Open Decision Ledger · Tax & international taxation
Gift tax on below-market shares and the return exemption
Supreme Court, Apr. 24, 2025, 2022Du42228 (judgment)
Case name: 증여세부과처분취소[구 「상속세 및 증여세법」(2016. 12. 20. 법률 제14388호로 개정되기 전의 것, 이하 ‘구 상증세법’) 제39조 제1항 제1호 (다)목 및 같은 법 제4조 제4항 전단의 적용이 문제된 사건]
Official text on the National Law Information Center
Question
Where a company issues new shares below market value to a person who is not a shareholder, so that a capital-increase benefit passes free of charge from its existing shareholders to the subscriber, may Article 4(4), opening sentence, of the former Inheritance and Gift Tax Act exempt that benefit when it is returned to the existing shareholder who made the gift?
Holding
It may. The Supreme Court held that the gift tax object under Article 39(1)(1)(c) of the former Inheritance and Gift Tax Act is the capital-increase benefit transferred free of charge from the company's existing shareholders to the subscriber when the company issues new shares below market value to a non-shareholder. Where such a benefit is returned to the existing shareholder who made the gift and meets the requirements of the exemption in Article 4(4), opening sentence, that exemption may be applied. On these facts the requirements were not met, so the assessment was lawful and the taxpayer's appeal was dismissed.
Summary of the holding, verbatim
구 상속세 및 증여세법(2016. 12. 20. 법률 제14388호로 개정되기 전의 것, 이하 ‘구 상증세법’이라 한다) 제39조 제1항 제1호 (다)목이 증여세 과세대상으로 삼은 ‘기존 주주로부터 무상으로 이전받은 증자에 따른 이익’이 구 상증세법 제4조 제4항 전단(이하 ‘비과세조항’이라 한다)에서 정한 요건을 충족하여 증여자인 기존 주주에게 반환된 경우에는 위 비과세조항을 적용할 수 있다.
Unofficial English translation
Where the 'benefit arising from a capital increase received without consideration from the existing shareholders' that item (c) of subparagraph 1 of paragraph (1) of Article 39 of the former Inheritance Tax and Gift Tax Act (as in effect prior to its amendment by Act No. 14388 on December 20, 2016, hereinafter the 'former Inheritance Tax and Gift Tax Act') designated as the subject of gift tax is returned to the existing shareholder, who is the donor, upon satisfying the requirements prescribed in the former part of Article 4, paragraph (4) of the former Inheritance Tax and Gift Tax Act (hereinafter the 'tax exemption provision'), the tax exemption provision may be applied.
Disposition
Dismissed Stated in the decision
상고를 기각한다. 상고비용은 원고가 부담한다.
Unofficial English translation
The appeal is dismissed. The plaintiff shall bear the costs of the final appeal.
Form of the test
Elements stated Stated in the decision
구 상속세 및 증여세법(2016. 12. 20. 법률 제14388호로 개정되기 전의 것, 이하 ‘구 상증세법’이라 한다) 제39조 제1항 제1호 (다)목(이하 ‘과세조항’이라 한다)에서 규정한 증여세 과세대상은 법인이 주주가 아닌 자에게 신주를 시가보다 낮은 가액으로 발행함에 따라 해당 법인의 기존 주주로부터 신주인수인에게 무상으로 이전되는 증자에 따른 이익으로 보는 것이 타당하다.
Unofficial English translation
The subject of gift tax prescribed in item (c) of subparagraph 1 of paragraph (1) of Article 39 of the former Inheritance Tax and Gift Tax Act (as in effect prior to its amendment by Act No. 14388 on December 20, 2016, hereinafter the 'former Inheritance Tax and Gift Tax Act') (hereinafter the 'taxing provision') may reasonably be regarded as the benefit arising from a capital increase which is transferred without consideration from the existing shareholders of the corporation to the subscriber for new shares as a result of the corporation issuing new shares at a price lower than the market value to a person who is not a shareholder.
