Cho Jae-2018-Mining-3911 ( November 30, 2018)

The period for which the total amount of salaries is at least 37 million won during the possession period of land shall be excluded from the self-competitive period even before the enforcement date of the main issue clause.

As long as the act of transferring land, which is a taxable cause, was done after July 1, 2014 when the issue clause was enforced, the period during which the total amount of salaries is at least 37 million won during the ownership period of the land should be excluded from the self-defense period even before the enforcement date of the issue clause.

Article 66 (14) of the Enforcement Decree of the Restriction of Special Taxation Act

2019Guhap10740 Revocation of Disposition of Imposing capital gains tax

KSL

KS Head of the tax office

June 13, 2019

July 18, 2019

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of capital gains tax of KRW 122,464,390 (including additional tax) against the Plaintiff on June 1, 2018 shall be revoked.

1. Details of the disposition;

A. On November 14, 1984, the Plaintiff acquired 000-3 Do-ri 1,323 m23 m2 (hereinafter “instant land”). On September 6, 2016, the Plaintiff transferred 527,000,000 won to ParkCC.

B. On October 31, 2016, the Plaintiff reported capital gains tax by applying the special deduction for long-term holding under Article 95(1) of the Income Tax Act and the reduction or exemption of self-arable farmland under Article 69 of the Restriction of Special Taxation Act to the instant land.

C. The Plaintiff’s total wage of earned income is as follows:

D. After conducting an investigation of capital gains tax on the instant land, the Defendant imposed capital gains tax on June 1, 2018 by excluding special deduction for long-term possession under Article 95(1) of the former Income Tax Act (amended by Act No. 14389, Dec. 20, 2016; hereinafter the same) on the ground that the instant land constitutes non-business land pursuant to Article 66(14) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 27848, Feb. 7, 2017; hereinafter the same shall apply) with a period of at least 37 million won for the Plaintiff’s annual gross salary during which the Plaintiff owned the instant land, exceeding 40%.

E. The Plaintiff dissatisfied with the instant disposition and filed a tax appeal on September 4, 2018, but was dismissed on December 4, 2018.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 4, 5, Eul evidence Nos. 1 to 3, the purport of the whole pleadings

2. The plaintiff's assertion

A. On or before July 1, 2014, the enforcement date of the instant issues clause, the period in which the Plaintiff’s total salary amount is at least KRW 37 million shall be included in the period of self-defense. In such a case, the instant land is not non-business land, and thus, the instant disposition based on a different premise is unlawful (hereinafter “the instant disposition”).

B. The key issue clause of this case is unconstitutional because it violates the principle of prohibition of retroactive legislation and infringes the Plaintiff’s property right and equality. Thus, the instant disposition based on the key issue clause of this case is unlawful (hereinafter “the second argument”).

3. Relevant statutes;

It is as shown in the attached Form.

4. Whether the instant disposition is lawful

A. Determination as to the first argument

The Income Tax Act does not recognize the special deduction for long-term possession of land for non-business in order to restrain the transfer of land for non-business by an individual without using it for productive purpose, as a means of property increase. In addition, Article 95 (2) of the former Income Tax Act amended on December 15, 2015, amended on Article 95 (2) of the former Income Tax Act stipulates that the special deduction for long-term possession shall be granted, but the period of possession shall be calculated from January 1, 2016 if the land for non-business is acquired before January 1, 2016.

Meanwhile, according to Article 104-3 (1) 1 (a) of the former Income Tax Act, subparagraph 1 (c) of Article 168-6 of the Enforcement Decree of the Income Tax Act, and Article 168-8 (2) (the latter part) of the latter part of Article 168-8 (2) of the Enforcement Decree of the Income Tax Act, farmland not cultivated by itself for a period exceeding 40/100 of the ownership period of the land is land for non-business use, and the issues of this case are applicable mutatis mutandis to the determination of the period for self-sufficiency of farmland. According to the issues of this case, the period for which total amount of gross income is at least 37 million won is excluded from the self-employed period, and according to Articles 1 and 2 (3) of the Addenda to the former Enforcement Decree of the Restriction on Special Cases concerning Taxation (Presidential Decree No. 25211, Feb. 21, 2014) of the former Enforcement Decree of the Income Tax

According to the above relevant provisions, as long as the act of transferring the land of this case, which is a taxable cause, was conducted after July 1, 2014 when the main issue clause of this case was enforced, the period for which the Plaintiff’s total salary is at least 37 million won during the ownership period of the land of this case, is excluded from the self-defensing period even before the enforcement date of the main issue clause of this case, and thus,

