, the date of the resolution for the reduction of capital of this case, was a director of the corporation of this case as of August 9, 2005, and five years have not passed after the retirement, and the special relationship between the plaintiff Park Jong-A and the plaintiffs is recognized.

(5) Therefore, this part of the plaintiffs' assertion that under the law enforced on August 9, 2005, which was the date of the resolution for the reduction of capital of this case, the special relation betweenCC and the plaintiffs is not recognized is without merit.

4. Stock value; and

A. The plaintiffs' assertion

At the time of capital reduction of this case, SCC sold 47,849 shares to the corporation of this case at KRW 000 per share and retired by the corporation of this case. This is an objective exchange price formed through transactions between the parties.

Therefore, in calculating the above profits with respect to the "donation of profits from capital reduction" under Article 39-2 of the Inheritance Tax and Gift Tax Act, 000 won per share should be assessed as the amount of the above shares.

However, the disposition of this case was unlawful since the amount of KRW 00 per share by the method under Article 63 of the Inheritance Tax and Gift Tax Act was assessed as the amount of the above shares.

B. Determination

(1) Article 39-2 of the Inheritance Tax and Gift Tax Act, which was in force as of August 9, 2005, which was the date of the resolution for the reduction of capital of this case, provides that “the donation of profits from the reduction of capital” shall be stipulated as “the donation of profits from the reduction of capital,” and stipulates that in case where a large shareholder who was in a special relationship with him gains profits from the retirement of a certain shareholder of the △△△△, the amount equivalent to such profits shall be deemed as the value of donated property of the

Article 29-2 of the Enforcement Decree of the Inheritance Tax and Gift Tax Act provides for the profits from capital reduction, such as light rain, at least 30/100 of the appraised value per share of the reduced stocks, which was reduced by subtracting the value per share at the time of the retirement of shares from the appraised value per share of the capital at △△△, as the profits from capital reduction (Paragraph 2). The foregoing profits from capital reduction should be based on the date of resolution of the general meeting of shareholders for capital reduction (Paragraph 3).

(2) Meanwhile, Article 60 of the Inheritance Tax and Gift Tax Act provides that the value of the property on which the gift tax is levied shall be based on the market value as of the base date of appraisal on the date of donation as of the base date of appraisal (Paragraph (1) and that the △△△△△△ is ordinarily established when a free transaction is made between many and unspecified persons, and includes the value that is recognized as the market value as prescribed by Presidential Decree, such as the expropriation price, the public sale price, and the appraisal price (Paragraph (2)).

Article 49(1) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act provides that with respect to a transaction that is recognized as the market price as the market price as prescribed by Presidential Decree, where there is a transaction within three months before or after the base date of appraisal of the donated property, the transaction price thereof shall be prescribed, and the same shall not apply where the value of the transaction with the specially related person, such as the “employee”, is objectively unreasonable

1) 1.

In addition, Article 60 of the Inheritance Tax and Gift Tax Act provides that if it is difficult to calculate the market price above, the relevant property.

In consideration of the type, size, transaction situation, etc., it was stipulated that the value assessed by the methods prescribed in Articles 61 through 65 of the same Act shall be deemed the market price (Paragraph 3).

(3) Around October 2001, LCC filed a complaint with Plaintiff LA with the crime of embezzlement, etc., and on November 9, 2001, on December 11, 2001, Plaintiff LA entered into a first agreement with Plaintiff LA on December 11, 2001. While the content of the agreement was not properly implemented, Plaintiff LA again filed a complaint with Plaintiff LA as embezzlement, etc., and on April 29, 2004, Plaintiff LA entered into a second agreement with Plaintiff LA on July 28, 2004. Plaintiff LA filed a complaint with LA on July 28, 2004, under which the agreement was not properly implemented, and Plaintiff LA entered into a lawsuit for a promissory note against Plaintiff LA jointly with the instant corporation on the total face value of 00 won, and Plaintiff A filed a lawsuit for a promissory note on July 28, 2005.

The contents of the instant conciliation are null and void both the first agreement and the second agreement, which are the agreement in the past of △△, and the △△ Group renounced all rights based on the promissory note totaling KRW 1000,000, and at the same time transferred 47,849 shares issued by the instant corporation to △△, and at the same time, transferred 47,849 shares issued by the instant corporation to △△△, and the instant corporation jointly and severally paid 00 won to △△ and the instant corporation paid 00 won to west, and the Plaintiff Park Jong was revoked the complaint against CC.

If SCC divided KRW 000 as stated in the instant conciliation into KRW 47,849 that it decided to transfer to Plaintiff ParkA, the transaction price per share would be KRW 000,000. In light of the above content of the conciliation, the above KRW 000 cannot be said to be the price for the transfer of shares. The above KRW 00 cannot be said to be the price for the transfer of shares. The above amount is determined by taking into account the relationship where the SCC renounced the right based on the promissory note with face value of KRW 100,000 and revoked the complaint against the SCC that was detained by Plaintiff ParkF.

