Plaintiff (Appointed Party)

The head of Dong-gu in Yananan-si

July 20, 2016

1. The plaintiff (appointed)'s claim is dismissed.

2. The costs of lawsuit shall be borne by the plaintiff (appointed party).

The Defendant’s disposition rejecting to rectify acquisition tax made on June 25, 2015 against Plaintiff (Appointed Party (hereinafter “Plaintiff”) and Appointed 2 and disposition rejecting to rectify acquisition tax reduction or exemption as of July 17, 2015 is revoked.

1. Details of the disposition;

A. On April 19, 2015, the Plaintiff and the Selection-party 2 purchased each 1/2 shares of the building (hereinafter “instant building”) located in the Dong-gu, Chungcheongnam-gu, Dong-gu and 447.4 square meters and the attached Form 2 on its ground from the Nonparty for the purpose of running the housing rental business. On May 26, 2015, the Plaintiff and the Selection-party 2 registered as the rental business operator on July 16, 2015 with the sale as of April 19, 2015 as the grounds for registration.

B. On May 26, 2015, Plaintiff and Selected 2 filed a report on acquisition with the Defendant based on the purchase price of KRW 1,435,00,000 for the instant building as the tax base, and paid acquisition tax of KRW 43,050,000, KRW 599,90 for special rural development tax, KRW 4,305,00 for local education tax, and KRW 47,954,90 for local education tax.

C. On June 15, 2015, on the ground that “the instant building consists of 18 households, so acquisition tax shall be calculated by each household, and acquisition value by each household constitutes 600 million won or less, and thus, the acquisition tax rate of 10/1,00 should be applied.” However, on June 25, 2015, the Defendant rejected the said request for correction on the ground that “the instant building is a detached house, and the acquisition tax rate of 30/1,000 shall be calculated on the basis of the total acquisition value rather than the acquisition value by each household, as it exceeds 90 million won,” and the acquisition tax rate of 30/1,000 shall be applied.”

D. On July 10, 2015, the Plaintiff and the Appointed 2 filed a request for reduction or exemption of acquisition tax with the Defendant to the effect that “the instant building constitutes a multi-unit house, and thus, should be subject to reduction or exemption of local tax by applying the provisions of Article 31 of the former Restriction of Special Local Taxation Act (amended by Act No. 13435, Jul. 24, 2015; hereinafter “former Restriction of Special Local Taxation Act”). However, on July 17, 2015, the Defendant rejected the said request for reduction or exemption on the ground that “the instant building is registered as a multi-unit house on the building ledger, and it does not constitute a multi-unit house, and thus does not fall under the reduction or exemption under Article 31(1) of the former Restriction of Special Local Taxation Act (hereinafter collectively referred to as “each of the instant dispositions”).

[Reasons for Recognition] Gap evidence Nos. 1, 2, 5, Eul evidence Nos. 1-1, and 2-2, the purport of the whole pleadings

2. Whether each of the dispositions of this case is legitimate

A. The plaintiff's assertion

1) Each household that jointly uses all or part of the walls, corridors, stairs, and other facilities of the building is a structure that allows independent residential life within one building, and it constitutes an apartment house with 18 floors as prescribed by the Housing Act. Nevertheless, the Defendant deemed the building of this case as a detached house on the ground that the building of this case is entered into a building ledger or a real estate copy as a detached house, and does not apply Article 31(1) of the former Restriction of Special Local Taxation Act. Each disposition of this case is unlawful against the substance over form principle and the principle of imposition of status.

2) A multi-family house, one of the detached houses, has low number of floors compared to a multi-household house, which is a multi-family house, and the number of households is small. Since a multi-family house is more small, the need for protection is greater because it is a multi-family house, and it is unlawful to include a multi-household house in the subject of Article 31(1) of the former Restriction of Special Local Taxation Act and to exclude a multi-family house, contrary

3) Since the instant building consists of 18 households, acquisition tax shall be calculated for each household. Since acquisition tax for each household constitutes 60 million won or less, acquisition tax rate of 10/1,000 shall apply. In addition, since 17 households out of the above 18 households fall under 60 square meters or less of exclusive residential areas, acquisition tax shall be exempted pursuant to Article 31(1) of the former Restriction of Special Local Taxation Act.

4) The Defendant imposed a special rural development tax on the part corresponding to the exclusive use area on the ground that one household among 18 households of the instant building exceeded 85 square meters. Although the exclusive use area of the downtown and 85 square meters for the exclusive use area of rural communities differs significantly from the transaction amount, it is unreasonable to apply the same standard. Only in cases where the transaction amount by household exceeds 60 million won, special rural development tax should be imposed.

