National High Court Decision 2007Du5059 ( December 31, 2008)

Amount received in excess of the acquisition value of shares after transferring equity shares shall be deemed as deemed dividend.

Where a person transfers equity shares and receives repayment of the real estate price in excess of the equity shares, the amount of excess shares shall be deemed as deemed the fictitious dividend, and the transferred shares remain in the list of investors due to the failure to complete the incineration procedure.

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

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposing global income tax of KRW 90,147,640 for the Plaintiff on May 1, 2007 is revoked.

1. Circumstances concerning the basic facts and dispositions;

가. 원고의 부친 망 김☆☆와 이CC는 ○○회사 ●●운수를, 정◎◎는 ○○회사 ◇◇ 택시를, 강□□은 ○○회사 □□택시를 각 운영하다가 1989. 2.경 경영상 이유로 ○○ 회사 ◇◇택시로 흡수합병한 후 상호를 ○○회사 AA교통(이하 'AA교통'이라 한다) 으로 변경하였고, 1992년경 자동차정비업을 목적으로 하는 ○○회사 AA정비(이하 '♧♧정비'라 한다)를 설립하였다.

나. AA교통의 각 출자자들의 지분을 보면, 김☆☆와 그 친지인 박■■의 지분 합계 8810구좌, 이CC 지분 1,555구좌, 정◎◎ 및 그 친지들(김△△, 방▲▲, 유▽▽)의 지분 합계 11,316구좌, 강□□ 및 그 친지들(강♤♤, 이♡♡) 지분 합계 11,119구좌(이하 '이 사건 회사'라 한다)이다.

C. The Kim Doi-ri, Lee Dong-ri, Lee Jong-ri, Park Jong-ri, and Gangnam-gu jointly participated in the management of AAA traffic, but the dispute arises between them, the following agreements (hereinafter referred to as the “instant agreement”) were concluded on March 31, 1995 to determine their shares and divide the property including the management right of AAB and AA maintenance.

1) 김☆☆와 이CC의 공동지분: 31.6%{ = (김☆☆ 및 박■■ 지분 8,810 + 이CC 지분 1,555) ÷ 전체지분 32,800}

가) AA교통의 창원시 ▶▶동 601-36 대지 310평 및 지상건물

나) AA교통의 창원시 ▶▶동 601-35 대지 201평 5층 및 본층건물, 2층 차고건 물 일부

2) Shares in Maternate: 34.5% (i.e., shares in 11,316 ± total shares 32,800)

(A) 10 cabs for business purposes of AA traffic (vehicle and license);

B) Site 600 square meters located in Chang-si, Chang-si.

3) Equity interest in Gangseo-gu: 33.9% (=shares 11,119 ± Total equity interest 32,800)

가) AA교통의 창원시 ▶▶동 601-34 대지 310평 및 지상 건물

나) AA교통의 창원시 ▶▶동 601-35 대지 108평 5층 및 2층 차고건물 일부

C) Right to permit a factory of AA readjustment and premium (telecommunications Equipment)

D. Pursuant to the above agreement, Mandong filed a lawsuit seeking confirmation of the right of employee with the Changwon District Court 2002Gahap1611 against the Plaintiff and the persons on the list of investors in AA traffic, including thisCC and Gangseo-gu, who succeeded to the shares of Kim Jong-ri in accordance with the above agreement.

E. On May 19, 2003, the above court constituted a conciliation of the following contents (hereinafter referred to as “instant conciliation”) with respect to AA traffic as an intervenor for conciliation.

1) The rest of the investors, excluding Madle Mad Co., Ltd., transfer all shares to AA traffic of the Intervenor.

2) AA traffic:

가) 강□□에 게 창원시 ▶▶동 601-34 대 1,024㎡ 및 같은 동 601-34, 35, 36 지 상 제1호와 제2호 사무실과 정비공장 등 건물들에 관하여 2003. 5. 19. 양도약정을 원 인으로 한 소유권이전등기절차를,

나) 원고에게 창원시 ▶▶동 601-36 대 1,024.8㎡ 및 같은 동 601-34, 35, 36 지상 제3호 사무실과 단층점검대 및 차고 등 건물들(이하 '이 사건 부동산들'이라 한다)에 관하여 2003. 5. 19. 양도약정을 원인으로 한 소유권이전등기절차를, 다) 창원시 ▶▶동 601-35 대 1024.8㎡ 중 1,024,800분의 771.162 지분에 대해서 는 강□□에게, 1,024,800분의 253,638 지분에 대해서는 이CC에게 각 2003. 5. 19. 양도약정을 원인으로 하는 소유권이전등기절차를, 각 이행한다.

