Article 104 of the Income Tax Act

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

A. The Plaintiff registered as a housing rental business operator on November 4, 2002. On December 20, 2010, the Plaintiff completed his/her business registration by adding his/her real estate sales business to the real estate sales business.

B. On July 26, 2002, the Plaintiff acquired ○○ apartment (hereinafter “instant apartment”) from 000 ○○ apartment (hereinafter “instant apartment”) in Seoul, ○○-dong, 000, and did not report the transfer income tax while transferring the instant apartment on December 22, 2010.

C. On August 18, 2016, the Defendant determined that the Plaintiff constitutes long-term rental houses under Article 167-3 of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 22811, Mar. 31, 201; hereinafter “former Enforcement Decree of the Income Tax Act”) (amended by Act No. 9897, Dec. 31, 2009; hereinafter “amended by Act No. 9897, Dec. 31, 2009”), on the ground that the transfer price of the instant apartment is KRW 890,00 million, KRW 302,420,977 (hereinafter “former Enforcement Decree of the Income Tax Act”) and excluded the acquisition price from the base of taxation of KRW 250,000,000,000, KRW 302,420,977 (the standard market price of the instant apartment as of April 4, 2002).

[1] Article 104(1)2-3 of the former Income Tax Act (amended by Act No. 7006, Dec. 30, 2003; Act No. 9897, Dec. 31, 2009; hereinafter referred to as "the amended Income Tax Act") provides for a heavy taxation rate on housing falling under three or more houses for one household. Article 104(1)4 of the former Income Tax Act (amended by Act No. 1006, Dec. 31, 2003; hereinafter referred to as "the amended Income Tax Act") was amended by Act No. 1014, Dec. 31, 2009; Article 104(1)4 of the former Income Tax Act (amended by Act No. 1010, Nov. 1, 2010; hereinafter referred to as "the amended Income Tax Act") was amended by Act No. 10130, Mar. 1, 2014>

D. On December 30, 2016, the Plaintiff appealed against the instant disposition and filed a tax appeal on December 30, 2016, but the Tax Tribunal dismissed the Plaintiff’s claim on March 14, 2017.

Facts that there is no dispute over recognition, Gap's 1, 2, Eul's 1, 2, and 4 (including Serial Nos. 1, 2, and 4), and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The summary of the Plaintiff’s assertion (the Plaintiff asserted the invalidity of Article 167-3 of the Enforcement Decree of the Income Tax Act amended by Presidential Decree No. 18173 on December 30, 2003, which was amended by Presidential Decree No. 18173 on December 30, 203, but the statutes applicable at the time of the transfer of the instant apartment are as follows: (a) Article 104(1)4 of the Income Tax Act amended on December 31, 2009; (b) Article 167-3 of the former Enforcement Decree of the Income Tax Act; and (c) Article 167-3 of the former Enforcement Decree of the Income Tax Act, to the extent that the Plaintiff’s assertion

1) Article 104 (1) 4 of the amended Income Tax Act on December 31, 2009 provides that when a person who owns three or more houses for one household as prescribed by the Presidential Decree transfers a house, 60% of the heavy tax rate shall be applied in calculating capital gains tax in cases where he/she transfers a house, and Article 167-3 of the former Enforcement Decree of the Income Tax Act provides that "houses falling under three or more houses for one household as prescribed by the Presidential Decree" under the amended Income Tax Act on December 31, 2009 shall be a house owned by three or more domestic houses in Korea, and Article 104 (1) 2 (b) of the former Enforcement Decree of the Income Tax Act provides that a resident who has registered his/her business before October 29, 2003 and leased two or more national houses or more for five or more years shall be excluded from the scope of housing leased within the scope of 300 million won at the time of acquisition (hereinafter referred to as "Article 16-14 (1) of the former Enforcement Decree of the Income Tax Act").

