Open Decision Ledger · Tax & international taxation
Gift tax on a major shareholder's gain from exercising subscription warrants
Supreme Court, Apr. 11, 2019, 2017Du52030 (judgment)
No holding summary · checked against points at issue. The official text publishes no summary of the holding for this decision. The quotation and factors in this record are copied verbatim from the points at issue; the evidence for each axis is taken from the points at issue, the order and the reasons.
Case name: 증여세경정거부처분취소
Official text on the National Law Information Center
Question
Where a company issued bonds with subscription warrants, an underwriter acquired all of them on the same day and transferred them to a securitisation company, which separated and sold the warrants to the company's major shareholder, could gift tax be imposed on that shareholder's gain from exercising the warrants under Article 40(1)(ii)(b) or Article 40(1)(iii) of the former Inheritance and Gift Tax Act?
Holding
It could not. Because the underwriter and the securitisation company did not acquire the bonds or the subscription warrants for the purpose of soliciting subscriptions from, or inviting offers by, 50 or more individual investors, Article 40(1)(ii)(b) of the former Inheritance and Gift Tax Act did not apply, and on the circumstances of the case Article 40(1)(iii) could not serve as the basis for the gift tax either. The Supreme Court found no error in that appellate judgment and dismissed the tax office's appeal, with the appeal costs on the tax office.
Points at issue, verbatim
을 회사와 병 회사가 50인 이상의 개인투자자를 상대로 매도의 청약을 하거나 매수의 청약을 권유할 목적으로 위 사채 또는 신주인수권을 취득하였다고 볼 수 없으므로 구 상속세 및 증여세법 제40조 제1항 제2호 (나)목에 따라 증여세를 부과할 수 없고, 나아가 제반 사정에 비추어 같은 법 제40조 제1항 제3호를 증여세 과세근거로 삼을 수도 없다고 본 원심판단을 수긍한 사례
Unofficial English translation
Since it cannot be regarded that Company B and Company C acquired the said bonds or the new share warrants for the purpose of offering to sell to, or soliciting offers to buy from, 50 or more individual investors, no gift tax may be imposed pursuant to Article 40, paragraph (1), subparagraph 2, item (b) of the former Inheritance Tax and Gift Tax Act; moreover, in light of all the circumstances, Article 40, paragraph (1), subparagraph 3 of the same Act cannot be taken as a basis for imposing gift tax. A case affirming the judgment below to that effect.
Disposition
Dismissed Stated in the decision
상고를 기각한다. 상고비용은 피고가 부담한다.
Unofficial English translation
The appeal is dismissed. The costs of the final appeal shall be borne by the defendant.
Form of the test
Existing test applied Read from the decision
을 회사와 병 회사가 50인 이상의 개인투자자를 상대로 매도의 청약을 하거나 매수의 청약을 권유할 목적으로 위 사채 또는 신주인수권을 취득하였다고 볼 수 없으므로
Unofficial English translation
Since it cannot be regarded that Company B and Company C acquired the said bonds or the new share warrants for the purpose of offering to sell to, or soliciting offers to buy from, 50 or more individual investors,
Factors
- 병 회사가 같은 날 신주인수권을 분리하여 갑 회사의 대주주인 정에게 매도하였고
- 을 회사와 병 회사가 50인 이상의 개인투자자를 상대로 매도의 청약을 하거나 매수의 청약을 권유할 목적으로 위 사채 또는 신주인수권을 취득하였다고 볼 수 없으므로
- 제반 사정에 비추어 같은 법 제40조 제1항 제3호를 증여세 과세근거로 삼을 수도 없다고 본 원심판단을 수긍한 사례
Unofficial English translation
• Company C separated the new share warrants on the same day and sold them to Jeong, the largest shareholder of Company A
• Since it cannot be regarded that Company B and Company C acquired the said bonds or the new share warrants for the purpose of offering to sell to, or soliciting offers to buy from, 50 or more individual investors,
• A case affirming the judgment below to the effect that, in light of all the circumstances, Article 40, paragraph (1), subparagraph 3 of the same Act cannot be taken as a basis for imposing gift tax
Relation to precedent
Cannot be determined Not in the decision
Decisions referred to
해당 본문 참조
Burden of proof
Not addressed Not in the decision
Open question and revisit condition
If the terms of a warrant are objectively determined but its exercise price is materially below the market price on the day it is sold to a major shareholder, may Article 40(1)(iii) still apply because the gain was obtained indirectly from a special related person?
A later decision applying Article 40(1)(iii) to warrants separated and sold in a securitisation support programme would require this entry to be read again, as would a change to Article 40(1) of the Inheritance and Gift Tax Act. So would a record showing that the acquirers sought 50 or more individual investors, or that the terms were not set between unrelated parties.
Cross-family AI independent reading & axis check
8 of 8 axes matched GPT-6 Astra (OpenAI, codex CLI) · 2026-10-26
A reader from another model family (GPT-6 Astra), given the official text but not the primary reading, agreed on all 8 axes.
