Article 66 of the Enforcement Decree of the Restriction of Special Taxation Act

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

Cheong-gu Office

The Defendant’s disposition of imposition of capital gains tax of KRW 111,355,845 against the Plaintiff on November 1, 2016 shall be revoked.

A. From December 15, 2005, the Plaintiff owned 322-1 Maa, Gangwonbb and 1/3 shares, and transferred all of his/her shares to Maa on October 8, 2015, while owning 322-1 Maga, Mai-dong, Mai-dong (hereinafter “instant land”).

B. Since then, the Plaintiff applied for reduction or exemption of capital gains tax on the ground that he directly cultivated the instant land for at least eight years pursuant to the Restriction of Special Taxation Act (amended by Act No. 13498, Aug. 28, 2015; hereinafter the same) to the Defendant.

C. However, on November 1, 2016, the Defendant issued a correction and notification of capital gains tax of KRW 111,355,845 (including additional tax; hereinafter the same shall apply) (hereinafter referred to as “instant disposition”) on the grounds that it is difficult to deem that the Plaintiff directly cultivated the instant land after undergoing a tax investigation with the Plaintiff.

D. The Plaintiff filed an objection with the commissioner of the Regional Tax Office on February 23, 2017, but was dismissed on February 23, 2017, and thereafter requested a trial with the Tax Tribunal, but was dismissed on September 18, 2017.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 4, 11, Eul evidence No. 1, the purport of the whole pleadings

2. The plaintiff's assertion

The Plaintiff cultivated directly on the instant land, such as cultivating a room.

3. Determination

(a) Relevant statutes;

The Restriction of Special Taxation Act

Article 69 (Reduction or Exemption of Transfer Income Tax for Self-Cultivating Farmland)

(1) Where a resident prescribed by Presidential Decree who resides in farmland at the seat of farmland transfers any farmland prescribed by Presidential Decree, which is directly cultivated by the Korea Rural Community Corporation under the Korea Rural Community Corporation and Farmland Management Fund Act or a corporation prescribed by Presidential Decree, the main business of which is agriculture (hereafter referred to as "agricultural corporation" in this Article) no later than December 31, 2015, not less than three years shall be reduced of an amount of tax equivalent to 100/100 of capital gains tax on the income accruing from the transfer of land prescribed by Presidential Decree, for at least eight years (where such farmland is subject to

(3) Any person who intends to have paragraph (1) applied shall file an application for reduction, as prescribed by Presidential Decree.

Enforcement Decree of the Restriction of Special Taxation Act (Amended by Presidential Decree No. 26369, Oct. 23, 2015; hereinafter the same shall apply)

Article 66 (Reduction or Exemption of Transfer Income Tax for Self-Cultivating Farmland)

(13) "Direct cultivation in the manner prescribed by Presidential Decree" in the main sentence of Article 69 (1) of the Act means that a resident is engaged in cultivating crops or growing perennial plants on his/her own farmland at all times, or cultivates or cultivates 1/2 or more of farming works with his/her own labor.

1) The laws and regulations relating to the reduction or exemption of capital gains tax for self-farmland are as follows:

2) Meanwhile, since a resident living in a farmland location under the Restriction of Special Taxation Act has provided that capital gains tax shall be exempted on the income accruing from the transfer of land which he/she has cultivated for not less than eight consecutive years, the burden of proving the fact that he/she resided in the farmland location and occupied the transferred land for not less than eight years lies in the taxpayer who asserts exemption of capital gains tax under the said provision (see, e.g., Supreme Court Decision 2002Du7074, Nov. 22, 20

3) Comprehensively taking account of such facts, a person liable to pay capital gains tax must prove that he/she is engaged in cultivating crops or growing perennial plants on his/her own land or is engaged in growing or growing them with his/her own labor.

B. Whether the plaintiff directly cultivated

1) In light of the following facts and circumstances acknowledged by comprehensively considering the purport of the entire pleadings, the evidence alone presented by the Plaintiff is insufficient to deem that the Plaintiff cultivated or cultivated not less than 1/2 of the farming work on the instant land with its own labor, and there is no other evidence to acknowledge otherwise.

A) During the ownership of the instant land, the Plaintiff worked as an English instructor at * University (U.S. ○○ Dong, △△ University, △△ University, etc.) and operated coffee stores and frequencies, etc., and bicycle sales stores, etc. in light of the Plaintiff’s occupation and business or anticipated time to be required. In light of the Plaintiff’s occupation and business, it is difficult for the Plaintiff to set a period of time necessary to cultivate or cultivate more than a half of the farming work of the instant land with his own labor.

B) At the time of the Defendant’s tax investigation, the Plaintiff stated that the Plaintiff was employed by the Plaintiff as well as other co-owners in cultivating the instant land and his family members, and that the Plaintiff’s family members and branch members were engaged in the work of gathering help from the neighbors. Moreover, the Plaintiff stated that the depth of the instant land was in a remote space with the Plaintiff. Furthermore, the Plaintiff stated to the effect that the Plaintiff’s family members and branch members were in a solitary room. Furthermore, the Plaintiff stated to the effect that the Plaintiff’s co-owner’s co-owner’

C) At the time of the Defendant’s on-site inspection of the instant land, the instant land was not classified by each owner, and as a result of the investigation of the NA residents, it was confirmed that the NA residents were engaged in the work, such as pooling, etc. of the instant land.

D) Although there is room to view that the Plaintiff had borne the costs required for the cultivation of the instant land, the circumstances to deem that the Plaintiff cultivated his own labor force by inserting considerable parts, are not peeped, and it seems that other co-owners, land owners, or the members of the Dong and Dong and employed, carried out most of the farming works on the instant land with the labor force of those members.

2) Therefore, the instant disposition is lawful.

4. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.