Cho High Court Decision 2010Du3993 ( October 14, 2011)

Rental housing does not include rental housing in unsold housing units

Since rental housing does not include rental housing in a house unsold in lots, even if a rental business operator and a housing construction business operator have owned it before rental and conversion into sale, it cannot be viewed as a house unsold in lots since ownership transfer through the initial sale is not premised.

2011Guhap22143 Revocation of Disposition of Imposition of Comprehensive Real Estate Tax, etc.

XX Co., Ltd

The director of the tax office

October 11, 2011

November 17, 2011

1. The plaintiff's claim is dismissed.

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

The Defendant’s imposition of comprehensive real estate holding tax on November 2, 2010 on KRW 665,521,290 and special rural development tax on KRW 133,104,250 and special rural development tax on KRW 133,10,250, comprehensive real estate holding tax on KRW 790,570,830 and special rural development tax on KRW 158,114,160, and imposition of comprehensive real estate holding tax on KRW 10,245,59,120 on KRW 2,09 and special rural development tax on KRW 2,049,120 shall be revoked.

1. Details of the disposition;

A. The Plaintiff was incorporated on March 16, 1983, and registered as a business operator on October 20, 1983 and operated a housing construction and a housing lease business.

B. The Plaintiff newly constructed and leased 11,440 households of private rental housing with approval for the construction of private rental housing under Article 16 of the Housing Act, and filed an application for exclusion from the aggregate amount by deeming that each of the comprehensive real estate tax on each of the housing reverted in 2007 through 2009 constitutes the total real estate tax base pursuant to Article 8(2)1 of the former Gross Real Estate Tax Act (amended by Act No. 10789, Jun. 7, 201; hereinafter the same shall apply) and Article 3(1)1 of the former Enforcement Decree of the Gross Real Estate Tax Act (amended by Presidential Decree No. 22045, Feb. 18, 2010; hereinafter the same shall apply) of the former Enforcement Decree of the Gross Real Estate Tax Act, and filed an application for exclusion from aggregate amount by 11,440 households of the above rental housing as those excluded from the total tax base (hereinafter referred to as “rental rental housing”).

B. Of the above rental housing 11,440 households, the Plaintiff agreed upon the lease of an apartment with 689 households, including 00 households in Gwangju Mine-gu, 110 XX apartment, 000 O-Myeon 00 O-Myeon 00, and 13(2)3 of the Enforcement Decree of the Rental Housing Act (hereinafter referred to as “sub-occupant housing”) from the time of commencement of the lease of an apartment with 689 households in South-gu, South-gu, AAdong 00-0 AAAdong 10 households, and agreed on the lease of the housing between March 2009 and December 4, 2009, to transfer the ownership of the housing to the lessee in lots pursuant to Article 16(3) of the former Rental Housing Act (amended by Act No. 11021, Aug. 4, 2011; hereinafter the same) and Article 13(2)3 of the Enforcement Decree of the Rental Housing Act.

C. On November 2, 2010, the Defendant issued a corrective disposition of each of the following: (a) on the ground that: (b) the Plaintiff did not meet the requirements of continuous lease for five or more years among the requirements of exclusion from adding up the tax base of rental housing under Article 3(1)1 (b) of the former Enforcement Decree of the Gross Real Estate Tax Act by converting the Plaintiff into parcelling-out to the lessee within five (5) years from the date on which the Plaintiff commenced the lease of the pertinent house; (b) on November 2, 2010, the Plaintiff added the amount equivalent to the amount of tax reduced to the amount of taxes reduced pursuant to Article 17(5) of the former Gross Real Estate Tax Act; and (c) comprehensive real estate holding tax for 65,521,290 and special rural development tax for 133,104,250 and special rural development tax for 208; and (d) comprehensive real estate holding tax for 158,114,160 won for 209.

D. On November 18, 2010, the Plaintiff dissatisfied with the instant disposition, filed an appeal with the Tax Tribunal, but the Tax Tribunal dismissed the Plaintiff’s appeal on April 14, 201.

[Reasons for Recognition] Facts without dispute, Gap 1, 2 evidence, Eul 1 evidence (including each number), the purport of the whole legal theory

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The key house constitutes a housing unit unsold in lots, which is excluded from the total tax base under Article 4(1)3 of the former Enforcement Decree of the Gross Real Estate Tax Act and Article 4 subparag. 1 of the former Enforcement Rule of the Real Estate Tax Act (amended by Ordinance of the Ministry of Strategy and Finance No. 1/80 of May 12, 2009; hereinafter the same) at the same time constitutes a housing unit unsold in lots (hereinafter referred to as a “ unsold housing unit unsold in lots”), even if the key housing unit was converted in lots within five years, when the liability for tax payment was established, so long as the housing unit unsold in lots meets the requirements for the exclusion from total sum, the disposition of this case was unlawful, deeming that the housing unit at issue did not meet the requirements for exclusion from total sum.

