Chairwoman Cho Yang-rae's Second Daughter of Hankook Tire Wins Second Trial in 6.1 Billion Won Gift Tax Lawsuit

Seoul Central District Court, Seocho-gu, Seoul. Photo by Jinhyung Kang aymsdream@

The second daughter of Cho Yang-rae, Honorary Chairman of Hankook & Company (formerly Hankook Tire) Group, won the appeal in a lawsuit against the tax authorities seeking cancellation of a gift tax imposition.

According to the legal community on the 1st, the Seoul High Court Administrative Division 3 (Presiding Judges Jeong Jun-young, Kim Hyung-jin, and Park Young-wook) recently ruled in favor of Cho, the plaintiff, upholding the first trial decision by Banpo Tax Office regarding approximately 6.1 billion KRW.

Previously, the National Tax Service conducted a tax investigation on the family of Honorary Chairman Cho from July 2018 to January the following year. They imposed a gift tax of 2.2 billion KRW, considering that 125,000 shares of Hankook & Company stock acquired by the second daughter Cho in April 2009 through an in-kind contribution were nominally entrusted from her father. According to the Inheritance and Gift Tax Act, in cases of stock nominal trust, the nominee is regarded as having received a gift of the corresponding amount from the actual owner.

The National Tax Service also imposed an additional 3.9 billion KRW, viewing the dividends received by Cho from October 2012 to April 2018 as gifts from Honorary Chairman Cho.

Cho filed the lawsuit arguing that the original source of the stocks deemed as nominal trust property by the tax authorities was a gift from Honorary Chairman Cho in 1996, and that all related gift taxes had already been reported and paid.

The first trial court ruled in favor of Cho, stating, "There is no direct evidence to conclude that there was a specific nominal trust agreement between the father and daughter," and "Rather, Honorary Chairman Cho reported and paid all gift taxes imposed on the initially acquired shares and the gift tax related to the payment on behalf." The second trial court also found no problem with the first trial's judgment and dismissed the tax office's appeal.

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