2) The provision of this case, which prescribes the subject of heavy tax rates and the subject of exclusion from heavy tax rates, is not effective as a law, because the Plaintiff is a rental business operator who purchased three or more existing houses, and has already completed business registration as of October 29, 2003, and is not included in the subject of heavy tax rates, and the existing business operator does not include the rental housing registered as rental housing between October 30, 2003 and December 31, 2003 in the subject of exclusion from heavy tax rates, etc. (hereinafter referred to as the “head”).

3) The Defendant, based on the instant provision, deemed the Plaintiff as a resident subject to the exclusion of the application of heavy taxation rates and made the instant disposition. However, the instant provision provides that the Plaintiff may avoid the application of heavy taxation rates in cases where two or more national housing units are leased before October 29, 2003, such as the Plaintiff at the beginning of the year when the Plaintiff was registered as a rental business operator, etc., and for more than five years thereafter, it excessively limits the exercise of property rights. Moreover, since Article 104(1)2-3 of the amended Income Tax Act was newly established on December 30, 203, the instant provision provides for room for applying heavy taxation rates to the owner of housing acquired before the enforcement of the amended Income Tax Act on December 30, 203, the former Enforcement Decree of the Income Tax Act restrictively establishes the grounds for exclusion from the application of transfer income tax and tax rates, thereby infringing on the basic tax rate of at least 13 owners of housing units before the enforcement of the Income Tax Act on December 30, 2003.

4) Article 16 of the Addenda to the Income Tax Act amended on December 30, 2013 provides that the amended provisions of Article 104(1)2-3 of the Income Tax Act of December 30, 2013 shall not apply to cases where three or more owners of one household transfer a house acquired before the enforcement of the amended Income Tax Act on December 30, 2013 (hereinafter referred to as "the supplementary provisions of this case"). However, the plaintiff may not sell the purchased rental house during the mandatory rental period (hereinafter referred to as "the supplementary provisions of this case"). The plaintiff could not dispose of the apartment of this case in accordance with the Rental Housing Act and the Enforcement Decree of the Rental Housing Act, which provides that three or more owners of one household shall be punished by imprisonment for not more than two years or by a fine not exceeding twenty million won, so the supplementary provisions of this case in this case shall not be unconstitutional and invalid (hereinafter referred to as "the Chapter III") in violation of the principle of trust protection.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) First, we examine whether the instant provision does not include the preexisting three or more rental business operators who acquired three or more houses, but does not include rental houses registered as rental houses from October 30, 2003 to December 31, 2003 as rental houses, and thus, constitutes a lack of law regarding the subject of exclusion from heavy tax rates.

The provision of this case is deemed to have registered a business under Article 168 of the Income Tax Act on the date of registration of a rental business under Article 6 of the Rental Housing Act when the resident who leases two or more national housing after registering a business under Article 168 of the Income Tax Act and a rental business under Article 6 of the Rental Housing Act before December 29, 2003, excluding a house which does not exceed 300 million won when the total standard market price of the relevant house and land appurtenant thereto is acquired, and has been registered as a rental business operator under Article 6 of the Rental Housing Act as of the base date of the existing business but has failed to make a business registration under Article 168 of the Income Tax Act until June 30, 204. In light of the language of the provision of this case, it includes not only the lease business operator under Article 168 of the Income Tax Act but also the lease business operator under Article 6 of the Rental Housing Act and the existing rental business operator under Article 8 of the Rental Housing Act until the specific date of the existing business registration.

In addition, Article 104 (1) 4 of the amended Income Tax Act (amended on December 31, 2009) and Article 104 (1) 2-3 of the amended Income Tax Act (amended on December 30, 2003) excludes the application of heavy tax rate because Article 104 (1) 2-3 of the amended Income Tax Act (amended on December 30, 2003) excludes the application of heavy tax rate since Article 104 (1) 2-3 of the amended Income Tax Act (amended on December 30, 203), a person who has three or more houses for one household as of January 1, 2004, which was the enforcement date of the amended Income Tax Act (amended on December 31, 2003), transfers a house acquired on or before December 31, 2004, as it does not apply to the new acquisition of another house after January 1, 2004.

