early 209west3298 ( October 11, 2010)

Inheritance Deductions and Division of Inherited Property

It does not violate the substance over form principle to deprive the spouse of the benefit of the spouse's inheritance mutual aid regardless of the intent to evade tax, where the inheritance is not divided within a given period.

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

Red○ ○

The Director of Gangnam District Office

1. The plaintiff's claim is dismissed.

2. The plaintiff shall bear the litigation costs.

The Defendant’s disposition of imposition of KRW 34,073,739 against the Plaintiff on June 1, 2009 is revoked.

1. Circumstances of the disposition;

A. The deceased KimA (hereinafter referred to as the “the deceased”) died on August 30, 2007, and accordingly, the plaintiff and the son KimB, who were his wife, jointly inherited the apartment of ○○○○○○-dong 206 Dong 1109 (hereinafter referred to as the “the apartment of this case”).

B. On February 27, 2008, the Plaintiff reported to the Defendant the inheritance tax of KRW 1,522,275,000 on the inherited property value of KRW 1,52,275,00, and received inheritance of the instant apartment as one-half shares with KimB, the Plaintiff reported the inheritance tax base by applying KRW 651,02,718 to the amount of the spouse’s inheritance deduction amount, and reported and paid KRW 43,710,113 of the inheritance tax calculated accordingly.

C. From September 22, 2008 to December 30, 2008, the Defendant conducted a tax investigation of inheritance tax on the deceased’s inherited property. As a result, the Defendant revealed that the instant apartment was not registered in the Plaintiff’s name even after six months have elapsed from the date following the due date of the split-off of the spouse’s inherited property under the proviso of Article 19(2) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 9269, Dec. 26, 2009; hereinafter “Inheritance Tax Act”). Accordingly, the Defendant denied the application of KRW 651,02,718, which was reported by the Plaintiff as the due date of the spouse’s inheritance deduction, and instead, notified the Plaintiff of the increase and decrease of KRW 36,78,390, Jun. 1, 2009 (hereinafter “the first disposition”).

D. On August 27, 2009, the Plaintiff filed an appeal with the Tax Tribunal on the grounds that it was dissatisfied with the initial disposition of correction, and on February 11, 2010, the Tax Tribunal rendered a decision to revise the amount of tax by excluding the additional tax on negligent tax returns during the initial disposition of correction. On February 23, 2010, the Defendant rendered a decision to reduce the amount of tax by 2,714,651 won from the initial disposition of correction (hereinafter referred to as “the disposition of imposition of inheritance tax of June 1, 2009, which was corrected by 34,073,739 won on February 23, 2010).

[Ground for Recognition: Facts without dispute, Gap 1 through 3 evidence, Gap 8 evidence, Eul 1 through 3 evidence, the purport of the whole pleadings]

2. Whether the disposition is lawful;

A. The plaintiff's assertion

(1) According to Article 19(2) of the Inheritance Tax Act (hereinafter “instant provision”), only if a spouse’s inherited property is divided into inherited property and reported the spouse’s inherited property by the deadline for division of the spouse’s inherited property, a spouse’s inheritance deduction under Article 19(1) of the Inheritance Tax Act may be applicable. However, only in cases where the division of the property requires registration, etc., a spouse’s inherited property shall be registered within the deadline for division of the property. However, pursuant to Article 187 of the Civil Act, the acquisition of real rights by inheritance does not require registration. Therefore, the Plaintiff is legally entitled to acquire the ownership of the instant apartment without registration. Therefore, on the premise that the instant apartment requires the registration of division of the property, the instant disposition is unlawful on the ground that the Plaintiff did not register, etc. by the deadline for

(2) The instant provision requires an inheritor to complete the division of inherited property by a certain period, which is a requirement for the application of the spouse inheritance deduction under Article 19(1) of the Inheritance Tax Act, is to prevent tax avoidance in relation to the portion of the inheritance deduction received by the spouse by dividing the inherited property with the share of a non-spouse after the spouse’s inheritance deduction. However, the Defendant denied the spouse inheritance deduction for the reason that the Plaintiff, who did not have no intention to evade the tax on the instant apartment, did not complete the registration of division of inherited property within the prescribed period, and ultimately imposes double inheritance tax on the 1/2 share of the instant apartment. This is unlawful as a government-oriented disposition that does not comply with the legislative intent of the foregoing provision.