B. Relevant statutes

Attached Form 3 shall be as listed in attached Table 3.

C. Determination

1) Whether the instant building constitutes multi-family housing

Article 2 subparag. 1 of the former Housing Act (amended by Act No. 13782, Jan. 19, 200) provides that "house" means all or part of the building with the structure wherein members of a household can live independently, and "multi-household housing" means multi-household housing with the structure of multi-household housing, the total floor area of which is 6 or less is 1/100 of which can be separated from the unit of each household, and the unit area of multi-household housing (excluding multi-household housing) is 6/100 of the unit area of multi-household housing, and the unit area of multi-household housing is 1/6 or less, and the unit area of multi-household housing is 6 or less, and the unit area of multi-household housing (excluding multi-household housing units) separated from the unit area of multi-household housing, and the unit area of multi-household housing is 1/6 or less, and the unit area of multi-household housing is excluded from the unit area of multi-household housing (excluding multi-household housing units).

With respect to the instant case, comprehensively taking account of the following circumstances acknowledged in the statement No. 1, No. 8, No. 1-1, No. 1-2, and No. 2 as follows: ① the instant building was registered as a detached house from the time of registration of ownership preservation to the register of real estate register; ② the Plaintiff and Appointed 2 registered as a rental business operator by marking the instant building as a multi-family house, which is a detached house; ③ the total number of 18 units of the instant building is not less than 1/3 of the total number is the object of ownership; ④ the number of houses in excess of 1/3 of the total number is not the object of divided ownership; ④ the Plaintiff and Appoint 2 do not seem to have an intention to be the object of separate ownership as the household unit of the instant building as the owner of each household; thus, the instant building falls under a multi-family house, which is a multi-family house. Therefore, the instant building does not constitute the subject of reduction or exemption under Article 2(1)3 of the former Restriction of Special Local Taxation Act.

2) Whether each of the dispositions of this case is against the principle of fair taxation

A multi-family house is divided into multi-family houses which are detached houses and multi-household houses which are multi-family houses, depending on whether they are the objects of multi-household ownership. A multi-family house rental business operator owns the entire house and operates a rental business, while a multi-household house rental business operator owns a separate space which is the objects of divided ownership among the houses and operates a rental business. Therefore, it cannot be readily concluded that a multi-family house rental business operator runs a rental business more detailed than a multi-household house rental business operator. Therefore, each of the dispositions of this case excluding the building of this case subject to local tax reduction pursuant to Article 31(1) of the former Restriction of Special Local Taxation

3) Whether the tax rate should be applied according to the acquisition value of each household of the instant building

The Plaintiff and Appointed 2 reported the purchase price of the instant building at KRW 1,435,00,000, and the fact that the instant building constitutes a multi-family house which is a detached house and the subject matter of ownership is as seen earlier. As such, the instant building exceeds KRW 900 million and is subject to acquisition tax rate of 30/1,00 pursuant to Article 11(1)8 of the former Local Tax Act (amended by Act No. 13427, Jul. 24, 2015). Moreover, as seen earlier, Article 31(1) of the former Restriction of Special Local Taxation Act is not applicable to the instant building. As such, acquisition tax cannot be exempted even if the exclusive use area of 17 households among each household of the instant building does not exceed 60 square meters. Ultimately, the Plaintiff’s assertion on this part is without merit.

4) Whether the instant building constitutes subject to non-taxation of special rural development tax

In light of the overall purport of pleadings Nos. 4 and 5, the Defendant may recognize the fact that, among the 18 households of this case, the exclusive area of the building of this case, the Defendant imposed KRW 59,900 on only one household (117.82 square meters) with an exclusive area exceeding 85 square meters (17.82 square meters). This is in accordance with Articles 4 subparag. 9 and 11 of the former Act on Special Rural Development and Fisheries (amended by Act No. 13383, Jun. 22, 2015) and Article 4(4) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 26954, Feb. 5, 2016) and the purport of the above Act is to exempt a small-scale housing below a certain size from special rural development tax, it cannot be deemed unlawful for the Plaintiff to exempt a special rural development tax for a household with an exclusive area of 85 square meters or less and impose a special rural development tax on a household exceeding 85 square meters.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.

[Attachment]

Judges Park Man-man (Presiding Judge)