Therefore, the plaintiff's chief of state (the defendant also made the disposition of this case on the premise that the plaintiff is excluded from the heavy tax rate pursuant to the provision of this case) that the subject of exemption from the heavy tax rate is insufficient in the law.

2) Next, applying the heavy taxation rate under the amended Income Tax Act on December 30, 203 and the amended Income Tax Act on December 31, 2009 to the owners of three or more houses for one household, the application of the basic tax rate by excluding three or more houses for one household owners in certain cases under the former Enforcement Decree of the Income Tax Act is excessively restricted in exercising property rights and thus, it infringes on the trust of the owners of three or more houses for one household that registered a rental business before October 29, 2003 as the Plaintiff.

The principle of trust protection is derived from the principle of a rule of law under the Constitution. If the public interest purpose to achieve new legislation is not justified because the party’s trust in the order of the former law is reasonable, reasonable, and the party’s damage caused by the enactment or amendment of the law is extreme, such new legislation may not be allowed in light of the principle of trust protection. However, since all expectations or trust of the citizen is not a constitutional right, there is reasonable trust in the existence of laws and regulations and institutions revised by the basis and type of trust, importance of loss, methods of infringement, etc. In particular, in the field of tax law, it is highly necessary for the State to flexibly and reasonably operate tax and financial policies, so long as the legal system of taxation has no choice but to change flexibly, it is difficult for the State to enter the new legal relationship actively based on trust in accordance with the old law and order, and thus, it is difficult to maintain the existing basic tax rate of 100 houses or 200 houses or 104 houses or 204 houses or 100 houses or 201 houses or 34 houses, respectively.

① In addition, Article 104(1)3 and Article 104(1)4 of the Income Tax Act amended on December 31, 2009, which provides that the transfer of three or more houses for one household shall be subject to heavy tax rates by transferring a house within the grace period of December 31, 2004, which is the first three or more houses, shall not be deemed to have been subject to heavy tax rates in light of the following: (3) Article 104(1)3 and Article 104(1)4 of the Income Tax Act amended on December 31, 2009: (a) Article 104(1) of the Income Tax Act (amended on December 30, 200; (b) Article 104(3) of the Income Tax Act provides that a person who owns a house for long-term lease after the lease for a specific period of time shall not be deemed to have any disadvantage to the public interest of one household; (c) Article 167-3(1) of the Enforcement Decree of the Income Tax Act provides that the previous rental business operator shall be subject to more than the first three houses.

Therefore, the plaintiff 2 is also without merit.

3) Finally, this case’s supplementary provision is unconstitutional and invalid in violation of the principle of trust protection.

The Plaintiff acquired the instant apartment on July 26, 2002 and transferred it on December 22, 2010, and the Defendant calculated transfer income tax by excluding heavy taxation rates on the grounds that the instant apartment house constitutes a long-term rental house under Article 167-3 of the former Enforcement Decree of the Income Tax Act on August 18, 2016, and then decided and notified the Plaintiff. As seen earlier, the instant supplementary provision does not directly affect the conclusion of the instant case, or its conclusion is different. Therefore, the Plaintiff’s chief does not have any further reasons as to the unconstitutionality of the instant supplementary provision.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. The judgment of the court of first instance is just and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.

Relevant statutes

▣ 소득세법 제104조(양도소득세의 세율)(2003. 12. 30. 법률 제7006호로 개정되기 전의 것)

(1) The transfer income tax amount of a resident shall be the amount calculated by applying the following rates to the tax base of transfer income in the current year (hereinafter referred to as "tax amount for transfer income"):

1. Assets under Article 94 (1) 1, 2 and 4, excluding those under the following subparagraphs 2 and 3:

Tax rates under Article 5 (1).