Raw responses and comparison record: Protocol · Blind readings (JSONL) · Axis comparison (JSONL) · SHA-256 (JSON)
Lower-court contrast & scope of application
Lower-court reading vs. Supreme Court holding
Lower-court context: The Seoul High Court, in its judgment of 16 June 2017 (2016Nu46504), held that the securities company (Company B) and the seventeenth securitisation company (Company C) did not acquire the bonds or the subscription warrants for the purpose of soliciting subscriptions from, or inviting offers by, 50 or more individual investors, so gift tax could not be imposed under Article 40(1)(ii)(b) of the former Inheritance and Gift Tax Act. It further held that Article 40(1)(iii) could not be the basis for the tax: the warrants had been separated and sold to the major shareholder because the issuer's credit rating was low and demand was expected to be limited, the terms including the initial exercise price had been set objectively between parties not related to each other, the shareholder had borne the risk of a fall in the share price for a considerable period, the rise in the price was attributable to the funds raised by the bond issue, the KOSDAQ listing and efforts to improve management, and it could not be found that the whole sequence had been carried out as a device to divert the gains from that rise to the major shareholder.
Supreme Court standard: The Supreme Court held that the appellate court, reading its reasons against the relevant legal principles and the lawfully admitted evidence, had not misunderstood the law in Article 40(1)(ii)(b) or in Article 40(1)(iii) of the former Inheritance and Gift Tax Act. It reviewed the grounds of appeal as supplemented and dismissed the tax office's appeal by the unanimous opinion of the Justices, with the appeal costs on the losing party.
Distinguishing conditions
- A case in which the acquirers of the bonds or the warrants did have the purpose of soliciting subscriptions from, or inviting offers by, 50 or more individual investors, so that Article 40(1)(ii)(b) applies.
- A case in which the terms of the warrants, including the initial exercise price, were not set objectively between parties without a special relationship.
- A case in which the acts are found to have been undertaken with the intention of appropriating the rise in the issuer's share price to the major shareholder from the outset.
Record verification notes
Confirm first which version of the Inheritance and Gift Tax Act governs, since the Court applied the Act as it stood before the amendment by Act No. 13557 of 15 December 2015. Then check whether the acquisition comes within Article 9(12) of the Financial Investment Services and Capital Markets Act, which the provision folds into 'acquisition etc.', and whether the person was a special related person of the issuer for Article 40(1)(iii). Finally, gather what shows that the terms were set objectively and that the rise in the share price had other causes, such as the funds raised, the listing and efforts to improve management.
From the official text
Points at issue
갑 주식회사가 신주인수권부사채를 발행하자 을 주식회사가 같은 날 위 사채를 전부 취득하여 병 유한회사에 양도하였는데, 병 회사가 같은 날 신주인수권을 분리하여 갑 회사의 대주주인 정에게 매도하였고, 이후 정이 신주인수권을 행사하여 갑 회사의 주식으로 전환하고 과세관청에 주식 전환에 따른 이익에 관하여 증여세를 신고·납부하였다가 증여세 과세대상에 해당하지 않는다고 주장하면서 경정청구를 하였으나, 과세관청이 이를 거부한 사안에서, 을 회사와 병 회사가 50인 이상의 개인투자자를 상대로 매도의 청약을 하거나 매수의 청약을 권유할 목적으로 위 사채 또는 신주인수권을 취득하였다고 볼 수 없으므로 구 상속세 및 증여세법 제40조 제1항 제2호 (나)목에 따라 증여세를 부과할 수 없고, 나아가 제반 사정에 비추어 같은 법 제40조 제1항 제3호를 증여세 과세근거로 삼을 수도 없다고 본 원심판단을 수긍한 사례
Unofficial English translation
Where Company A, a stock company, issued bonds with warrants, Company B, a stock company, acquired all of the said bonds on the same day and transferred them to Company C, a limited liability company; Company C separated the new share warrants on the same day and sold them to Jeong, the largest shareholder of Company A; thereupon Jeong exercised the new share warrants to convert them into shares of Company A and filed and paid gift tax with the tax authority in respect of the gain arising from the share conversion, but then asserted that the gain did not fall within the subject matter of gift tax and filed a claim for a rectification, which the tax authority refused. In this case, since it cannot be regarded that Company B and Company C acquired the said bonds or the new share warrants for the purpose of offering to sell to, or soliciting offers to buy from, 50 or more individual investors, no gift tax may be imposed pursuant to Article 40, paragraph (1), subparagraph 2, item (b) of the former Inheritance Tax and Gift Tax Act; moreover, in light of all the circumstances, Article 40, paragraph (1), subparagraph 3 of the same Act cannot be taken as a basis for imposing gift tax. A case affirming the judgment below to that effect.
Summary of the holding
The official text publishes no summary of the holding for this decision. The quotation and factors in this record are copied verbatim from the points at issue; the evidence for each axis is taken from the points at issue, the order and the reasons.
Order
상고를 기각한다. 상고비용은 피고가 부담한다.
Unofficial English translation
The appeal is dismissed. The costs of the final appeal shall be borne by the defendant.
Provisions referred to
구 상속세 및 증여세법(2015. 12. 15. 법률 제13557호로 개정되기 전의 것) 제40조 제1항 제2호 (나)목, 제3호, 자본시장과 금융투자업에 관한 법률 제9조 제12항
Read 2026-10-26 · Cross-read 2026-10-26. All quotes matched against the official text. The Chinese-character placeholders the court used for anonymised parties are given in their Korean readings, and parenthetical Chinese-character glosses are omitted.
Every entry is published only after all quotes have been matched character by character against the official text, and audited by an independent second reading from a different model family across all eight axes. Both agreed axes and text-grounded interpretive divergences are recorded openly. The ledger is a research record, not an assessment of the court or advice on any matter.
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