Early High Court Decision 2009J3884 ( December 15, 2009)

Exemption from gift tax on farmland, etc. donated to farming children;

It is insufficient to recognize that the plaintiff was directly engaged in farming due to the fact that the plaintiff received substantial business income while operating retail stores.

The contents of the decision shall be the same as attached.

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of gift tax of KRW 58,651,490 against the Plaintiff on July 1, 2009 is revoked.

1. Circumstances of the disposition;

A. On December 13, 2006, the Plaintiff received donation from the Ministry of Agriculture, Food and Rural Affairs of ○○○○○○-dong 10,000 square meters and 17-4 square meters and 5,445 square meters (hereinafter “instant land”).

B. On February 7, 2007, the Plaintiff, as a farming child, applied for a tax reduction or exemption pursuant to Article 58(1)1(a) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 5584, Dec. 28, 1998; hereinafter the same shall apply), Article 57(1) and (2) of the former Enforcement Decree of the Regulation of Tax Reduction and Exemption Act (amended by Presidential Decree No. 15976, Dec. 31, 1998; hereinafter the same shall apply), Article 15(2) of the former Restriction of Special Taxation Act (amended by Act No. 5825, Feb. 8, 199; hereinafter the same shall apply) on the ground that the Plaintiff was donated the instant land to the Defendant as a farming child.

C. The Defendant, not only did the instant land be subject to the gift tax reduction and exemption under each of the above provisions, but also deemed that the Plaintiff was not directly engaged in farming within five years after the Plaintiff donated the instant land, and imposed gift tax of KRW 58,651,490 on the Plaintiff on July 1, 2009 (hereinafter “instant disposition”).

D. The Plaintiff filed an objection against the instant disposition on August 6, 2009, but was dismissed. The Plaintiff filed an inquiry tribunal with the Tax Tribunal on October 22, 2009, but was dismissed.

[Reasons for Recognition] Facts without dispute, Gap evidence 1, Gap evidence 2-1, 2, Gap evidence 5-2, Eul evidence 5-2, Eul evidence 6, Eul evidence 7-4, and 5, the purport of the whole pleadings

2. Whether the disposition of this case is legal; and

(a)the master of the plaintiff;

The Plaintiff asserts that the disposition of this case is unlawful, since the Plaintiff satisfies the requirements for exemption from gift tax as of the date of donation of farmland to fall under exemption from gift tax under the former Regulation of Tax Reduction and Exemption Act, and it is not necessary to satisfy the requirements for exemption from gift tax even at the time of January 1, 1999, which is the enforcement date of the former Restriction of Special Taxation Act, since the Plaintiff directly engaged in farming for more than two years retroactively from the date of donation of the land of this case, thereby satisfying the requirements for exemption from gift tax, and was donated to the land by ParkA, a self-employed farmer, thereby satisfying the requirements for exemption from gift tax under the former Regulation of Tax Reduction and Exemption Act.

B. Relevant statutes

It is as shown in the attached Table related statutes.

C. Determination

1) Under the principle of no taxation without law, the interpretation of tax laws and regulations shall be interpreted in accordance with the text of the law, barring any special circumstance, and it shall not be permitted to expand or analogically interpret it without reasonable grounds. In particular, it conforms to the principle of fair taxation to strictly interpret the provisions that can be seen as a expressly preferential provision among the requirements for reduction and exemption (see Supreme Court Decision 2003Du7392, May 28, 2004).

However, Article 15(2) of the Addenda to the Restriction of Special Taxation Act provides that the gift tax shall be exempted pursuant to the former Regulation of Tax Reduction and Exemption Act as to the farmland, etc. subject to exemption of gift tax pursuant to Article 58(1) of the former Regulation of Tax Reduction and Exemption Act at the time of the enforcement of the same Act, and Article 57(1) and (2) of the former Enforcement Decree of the Regulation of Tax Reduction and Exemption Act requires that the donated farmland be engaged in direct farming for two or more years retroactively from the date of donation of the relevant farmland, as one of the requirements for farming children exempted from gift tax. In other words, Article 15(2) of the former Enforcement Decree of the Restriction of Special Taxation Act provides that the former Enforcement Decree of the Restriction of Tax Reduction and Exemption Act shall be construed as 9 years retroactively from the date of donation of the farmland, etc., which is subject to exemption of gift tax pursuant to Article 15(1) of the former Enforcement Decree of the Restriction of Tax Reduction and Exemption Act at the time of enactment of the Restriction of Special Taxation Act.

2) 그러므로 원고가 1999. 1. 1.을 기준으로 소급하여 2년간 계속하여 이 사건 토지에서 직접 영농에 종사함으로써 영농자녀로서의 요건을 갖추고 있었는지 여부에 관하여 살피건대, 구 조세감면규제법이 정하는 영농자녀라 함은 농지 등을 타인에게 위탁하거나 대여하지 않고 직접 자기의 책임 하에 관리 ・ 경작하는 자를 의미하며, 직접 영농에 종사하는 이상 다른 직업을 겸업하더라도 여기에서 말하는 영농자녀에 해당할 것이지만, 다른 직업에 전념하면서 농업을 간접적으로 경영하는 것에 불과한 경우에는 영농자녀에 해당한다고 볼 수 없는바(대법원 1998. 9. 22. 선고 98두9271 판결 참조), 을 제10호증의1, 2, 을 제11, 12, 13호증의 각 기재에 변론 전체의 취지를 더해 인정되는 다음과 같은 사정, 즉, 원고는 1996. 7. 29 부터 2003. 9. 18.까지 ◇◇점이라는 상호로 과자, 떡 소매점을 운영하면서 실질적인 사업소득을 얻고 있었고, 2000. 8. 24부터 2004. 5. 20까지 '□□'이라는 상호로 빵 소매점을 운영한 점, 박BB이 1996. 3. 1.부터 사업자등록을 하고 이 사건 토지 등에서 미나리를 재배하여 온 점 등에 비추어 보면, 원고가 1999. 1. 1.을 기준으로 소급하여 2년 이상 계속하여 직접 영농에 종사하였다고 보기 어렵고, 갑 제18호증의1, 갑 제22호증의 각 기재만으로는 위 기간 중 원고가 직접 영농에 종사하였다는 점을 인정하기에 부족하며 달리 이를 인정할 증거가 없을 뿐만 아니라, 가사 원고가 위 기간에 틈틈이 이 사건 토지를 경작했다고 하더라도 이는 위와 같은 개인 사업에 전념하면서 간접적으로 영농에 종사한 것에 불과한 것이라고 봄이 상당하다.

Therefore, as of January 1, 199, the Plaintiff failed to meet the requirements for farming children under the former Regulation of Tax Reduction and Exemption Act and the Enforcement Decree of the same Act as of January 1, 199, the instant disposition is lawful on the premise that the instant land does not fall under the category of exemption from gift tax, without further examination as to whether it satisfies the requirements for farming children as of the donation date, and whether it is directly engaged in farming in the instant land after the donation date.

3. Conclusion

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