2. Assets under Article 94 (1) 1 and 2, the holding period of which is less than one year:

36/100 or less of the tax base of transfer income (hereafter referred to as "tax base of transfer income")

▣ 2003. 12. 30. 개정

Article 104 (Tax Rate of Transfer Income Tax) (1) The amount of transfer income tax for a resident shall be the amount calculated by applying the following tax rates to the tax base of transfer income in the current year (hereinafter referred to as "tax base of transfer income"). In such cases, if one asset falls under two or more of the tax rates under the following subparagraphs, the highest of such ones shall apply:

2-3. Housing falling under three or more houses for one household as prescribed by the Presidential Decree (including land annexed thereto);

60/10 or less of the tax base of transfer income (hereafter in this Article, the same shall apply)

Addenda

This Act shall enter into force on January 1, 2004: Provided, That the amended provisions of Article 34 (2) 3-2 and 6 shall enter into force on the date of its promulgation, and the amended provisions of Article 99 (1) 1 (c) shall enter into force on January 1, 2005.

Article 2 (General Application) This Act shall apply to the portion of income accruing after the enforcement of this Act.

Article 3 (General Application of Transfer Income Tax) The amended provisions of this Act concerning transfer income tax shall apply from the portion transferred after the enforcement of this Act.

Where a real estate sales businessman or a person who has three or more houses for one household transfers a house (including land annexed thereto) acquired before this Act enters into force on or before December 31, 2004, as at the time this Act enters into force, the amended provisions of Articles 64, 95, and 104 (1) 2-3 shall not apply: Provided, That the same shall not apply where the relevant real estate sales businessman or a person who has three or more houses for one household newly acquires another house on or after January 1, 2004.

▣ 2009. 12. 31. 개정

(1) The amount of income tax on global income of a resident shall be calculated by applying the following tax rates to the global income tax base for the relevant year (hereinafter referred to as "global income tax on global income"):

1. Income generated during the period from January 1, 2010 to December 31, 2011:

Tax Base Income

Tax Rate

Not more than 12 million won;

6/100 of the tax base;

From 12 million won to 46 million won;

720,000 won + (15/100 of the amount exceeding 12 million won)

More than 46 million won but not more than 88 million won;

5820,000 + (24/100 of the amount exceeding 46 million won)

More than 80 million won

15.9 million won + (35/100 of the amount exceeding 88 million won)

(1) The amount of capital gains tax of a resident shall be calculated by applying the following tax rates to the tax base of capital gains in the relevant taxable period (hereinafter referred to as "calculated amount of capital gains tax"). In such cases, where one asset falls under at least two of the tax rates under the following subparagraphs, the highest of such rates shall apply:

1. Assets under Article 94 (1) 1, 2 and 4:

Tax rates under Article 5 (1).

2. Assets under Article 94 (1) 1 and 2, the holding period of which is not less than one year but less than two years:

40/100 of the tax base of capital gains;

3. Assets under Article 94 (1) 1 and 2, the holding period of which is less than one year:

50/100 of the tax base of capital gains;

4. Three or more houses for one household prescribed by Presidential Decree (including land annexed thereto; hereafter the same shall apply in this Article):

60/100 of the tax base of capital gains;

▣ 구 소득세법 시행령 제167조의3(1세대 3주택 이상에 해당하는 주택의 범위)(2011. 3. 31. 대통령령 제22811호로 개정되기 전의 것)

(1) "Housing falling under three or more houses for one household prescribed by Presidential Decree" in Article 104 (1) 4 of the Act means housing owned by one household possessing three or more houses in Korea (the housing falling under subparagraph 1 shall not be included in the calculation of the number of houses), which do not fall under any of the following subparagraphs:

2. Housing leased after a registration of the rental house by the resident who has made a registration of a business under Article 168 of the Act and of a rental business under Article 6 of the Rental Housing Act (hereafter in this Article, referred to as "registration of a business, etc."): Provided, That when the resident failing to make a registration of a business under Article 168 of the Act, while he/she made a registration of a rental business under Article 6 of the Rental Housing Act as of October 29, 2003 (hereafter in this Article, referred to as the "standard date for existing business operators"), has made a registration under the same paragraph of the same Article not later than June 30, 2004, it shall be deemed that he/she has made a registration of a business under Article 168 of the Act on the date of registration of a rental business under Article