2) Even if the housing at issue does not fall under the housing unsold in lots, since there is no speculative element of real estate holding that the Act on Comprehensive Real Estate Holding Tax does not govern the housing unsold in lots, it is reasonable to interpret that comprehensive real estate holding tax on rental housing should be limited only if it fails to meet the requirements required by the Rental Housing Act. In this purport, the Comprehensive Real Estate Holding Tax Act provides for the requirement that the rental housing should be continuously leased for 5 or more years by going through the mandatory rental period under the Rental Housing Act. However, Article 16(3) of the former Rental Housing Act and Article 13(2)3 of the Enforcement Decree of the Rental Housing Act allow the conversion of rental housing (hereinafter referred to as ' early conversion of rental housing') within the mandatory rental period. However, Article 3(7)5(b) of the former Enforcement Decree of the Comprehensive Real Estate Holding Tax Act allows early conversion of rental housing only on the basis of the public rental housing, which is in contravention of the principle of tax equity in the case of early conversion of rental housing without any reason to treat it differently from the public rental housing.

Therefore, Article 3(7)5 (b) of the former Enforcement Decree of the Gross Real Estate Tax Act prior to the Enforcement Decree of the Act is null and void in violation of the principle of tax official title. Thus, the instant disposition that did not recognize the exception of the mandatory rental period due to the early conversion of private rental housing due to discrimination against the public rental housing based on the provision of the above Enforcement Decree is

B. Determination

1) Determination on the first argument

A) Under the principle of no taxation without law, or under the principle of no taxation without law, the interpretation of tax laws and regulations shall be interpreted in accordance with the law, barring special circumstances. It is not allowed to expand or analogically interpret without reasonable grounds. In particular, it accords with the principle of fair taxation to strictly interpret the provisions that can be seen as clearly preferential provisions among the requirements for reduction and exemption (see, e.g., Supreme Court Decision 2003Du7392, May 28, 2004).

B) In light of the above legal principles, in full view of the following circumstances revealed through the health stand, the facts acknowledged earlier, and the purport of the entire pleadings, housing at issue, which is a rental house under Article 2 subparag. 1 of the former Rental Housing Act, shall not be a housing unsold in lots as prescribed by Article 8(2)2 of the former Gross Real Estate Tax Act, Article 4(1)3 of the former Enforcement Decree of the Gross Real Estate Tax Act, and Article 4 subparag. 1 of the former Enforcement Rule of the Gross Real Estate Tax Act. Therefore, the Plaintiff’s assertion on this different premise is without merit without any need

(1) Article 8 (2) of the former Gross Real Estate Tax Act provides that housing falling under any of the following subparagraphs shall not be included in the scope of housing subject to summing-up of the tax base of the comprehensive real estate holding tax. Article 8 (2) of the same Act provides that housing prescribed by the Presidential Decree in consideration of the rental period, the number of houses, price, size, etc. as rental housing under Article 2 (1) of the Rental Housing Act or multi-household rental housing prescribed by the Presidential Decree, and housing other than housing under subparagraph 2 of subparagraph 2 is not in conformity with the purpose of imposing the comprehensive real estate holding tax, such as unsold housing constructed and owned by a housing construction business operator under Article 8 (2) 2 of the former Gross Real Estate Tax Act, and the requirements for exclusion from summing-up of the tax base of unsold housing are clearly and clearly prescribed in the Enforcement Decree of the former Gross Real Estate Tax Act and the Enforcement Rule of the former Gross Real Estate Tax Act.

(2) In addition, Article 4 (1) 3 (a) of the former Enforcement Decree of the Gross Real Estate Tax Act, which received the above status under Article 8 (2) 2 of the former Gross Real Estate Tax Act, provides that housing unsold in lots which is not in conformity with the purpose of imposing the comprehensive real estate holding tax, and which is owned by a housing construction business operator as prescribed by the Presidential Decree, is a housing unsold in lots as prescribed by Ordinance of the Ministry of Strategy and Finance, which is constructed and owned by a person who registered his business as of the tax base date and obtained approval of a business plan under Article 16 of the Housing Act. Article 4 of the Enforcement Rule of the former Gross Real Estate Tax Act, which received the delegation, provides that housing unsold in lots refers to housing unsold in lots owned by the person who newly constructs and sells the house, which falls under any of the following subparagraphs. According to the above provisions, housing unsold in lots shall not be included in rental housing unsold in lots, and even if the plaintiff, who is a housing construction business operator and a housing

Meanwhile, the Plaintiff asserted that Article 4 of the former Enforcement Rule of the Gross Real Estate Tax Act is null and void as a provision reducing the scope of special cases for exclusion of summing-up only to a person who newly constructs and sells a house without delegation of the mother law. However, as seen earlier, the former Gross Real Estate Tax Act clearly states that rental housing is not included in unsold housing owned by a housing construction business entity. As such, the above Enforcement Rule is merely a specification and clarification of the provisions of the former Comprehensive Real Estate Tax Act and the Enforcement Rule of the same Act concerning unsold housing excluded from summing-up, and thus, it cannot be said

③ Article 4 of the Enforcement Rule of the former Gross Real Estate Tax Act provides for the requirements for unsold housing units that are not in conformity with the purpose of imposing comprehensive real estate tax upon delegation by superior statutes, and where the unsold period, counting from the date when the first liability for tax payment of property tax on housing units after January 1, 2005, does not exceed three years, intends to provide support to housing construction business operators holding unsold housing units by excluding the subject matter of aggregate tax base of comprehensive real estate tax (i.e., in cases where a housing construction business operator has no newly built housing units and has no choice but to hold them inevitably due to a lack of ownership). Therefore, the above provision cannot be applied to the same housing construction business operator (rental business operator) as the Plaintiff who owned rental housing units before early conversion, and if it is deemed that the above provision can be applied as alleged by the Plaintiff, it would result in unreasonable results in the lack of meaning of the provisions of the former Gross Real Estate Tax Act and the Enforcement Decree of the same Act.