The plaintiffs also stated in the complaint of this case that not only the value of the corporation of this case, but also the number or amount of damages caused by the management rights and damages, etc. are combined.

On August 9, 2005, the date of the resolution for the reduction of capital of the instant corporation, the instant corporation was an unlisted corporation, and as of August 9, 2005, the Plaintiff Parkba 172,038 shares (61.42%) among the total number of shares issued by the instant corporation, and the Plaintiff LeeB, who is his wife, owned 12,10 shares (4.32%) and 47,849 shares (17.08%) respectively.

After the conclusion of the instant mediation, on August 9, 2005, the resolution for the reduction of capital was made at the general meeting of the instant corporation and on August 12, 2005, the CC concluded a contract with the instant corporation to sell the said 47,849 shares to KRW 00 per share between the instant corporation and the said corporation, and the transfer of shares was stated as the basis of the instant mediation.

As above, in the event that SCC sold 47,849 shares to the instant corporation based on the instant conciliation, such sales price cannot be deemed as the price for transferring shares, and it is determined in consideration of consolation money and damages, etc. between SCC and the Plaintiff Park F, the representative director of the instant corporation.

(4) In light of the above circumstances, 00 won set forth in the instant conciliation is divided into 47,849 shares that CC agreed to transfer to Plaintiff ParkA, and KRW 000 per share, or KRW 000 per share that CC sold the said shares to the instant corporation after the instant conciliation was established, shall not be deemed to have been generally established when a free transaction was made between many and unspecified persons, and it shall not be deemed to have been an ordinary transaction price, and the said 47,849 shares shall not be assessed by the method set forth in Article 60 of the Inheritance Tax and Gift Tax Act.

(5) Therefore, this part of the plaintiffs' assertion that the above KRW 000 per share should be assessed as the above KRW 47,849 per share is without merit, and it is lawful to evaluate the above shares in the disposition of this case by the method under Article 63 of the Inheritance Tax and Gift Tax Act.

5. Improper;

A. The plaintiffs' assertion

Even though the taxation requirement under Article 39-2 of the Inheritance Tax and Gift Tax Act is satisfied with respect to the capital reduction of this case, since the capital reduction of this case is an act of transaction between the parties with economic rationality, and thus, the "unfairness" under Article 2(4) of the Inheritance Tax and Gift Tax Act is not recognized, gift tax cannot be levied on the ground of capital reduction

However, even though the above illegality is not recognized in the disposition of this case, the gift tax was imposed on the ground of the capital reduction of this case, which was unlawful.

B. Determination

(1) Article 2(4) of the Inheritance Tax and Gift Tax Act, which was enforced on August 9, 2005, which was the resolution date of the capital reduction of this case, is deemed to have unjustly reduced the gift tax by means of an indirect method via a third party, or by means of two or more acts or transactions, the said economic substance shall be deemed to have been directly traded by the relevant party or by deeming it as a single act or transaction in succession subject to paragraph (3).

As above, Article 2(3) of the Inheritance Tax and Gift Tax Act provides that Article 2(4) of the Inheritance Tax and Gift Tax Act shall apply mutatis mutandis. The term “donation” refers to a transfer (including transfer at a remarkably low price) of tangible and intangible property without compensation to another person, either directly or indirectly, or an increase in the value of another person’s property by donation, regardless of the name, form, purpose, etc. of the act or transaction.

(2) The above provisions were newly established as of December 30, 2003 by amendment of the Inheritance Tax and Gift Tax Act and effective January 1, 2004, and Article 2(3) of the above provisions adopted the comprehensive principle of gift tax. Article 2(4) of the above provisions intended to regulate bypassing or multi-stage acts for tax avoidance and intended to impose taxes according to the substance in response to such tax avoidance act.

As seen earlier, Article 39-2 of the Inheritance Tax and Gift Tax Act, which was enforced on August 9, 2005, which was the date of the resolution for the reduction of capital, stipulated "the donation of profits due to the reduction of capital" as mentioned above. This is because the Inheritance Tax and Gift Tax Act adopted the method of comprehensive taxation of the gift tax as mentioned above, it is unnecessary to consider the provision on the constructive donation of individual matters as "the donation of profits due to the reduction of capital" as an individual example of the donation.

(3) If so, if the taxation requirements under Article 39-2 of the Inheritance Tax and Gift Tax Act, which was enforced on August 9, 2005, which was the resolution date of the capital reduction of this case, are met, gift tax may be levied accordingly. In addition to such taxation requirements, it is not necessary to separately determine whether the act or transaction is unreasonably reduced as provided under Article 2(4) of the Inheritance Tax and Gift Tax Act.

(4) Therefore, the plaintiffs' assertion that gift tax cannot be levied because the illegality under Article 2 (4) of the Inheritance Tax and Gift Tax Act is not recognized is not justified.

IV. Conclusion

Therefore, the plaintiffs' claims seeking the revocation of the disposition of this case are dismissed without merit, and the judgment of the court of first instance is justified with this conclusion, and all appeals by the plaintiffs are dismissed. It is so decided as per Disposition.