(a) Housing leased for not less than five years by a resident who leases three (one subparagraph in cases of an area outside the Seoul Metropolitan area) or more housing [referring to housing under the Housing Act, the area of which does not exceed 298 square meters, and the total floor area (including the part deemed a house pursuant to the main sentence of Article 154 (3) and the area of an underground room used for exclusive use for residence, and referring to the exclusive use area in cases of multi-family housing; hereafter the same shall apply in this item) of which is not more than 149 square meters; hereafter the same shall apply in this item] in the Seoul Metropolitan area, and the total sum of standard market prices of the relevant housing and land appurtenant thereto do not exceed 60 million won (30 million won

(b) National housing leased for not less than five years by the resident making a lease of two or more national housing after making a registration of business operator, etc. before the standard date for existing business operators (limited to the lease after making a registration of rental house before the standard date for existing business operators), and the total sum of standard market prices of relevant housing and lands appurtenant thereto do not exceed 300 million won, when the relevant housing or general houses under the provisions

(c) Housing leased for not less than five years or made a parcelling-out conversion (including the case where selling to a rental business operator under the Rental Housing Act) by the resident who leases not less than 2 constructed rental houses with the site area of not more than 298 square meters under the Rental Housing Act and the total floor area of not more than 149 square meters (including the portion deemed a house under the main sentence of Article 154 (3) and the area of underground room exclusively used for residence, and referring to the exclusive use area in the case of apartment houses). In this case, it means the house the aggregate of standard market prices of the relevant house and lands appurtenant thereto (where there exists the house price under the Public Notice of Values and Appraisal of Real Estate Act, referring to the said price) does not exceed 60

▣ 임대주택법 제2조(정의)(2008. 2. 29. 법률 제8852호로 개정되기 전의 것)

The definitions of terms used in this Act shall be as follows:

1. The term “rental house” means a constructed or purchased rental house made available for the purpose of leasing;

3. The term “purchasing-rental house” means a house leased by a rental business operator by acquiring its ownership through a sale or purchase, etc. (hereinafter omitted);

Article 6 (Registration of Rental Housing Act) (1) A person who intends to rent housing of more than the number prescribed by Presidential Decree may file an application for registration with the head of a Si/Gun/Gu (referring to the head of an autonomous Gu; hereinafter the same shall apply

(2) A person who intends to register pursuant to paragraph (1) shall report to the head of a Si/Gun/Gu: Provided, That this shall not apply to minor matters prescribed by the Ordinance of the Ministry of Construction and Transportation.

(3) Matters necessary for the standards and procedures for registration and report referred to in paragraphs (1) and (2) shall be determined by Presidential Decree.

Article 12 of the Rental Housing Act (Restriction, etc. on Sale of Rental Housing) (1) A rental house shall be prohibited from being sold unless the period under any of the following subparagraphs (hereinafter referred to as the mandatory rental period) has elapsed:

4. As for the constructed or purchased rental houses other than those as referred to in subparagraphs 1 through 3, the period as prescribed by the Presidential Decree.

A person who falls under any of the following subparagraphs of Article 22 (Penal Provisions) of the Rental Housing Act shall be punished by imprisonment for not more than two years or by a fine not exceeding twenty million won:

3. A person who has sold a rental house in violation of the provisions of Article 12;

▣ 임대주택법 시행령 제6조(임대사업자의 범위 및 등록기준 등) (2004. 3. 17. 대통령령 제18315호로 개정되기 전의 것)

(1) The term "number of houses prescribed by Presidential Decree" in Article 6 (1) of the Act means two houses in cases of detached houses, and two households in cases of collective housing; hereinafter the same shall apply).

Article 9 (Obligatory Lease Period, etc. of Rental Houses) (1) The term "period prescribed by the Presidential Decree" in the main sentence of Article 12 (1) of the Act means any of the following periods:

4. Three years from the commencement date of lease of the relevant rental house in case of the purchased rental house.