Factors
- 상법 제418조 제1항은 "주주는 그가 가진 주식 수에 따라서 신주의 배정을 받을 권리가 있다."라고 규정하여 원칙적으로 기존 주주만이 신주의 배정을 받을 권리가 있다
- 기존 주주가 보유한 주식의 가치가 희석되어 새로이 주주가 된 제3자에게 기존 주주의 부가 이전하는 효과가 발생하게 된다
- 조세평등을 도모하려는 데에 있다
- 이는 증자에 따른 이익을 증여한 자가 신주발행법인의 기존 주주임을 전제로 한 규정이다
Unofficial English translation
• Article 418, paragraph (1) of the Commercial Act provides that "A shareholder has the right to receive an allotment of new shares in proportion to the number of shares he holds," thereby establishing that, in principle, only existing shareholders have the right to receive an allotment of new shares
• the effect arises whereby the value of the shares held by the existing shareholder is diluted and the wealth of the existing shareholder is transferred to the third party who newly becomes a shareholder
• it lies in seeking to promote equality of taxation
• this is a provision premised on the fact that the person who donates the benefit arising from a capital increase is an existing shareholder of the corporation issuing the new shares
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 existing shareholder is repaid in money rather than having the shares returned, so that the gifted property is not returned in kind, can Article 4(4), which excludes money, still apply to the capital-increase benefit?
Any amendment to Article 39(1)(1)(c) or Article 4(4) of the Inheritance and Gift Tax Act, including a change to the rule fixing the gift date in Article 29(1)(ii) of the Enforcement Decree, would call for a fresh reading. A later Supreme Court decision on the meaning of a return to the donor would also require this entry to be read again.
Cross-family AI independent reading & axis check
7 of 8 axes matched GPT-6 Astra (OpenAI, codex CLI) · 2026-10-25
A reader from another model family (GPT-6 Astra), given the official text but not the primary reading, agreed on 7 of the 8 axes; the readings differed on axis 8 (open question and revisit condition).
Axis 8 (Open question and revisit condition): Primary “If the existing shareholder is repaid in money rather than having the shares returned, so that the gifted property is not returned in kind, can Article 4(4), which excludes money, still apply to the capital-increase benefit?” vs Independent “What transactions and valuation methods suffice to establish that the capital-increase benefit has been returned to the existing shareholders?”
The primary reading asks whether a money repayment instead of returned shares can qualify, while the independent reading asks what transactions and valuation methods prove the return.
구 상속세 및 증여세법(2016. 12. 20. 법률 제14388호로 개정되기 전의 것, 이하 ‘구 상증세법’이라 한다) 제39조 제1항 제1호 (다)목이 증여세 과세대상으로 삼은 ‘기존 주주로부터 무상으로 이전받은 증자에 따른 이익’이 구 상증세법 제4조 제4항 전단(이하 ‘비과세조항’이라 한다)에서 정한 요건을 충족하여 증여자인 기존 주주에게 반환된 경우에는 위 비과세조항을 적용할 수 있다.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 30 March 2022 (2021Nu46096), treated the object taxed under Article 39(1)(1)(c) as an increase in property value contributed by another, and on that basis held that the taxpayer, a third party who subscribed the shares at a low price, could not be seen to have received the capital-increase benefit from the company's existing shareholders. It rejected the taxpayer's claim for the exemption without examining it further. It also held that the agreed price of KRW 500 per share, made in the settlement of a dispute over the acquisition of management rights, did not form a price reflecting objective exchange value in a normal transaction, so the tax authority was right to value the shares by the supplementary method.
Supreme Court standard: The Supreme Court held that reading the taxed object as an increase in property value contributed by another was not appropriate, since the benefit is that of the existing shareholders transferred free of charge to the subscriber. It nevertheless affirmed the result: even assuming the taxpayer received the benefit from the existing shareholders, the shares were transferred on 31 December 2016, after the three-month period from the end of the month in which the subscription money was paid, and to persons other than existing shareholders, for one tenth of the acquisition price, so the exemption requirements were not met. It found no misreading of the law on the scope of the exemption that affected the judgment, and no error on the sale transaction price, and dismissed the appeal with the unanimous opinion of the Justices.
Distinguishing conditions
- A case in which the shares are not returned to the existing shareholder who made the gift, or are transferred on to persons other than existing shareholders, since the exemption in Article 4(4) requires return to the donor.
- A case in which the return does not fall within the requirements of the exemption, for example a return not made by agreement between the parties within the filing deadline in Article 68(1), or a case in which the tax base and tax were determined before the return.
- A capital increase in which new shares are not issued below market value to a person who is not a shareholder, so that no benefit passes free of charge from the existing shareholders.
Record verification notes
Fix the gift date first, since the Enforcement Decree makes it the date the subscription money was paid, and compare it with the date of the return and the filing deadline under Article 68(1). Then identify who held the existing shares at that time and whether the shares went back to them or on to others. Note that the decision applies the Inheritance and Gift Tax Act as it stood before the amendment by Act No. 14388 of 20 December 2016.