2) Determination on the second argument

A) Whether to define a tax law as a certain content is a matter of policy and technical determination based on accurate data about the actual state of national finance, social economy, national income, and people’s lives. As such, this can be said to be left to a policy and technical judgment based on the legislative formation discretion of the legislators. Therefore, the provision of tax requirements in a tax law and an exceptional provision thereof, non-taxation, or tax exemption requirement is within the legislative discretion of the legislators unless the provision is manifestly unreasonable (see, e.g., Supreme Court Decision 927265, May 29, 2001).

B) In light of the above legal principles, the Plaintiff’s assertion that the instant disposition, which did not recognize the exception of the mandatory rental period following the early sale conversion of privately constructed rental housing, was unlawful, based on the discrimination between the public construction rental housing owner’s housing and the following circumstances revealed through the facts acknowledged earlier, and the purport of the entire pleadings, is without merit.

① Article 3(4)5 of the Enforcement Decree of the Gross Real Estate Tax Act enacted and enforced on May 31, 2005 provides that if the period of mandatory rental of rental housing fails to meet the obligatory rental period due to purchase by consultation or expropriation of land, etc. for public-interest projects under the Act on Acquisition of and Compensation for Land, etc. or other Acts, it shall be deemed that the lease continued until the expiration of the obligatory rental period. However, upon the amendment on August 6, 2007, Article 3(7)5(b) of the Enforcement Decree of the same Act newly added that if the publicly constructed rental housing was converted to a lessee under certain conditions under the Rental Housing Act, it shall be deemed that the lease continued until the expiration of the mandatory rental period, while Article 3(2) and Article 3(7)5(b) of the Addenda (No. 2020, Aug. 6, 2007) provides that the amended provisions of Article 3(3)5(b) of the Enforcement Decree shall apply only where the rental housing was converted to sale in lots after the enforcement date of the amended Enforcement Decree.

In light of the above amendment progress and contents, since the amendment of the Enforcement Decree of the Comprehensive Real Estate Tax Act did not exist any provision on the exception of the mandatory rental period due to the early conversion of the constructed rental housing at the time of the enactment of the Enforcement Decree of the same Act, the provision on the exception of the mandatory rental period due to the early conversion of the constructed rental housing and private constructed rental housing was newly established, and at the same time, the provision of the Enforcement Decree of the same Act shall apply only to the conversion of the rental housing into lots after the enforcement of the amended Enforcement Decree, and at the same time, it seems that the scope of the comprehensive real estate tax exemption is gradually expanded in consideration of changes in the national finance and economic situation, and it cannot

② In addition, as alleged by the Plaintiff, since the key house was converted to a tenant early, according to the requirements stipulated by the former Rental Housing Act, it cannot be deemed that the Plaintiff owned the key house prior to the early conversion to a tenant for the purpose of excessive possession and speculation of real estate property. In this respect, even if there is no difference from the early converted public rental house for which the comprehensive real estate holding tax exemption benefits have been maintained under the former Enforcement Decree of the Comprehensive Real Estate Holding Tax Act, the issue of determining what contents of tax laws as seen earlier is based on the accurate data about the actual state of national finance, social economy, national income, life, etc. is to be based on the policy and technical judgment based on the legislative formation discretion of the legislators. Therefore, even if there is room for considering the Plaintiff’s circumstances, the instant disposition is not unlawful.

(3) On the other hand, Article 2 of the Enforcement Decree of the Rental Housing Act classify the constructed rental housing under subparagraph 2 of Article 2 of the former Rental Housing Act as the publicly constructed rental housing and the privately constructed rental housing. Article 2 of the former Enforcement Decree of the Rental Housing Act stipulates that the housing constructed and leased after obtaining approval of a project plan pursuant to Article 16 of the Housing Act shall be the publicly constructed rental housing (Article 16) and other constructed rental housing as private constructed rental housing (Article 13 (2) 3 of the Enforcement Decree of the Rental Housing Act). Under the latter part of Article 13 (2) of the former Enforcement Decree of the Rental Housing Act, the public constructed rental housing provides that lessees falling under Article 21 (1) or (2) of the former Rental Housing Act (Article 21 (1) provides that lessees who reside in the relevant rental housing at the time of conversion for sale in lots or who reside in the relevant rental housing, and Article 2 (2) provides for the exemption of comprehensive real estate holding tax in cases where the rental business operator goes bankrupt and is prescribed by Presidential Decree.

3. Conclusion

The plaintiff's claim is dismissed on the ground that it is without merit.