(3) The Plaintiff reported the acquisition on the ground that he received the inheritance of the 1/2 share ownership of the instant apartment, and the Defendant was well aware that the Plaintiff acquired the instant apartment through the division of the inherited property. Under the premise that such inheritance was conducted, the Plaintiff, as the Plaintiff, trusted that the spouse’s inheritance deduction on the instant apartment was completed with respect to the instant apartment, by taking prior measures, such as not imposing any comprehensive real estate holding tax already imposed on the premise that the inheritance deduction was completed. Nevertheless, the instant disposition taken on the premise that the spouse’s inheritance deduction on the instant apartment was erroneous is an unlawful disposition that infringes the Plaintiff’s trust.

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

(1) The determination on the assertion that the apartment of this case does not constitute a case where the division of the apartment of this case requires registration, etc. under Article 187 of the Civil Act

(A) While the Inheritance Tax Act requires a spouse to deduct the actual amount of inheritance within a certain limit from the taxable amount of inheritance taxes, such inheritance deduction is not always acknowledged, but it is required that such inheritance deduction should be carried out within a time limit by allowing the spouse to approve such inheritance deduction only when the inherited property is divided within the time limit for the division of inherited property (i.e., the registration when the registration is required).

As can be seen, the provision of this case does not subject to the spouse’s abstract statutory share of inheritance deduction, and requests the completion of the division of inherited property by a certain period, and the actual share of the spouse confirmed by the division is subject to the spouse’s inheritance deduction. The purpose is to prevent the tax avoidance in relation to the portion for which the spouse’s inheritance deduction was received by dividing the inherited property to the share of a non-spouse after the inheritor received the spouse’s inheritance deduction according to the abstract statutory share of inheritance.

(B) Considering that the purport of the provision of this case is to prevent unfair acts of evading and delaying inheritance tax and to ensure fairness in tax burden, it is reasonable to interpret that "where registration, registration, or change of title is required" means "where the public disclosure system on the property requires the completion of the public disclosure of changes in real rights of the property as the property is equipped with the public disclosure system." The provision of this case requires the requirement of additional registration regardless of the time of attribution of ownership under the Civil Act for a spouse's inheritance deduction.

(C) On a different premise, the Plaintiff’s assertion that the instant provision is not applicable to the Plaintiff is without merit.

(2) Determination as to whether the application of this case provision is unlawful until there is no intention to evade tax;

In order to effectively prevent the inheritance deduction system from being abused as a means of tax avoidance, it is necessary to establish a clear legal relationship with respect to inheritance tax early. The provision of this case takes the means to deprive the spouse of the benefits of the spouse’s inheritance deduction regardless of the intention of tax evasion in the event that the inheritance deduction system is not divided within a given period of time (in reality, the provision of this case, which choice such regulatory method, does not violate the substance over form principle in order to achieve the above legislative purpose, shall not be deemed to violate the substance over form principle). The Plaintiff’s assertion on this part is without merit, premised on the premise that the provision of this case should be applied only when the heir intended to evade tax.

(3) Determination on the assertion that the principle of trust protection is contrary to the principle

In order to apply the principle of trust protection to the acts of tax authorities in tax legal relations, at least u300, the tax authorities should explicitly or implicitly express the public opinion the subject of trust to taxpayers. The fact that the Defendant did not impose the comprehensive real estate holding tax imposed on the deceased on the premise that the Plaintiff was aware of the Plaintiff’s report and accordingly the Plaintiff acquired the shares of 1/2 of the apartment of this case does not necessarily mean that the Defendant expressed the public opinion suggesting that the requirements for the spouse’s inheritance deduction under Article 19(1) of the Inheritance Tax Act have been completed. Accordingly, the Plaintiff’s assertion on this issue is without merit.

3. Conclusion

Inasmuch as the plaintiff's claim is groundless, it is dismissed.