From the official text
Points at issue
[1] 구 상속세 및 증여세법 제39조 제1항 제1호 (다)목에서 규정한 증여세 과세대상(=법인이 주주가 아닌 자에게 신주를 시가보다 낮은 가액으로 발행함에 따라 해당 법인의 기존 주주로부터 신주인수인에게 무상으로 이전되는 증자에 따른 이익) [2] 구 상속세 및 증여세법 제39조 제1항 제1호 (다)목이 증여세 과세대상으로 삼은 ‘기존 주주로부터 무상으로 이전받은 증자에 따른 이익’이 같은 법 제4조 제4항 전단(비과세조항)에서 정한 요건을 충족하여 증여자인 기존 주주에게 반환된 경우, 비과세조항을 적용할 수 있는지 여부(적극)
Unofficial English translation
[1] The subject of gift tax prescribed in item (c) of subparagraph 1 of paragraph (1) of Article 39 of the former Inheritance Tax and Gift Tax Act (= the benefit arising from a capital increase which is transferred without consideration from the existing shareholders of the corporation to the subscriber for new shares as a result of the corporation issuing new shares at a price lower than the market value to a person who is not a shareholder) [2] Where the 'benefit arising from a capital increase received without consideration from the existing shareholders' that item (c) of subparagraph 1 of paragraph (1) of Article 39 of the former Inheritance Tax and Gift Tax Act designated as the subject of gift tax is returned to the existing shareholder, who is the donor, upon satisfying the requirements prescribed in the former part of Article 4, paragraph (4) of the same Act (the tax exemption provision), whether the tax exemption provision may be applied (affirmative)
Summary of the holding
[1] 구 상속세 및 증여세법(2016. 12. 20. 법률 제14388호로 개정되기 전의 것, 이하 ‘구 상증세법’이라 한다) 제39조 제1항 제1호 (다)목(이하 ‘과세조항’이라 한다)에서 규정한 증여세 과세대상은 법인이 주주가 아닌 자에게 신주를 시가보다 낮은 가액으로 발행함에 따라 해당 법인의 기존 주주로부터 신주인수인에게 무상으로 이전되는 증자에 따른 이익으로 보는 것이 타당하다. 구체적인 이유는 다음과 같다. ① 상법 제418조 제1항은 "주주는 그가 가진 주식 수에 따라서 신주의 배정을 받을 권리가 있다."라고 규정하여 원칙적으로 기존 주주만이 신주의 배정을 받을 권리가 있다. 따라서 법인이 시가보다 낮은 가액으로 발행한 신주를 기존 주주가 아닌 제3자에게 배정하게 되면 법인의 지분비율에 변화가 생기고, 기존 주주가 보유한 주식의 가치가 희석되어 새로이 주주가 된 제3자에게 기존 주주의 부가 이전하는 효과가 발생하게 된다. ② 위 과세조항의 입법 취지는 위와 같이 신주를 저가에 발행한 법인의 기존 주주로부터 신주인수인에게 무상으로 이전되는 증자에 따른 이익에 대하여 과세함으로써 조세평등을 도모하려는 데에 있다. ③ 구 상증세법 제39조 제2항은 위 과세조항 등을 적용할 때 이익을 증여한 자가 소액주주로서 2인 이상인 경우에는 이익을 증여한 소액주주가 1명인 것으로 보고 이익을 계산하도록 규정하고 있는데, 이는 증자에 따른 이익을 증여한 자가 신주발행법인의 기존 주주임을 전제로 한 규정이다. [2] 구 상속세 및 증여세법(2016. 12. 20. 법률 제14388호로 개정되기 전의 것, 이하 ‘구 상증세법’이라 한다) 제39조 제1항 제1호 (다)목이 증여세 과세대상으로 삼은 ‘기존 주주로부터 무상으로 이전받은 증자에 따른 이익’이 구 상증세법 제4조 제4항 전단(이하 ‘비과세조항’이라 한다)에서 정한 요건을 충족하여 증여자인 기존 주주에게 반환된 경우에는 위 비과세조항을 적용할 수 있다.
Order
상고를 기각한다. 상고비용은 원고가 부담한다.
Unofficial English translation
The appeal is dismissed. The plaintiff shall bear the costs of the final appeal.
Provisions referred to
[1] 구 상속세 및 증여세법(2016. 12. 20. 법률 제14388호로 개정되기 전의 것) 제39조 제1항 제1호 (다)목, 제2항, 상법 제418조 제1항 [2] 구 상속세 및 증여세법(2016. 12. 20. 법률 제14388호로 개정되기 전의 것) 제4조 제4항, 제39조 제1항 제1호 (다)목
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