3) We shall pay 50,000,000 won to Maternal Materns, and the Plaintiff and thisCC shall jointly and severally pay 200,000,000 won until the execution of each of the procedures for the registration of ownership transfer under paragraph (2) above, and if not performed, the amount shall be calculated by adding 10% interest per annum to 10%.

4) Madle Madnum shall waive the employee's share in the AA maintenance held by the Madle Madle and the trustee, and shall cooperate in the procedure of transferring the share after the vehicle as desired by the

F. On March 10, 2005, the Plaintiff received a substitute fee for the registration of ownership transfer concerning the real estate in the instant case.

G. On May 15, 2007, the Defendant: (a) deemed that the portion exceeding the acquisition value of the Plaintiff’s share of the real estate of this case constitutes the constructive dividend income under Article 17(2)1 of the Income Tax Act; and (b) imposed global income tax on the Plaintiff as stated in the purport of the claim against the Plaintiff (hereinafter “instant disposition”).

Facts without dispute over the basis of recognition, Gap evidence 1, Eul evidence 2-1.2, 3, Gap evidence 3, 4, Gap evidence 5-1, 2, Gap evidence 6, 7, 8, 9, Eul evidence 1, and the purport of the whole pleadings

2. Whether the dispositions of the instant case are legal.

A. The plaintiff's principal

1) Since a person who actually takes over the Plaintiff’s equity shares is shot, the instant disposition taken on the premise that the transferee is AAA traffic is unlawful against the principle of substantial taxation as to the person to whom the transaction belongs.

2) 원고가 양도한 출자지분은 이 사건 약정 및 조정 후 수년이 지났을 뿐만 아니라 AA교통의 경영권이 정◎◎로부터 변▷▷으로 이전된 후 수년이 지난 현재까지도 소각되지 않고 여전히 AA교통의 자본을 구성하고 있으므로 위 출자지분의 양도가 출자 지분의 소각을 목적으로 하지 않았다고 할 것이고 앞으로도 소각되지 않을 가능성이 높다고 할 것이므로 위 출자지분의 소각을 전제로 한 이 사건 처분은 거래의 실질에 관한 실질과세의 원칙에 반하여 위법하다.

(b) Related statutes;

The entries in the attached Table-related statutes are as follows.

C. Determination

(i)the first proposal;

In a case where the uniform economic effect can be achieved through the transaction of different legal compositions, the tax requirements and effects should be determined on the basis of such transaction unless there are circumstances such as false marking, etc., or denying the legal effect as it is an act of tax avoidance.In order to secure the right to sole operation of the field traffic, there may be 100% method of acquiring shares from the existing investors such as the plaintiff, etc., but there may be 100% method of taking over shares from the existing investors such as the plaintiff, etc. However, as the contents of the instant adjustment, there may be a method of allowing investors other than YM to transfer each share of the ownership to AA traffic, so that all of the remaining shares except for the shares transferred to AAA traffic may become a ○ substantial right holder. Such a method of transaction should also be respected in the determination of taxation requirements, unless there is any circumstance to deny the legal validity of the aforementioned method. Accordingly, the opposing party who takes over the Plaintiff's shares among the contents of the instant adjustment should be considered as AAA traffic according to the legal method chosen by the parties.

(ii) the second light judgment;

In light of the overall purport of the arguments in Gap evidence Nos. 3, 4, 7, and 8, the reason why the plaintiff et al. transferred his equity shares to AAA traffic in this case is to make the plaintiff et al. the sole equity right holder of AAA traffic. After the agreement of this case, Kim △-won or the plaintiff may recognize the fact that the plaintiff acquired the ownership of the real estate in this case from AAA traffic according to the adjustment of this case. The fact that the plaintiff acquired the ownership of the real estate in this case from the eropic transportation. Under these circumstances, even though AA transportation did not formally complete the procedures for the retirement of the plaintiff's share until the end of 2005, even if the plaintiff remains in the list of investors in AAA transportation, the plaintiff could not exercise the right of share, and thus, the real estate in this case constitutes the property acquired due to the decrease of the plaintiff's equity interest, and the amount exceeding the acquisition value of the plaintiff's share in this case's real estate in this case is deemed as dividends, and thus, the plaintiff's income tax (Article 17 (2).

3. Conclusion

The plaintiff's claim of this case is dismissed as it is without merit. It is so decided as per Disposition.