Seoul High Court Decision 2008-0240 (Law No. 21, 2008)

Whether taxation on evaluation marginal profits from foreign currency assets violates the principle of no taxation without the law due to unrealized profits.

The provisions of the Enforcement Decree exceeds the scope of delegation of the Income Tax Act, the parent corporation merely because the unrealized profits are included in gross income, or cannot be deemed as violating the principle of substantial taxation under the no taxation without law under the Constitution.

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

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked. The defendant shall revoke the disposition of imposition of global income tax of KRW 38,33,780 for the plaintiff on November 1, 2007.

1. Quotation of judgment of the first instance;

The court's reasoning concerning this case is as stated in the reasoning of the judgment of the court of first instance except for the following additional parts among the judgment of the court of first instance. Thus, this court's reasoning is cited in accordance with Article 8 (2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act.

○ Additional Judgment

In return and payment of each comprehensive income tax for the year 2005 through 2007 by multiple individual entrepreneurs including the plaintiff, the plaintiff paid the loss from the evaluation of foreign currency debt without including the gross income and necessary expenses. Since the practice of non-taxation on the profit from the loss from the evaluation of foreign currency assets and liabilities is deemed to have been established, the disposition of this case in violation of this principle is alleged to be illegal. Thus, in order to establish the non-taxation practice under Article 18(3) of the Framework Act on National Taxes, there must be an objective fact that has not been imposed for a considerable period of time, and there must be an intention not to impose tax due to any special circumstance even though the tax authority knew that it is able to impose tax on the matter. Such public opinion or opinion must be expressed explicitly or explicitly, but it should be deemed that the tax authority declared that it would not impose taxes on the state of non-taxation for a considerable period of time (see Supreme Court Decision 2001Du7855, Sept. 5, 2003).

2. Conclusion

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