B. Judgment on the second argument

1) Whether the principle of retroactive prohibition of legislation was violated

The principle of retroactive taxation prohibition pursuant to Article 13 of the Constitution of the Republic of Korea is not applicable to the facts subject to taxation, which are closed before the enactment or amendment of tax-related Acts and subordinate statutes, or when there is any change in the interpretation or guidelines of the tax authority for the interpretation or handling of the relevant Acts and subordinate statutes, and it does not restrict the application of new Acts and subordinate statutes, etc. to the facts that have been pending or subsequently incurred (see, e.g., Supreme Court Decision 97Nu6476, Dec. 23, 1998). Since transfer income tax is a taxation requirement for transfer and is subject to capital gains tax, the transfer income tax is subject to taxation, and therefore, whether the transferred assets meet the taxation requirements and the requirement of reduction or exemption should be determined on the basis of the transfer time (see, e.g., Supreme Court Decision 2007Du15124, Jun. 12,

Inasmuch as the Plaintiff completed the transfer of the instant land after the entry into force of the instant key clause, the instant key provision cannot be deemed to contravene the principle of retroactive legislative prohibition. Accordingly, the Plaintiff’s assertion on this part is without merit.

2) Whether or not property rights and equality rights are infringed

A) The imposition and collection of taxes are based on the citizen’s duty to pay taxes, and it does not, in principle, infringe on property rights, and thereby, may infringe on property rights only if it is subject to serious restrictions on the taxpayer’s right to use, profit from, and dispose of private property. It does not result in infringement on property rights solely on the ground that it is excluded from the beneficiary of the beneficial legislation. Even if the expectation of property benefits that can be gained when it is subject to the beneficiary of the beneficial legislation has not been achieved, the expectation of such simple pecuniary benefits is not included in the area of property rights protected by the Constitution (see, e.g., Constitutional Court Order 96HunBa19, 96Hun-Ba72, Dec. 24, 1997; Constitutional Court Order 203Hun-Ba2, Nov. 27, 2003).

In light of the above legal principles, it is difficult to see the expectation of property benefits that can be gained in the event of being subject to reduction of or exemption from capital gains tax, which is a health-oriented legislation, as property right protected by the Constitution. Since the tax law has a high need for the State to flexibly and rationally operate tax and fiscal policies, the laws and systems on taxes have to change flexibly. Therefore, barring any special circumstance, a taxpayer is bound to maintain the current tax rate in the future (see, e.g., Constitutional Court Order 2009Hun-Ba67, Oct. 28, 2010). It is difficult for a person with a job of 37 million won or more to ordinarily engage in cultivating crops or cultivate or cultivate them with his own labor, and even if it is possible, such a person is deemed to possess farmland as a means of property increase, not as a productive purpose, and thus, it is difficult to prevent the development of the Plaintiff’s property rights and to ensure the balanced development of the land and to realize the price of the land.

B) Pursuant to the principle of equality under Article 11(1) of the Constitution, the principle of tax equality is equally treated as the same in the legislative process or enforcement process of the tax law, and different ones are treated differently (see, e.g., Constitutional Court Order 89Hun-Ma38, Jul. 21, 1989). However, today, the number of tax members is extremely diverse, and there are many differences in the people’s ability to pay taxes, and taxes are imposed for various policy purposes, other than the classic purpose of securing national financial resources, in the area of the tax law, a broad right is granted to the legislators. Therefore, in relation to the legislation of the income tax on capital gains, the legislators have a broad right to form a law in the area of the tax law. Therefore, whether the legislative branch equally treats all taxable objects, or relatively high or lower tax rates are applied to the specific objects, and what is the subject to such high or lower tax rate, and the Constitutional Court’s presumption of constitutionality by the National Assembly, a representative institution of law, barring special circumstances.

The key issue clause of this case is to set the standard of income of KRW 37 million in consideration of the legislative intent of the mother law, and it is difficult to deem the standard unreasonable and to recognize the need for public interest. In full view of the above, it should be respected as based on the freedom of legislative formation wide range in the area of tax law, and there is no decision of unconstitutionality as to the key issue clause of this case, the key issue clause of this case cannot be deemed to have infringed the Plaintiff’s right of equality. Thus, the Plaintiff’s assertion on this part is without merit

C. Sub-decision

According to the aforementioned evidence, the Plaintiff’s acquisition of the instant land from November 14, 1984 to September 6, 2016, which was the date of transfer, can be recognized that the total amount of total salary during 11,620 days from September 6, 2016, which was at least 37 million won, constitutes land for non-business purposes. Accordingly, the instant land owned by the Plaintiff constitutes land for non-business purposes. Ultimately, the period from January 1, 2016 to September 6, 2016, which was the date of transfer, does not exceed three years, so the instant land transfer does not constitute a special deduction for long-term possession under Article 95 of the former Income Tax Act. Accordingly, the instant disposition that did not deduct the amount of special deduction for long-term possession is lawful in calculating the transfer income amount of the instant land.

5. Conclusion

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