The late Yoo Byeong-eon's second son, Yoo Hyuk-ki, has reportedly won his appeal on the gift tax of about 1.49 billion won imposed by the tax authorities in the second trial held on the 8th. He initially lost in the first trial but overturned the decision in the second. His eldest daughter, Yoo Seom-na, who also filed the lawsuit, won in the first trial, and the ruling was confirmed.
The Seoul High Court Administrative Division 1-2, led by Director General Cha Mun-ho, Park Hyung-jun, and Yoon Seung-eun, issued a ruling in favor of the plaintiff on the 29th of last month in the second trial of the lawsuit filed by Hyuk-ki, in which he requested to invalidate the gift tax of about 1.49 billion won against the Gangnam Tax Office.
The SeMo Group is a shipping company with the ferry operator Chonghaejin Marine as an affiliate. Hyuk-ki and Seom-na own 19.44% and 2.57% of the shares in the holding company I1I Holdings, respectively. The tax authorities conducted a tax investigation on the SeMo Group following the Sewol ferry incident in 2014, determining that I1I Holdings had purchased shares from two affiliates at a low price in 2008, providing a benefit to Hyuk-ki and Seom-na, and imposed about 1.49 billion won and 77 million won in gift tax, respectively.
In August 2014, after sending a tax notice to their residence in Korea, which was returned, the authorities proceeded with a method known as 'public notification' by posting it on the court's website or bulletin board. They argued that it was illegal to proceed with public notification without attempting delivery to their overseas address and claimed that the resulting tax imposition was invalid, filing a lawsuit in February of last year.
The first trial ruled in favor of Seom-na in December of last year but ruled against Hyuk-ki. Seom-na was seen as being identifiable due to being arrested and detained in France at that time. However, regarding Hyuk-ki, while the authorities acknowledged they did not attempt to send the notification to his address in the United States, they considered that he had operated a domestic enterprise after moving abroad, had paid taxes in Korea until the incident, and thus deemed the public notification valid. Hyuk-ki appealed the first trial ruling.
The second trial ruled, unlike the first, that 'it is difficult to consider that the address or business location is abroad, making delivery difficult under the National Tax Basic Act.'
The second trial court stated, 'Hyuk-ki's overseas address was registered in the overseas citizens registration database, and the Gangnam Tax Office could have easily verified it, yet they made no effort to deliver the tax notice by mail.' It also pointed out that 'the tax location for income tax is determined according to the Income Tax Act, while inheritance and gift tax is determined by the Inheritance and Gift Tax Act,' asserting that 'Hyuk-ki's tax location application was related to income tax, which is different from the location to which the (gift tax related) mail should have been delivered.'
Moreover, the court did not accept the tax office's claim that another office had attempted to deliver the notice to Hyuk-ki's overseas address but failed, stating, 'This public notification occurred after this case was processed.'