Document-2018- Inheritance or Gift-4074 (20205.06)

Certificates of merit

Inheritance Tax Division-313

The land attached to a stable or stable for which gift tax may be reduced or exempted pursuant to Article 71 of the Restriction of Special Taxation Act refers to the land within the scope of the area calculated by dividing the actual area of the relevant stable by building-to-land ratio under Article 55 of the Building Act, and the reduction or exemption of gift tax may apply even where part of the land attached to a stable or stable meeting the requirements for reduction or exemption is donated.

In the case of your questioning, it is time to refer to the inheritance or donation-0690 ( October 15, 2019) and inheritance-1208 ( October 2012, 2019) of the existing interpretation cases to be attached.

Article 71 of the Restriction of Special Taxation Act

Article 68 of the Enforcement Decree of the Restriction of Special Taxation Act

【Reference Materials】

1. Factual basis

○ The father intends to make a donation of land for stock farms and farmland to the donee 1.

○ The father and 1 of a child are engaged in the livestock industry as of the date of donation and meet the requirements of a self-employed farmer, etc. under special law.

○ However, a stable existing in the relevant stock farm shall be held in the name of 2 children (general wage and salary income earners and not corresponding to donees) as of the date of donation.

2. Contents of questioning;

Whether the provision on reduction or exemption of gift tax under Article 71 of the Special Provision for the Fishing Villages Act shall apply to a gift, other than a stable, among the land for stock farm.

3. Related Acts and subordinate statutes.

○ Article 71 of the Restriction of Special Taxation Act 【Reduction or Exemption of Gift Tax on Farmland, etc. Given to Farming Children, etc.】

(1) Where a resident prescribed by Presidential Decree (hereafter referred to as "self-employed farmer, etc." in this Article) donates farmland, grassland, forest land, fishing vessel, fishery right, fishery land, salt farm, or livestock farm (including the equity shares acquired by investing in kind the relevant farmland, grassland, forest land, fishing vessel, fishery right, fishery land, salt farm, or livestock farm to an agricultural partnership or fishery partnership partnership; hereafter referred to as "farmland, etc." in this Article) who resides in the location of the farmland, etc., and engages in farming (including livestock raising, fishery, and forest management; hereafter the same shall apply in this Article) while living therein, on or before December 31, 2020, to his/her lineal descendants prescribed by Presidential Decree (hereafter referred to as "self-employed farmer, etc." in this Article), an amount equivalent to 100/100 of the gift tax on the value of the relevant farmland, etc. shall be reduced or exempted:

1. Farmland, etc. falling under any of the following items:

(a) Farmland: The land defined in subparagraph 1 (a) of Article 2 of the Farmland Act not exceeding 40 thousand square meters;

(b) Grassland: The grassland permitted to create grassland under Article 5 of the Grassland Act, the area of which shall not exceed 148,500 square meters;

(c) Forest land: The forest land (including seed gathering forests and forest protection zones under Article 7 of the Forest Protection Act; hereafter the same shall apply in this item) whose forest management plan is authorized pursuant to the Creation and Management of Forest Resources Act or which is designated as a special forest project zone and newly afforested for at least five years, among preserved mountainous districts under Article 4 (1) 1 of the Management of Mountainous Districts Act, the area of which shall not exceed 297,00 square meters: Provided, That in cases of a forest land, the afforestation period of which is at least 20 years, the area shall be not more than 90,000 square meters, including the forest land, the afforestation period of which

(d) Place for livestock use: Land attached to a livestock shed or stable, the actual building area of which does not exceed the extent of the area calculated by dividing the building-to-land ratio under Article 55 of the Building Act by that of the relevant livestock shed;

(e) Fishing vessels: Fishing vessels with a gross tonnage of less than 20 tons under Article 13-2 of the Fishing Vessels Act;

(f) A fishing right: A fishing right under Article 2 of the Fisheries Act or Article 7 of the Inland Water Fisheries Act, not exceeding 100,000 square meters;

(g) Land, etc. for fisheries: Up to 40,000 square meters.

(h) Salt farm: Not more than 60,000 square meters as a salt farm under subparagraph 3 of Article 2 of the Salt Industry Promotion Act;

2. Farmland, etc. located outside a residential area, commercial area, or industrial area under Article 36 of the National Land Planning and Utilization Act;

3. Farmland, etc. located other than a housing site development zone under the Housing Site Development Promotion Act or a development project area prescribed by Presidential Decree;

(2) Where farmland, etc., the gift tax of which has been reduced or exempted pursuant to paragraph (1) is transferred within five years from the date of donation without justifiable grounds prescribed by Presidential Decree, such as the death of farming children, etc. or is no longer engaged in farming directly in the relevant farmland, etc. without justifiable grounds prescribed by Presidential Decree, such as diseases, school attendance, an amount equivalent to the reduced or exempted amount of the gift tax on such farmland, etc.

○ Article 68 of the Enforcement Decree of the Restriction of Special Taxation Act 【Reduction or Exemption of Gift Tax on Farmland, etc. Donated by Farming Children】

(1) "resident prescribed by Presidential Decree" in the main sentence of Article 71 (1) of the Act means a person who meets all the following requirements (hereafter referred to as "self-employed farmer, etc." in this Article):

1. The farmland, etc. (hereafter referred to as "farmland, etc." in this Article) under the part other than the subparagraphs of Article 71 (1) of the Act shall be residing within 30 kilometers in a straight line from the Si/Gun/Gu (referring to an autonomous Gu; hereafter the same shall apply in this Article) adjacent thereto, Si/Gun/Gu, or the farmland, etc.;

2. Persons engaged directly in the farming (including livestock raising, fishing, and forest management; hereafter the same shall apply in this Article) for at least three consecutive years retroactively from the date of donation of farmland, etc.

(2) Newly Inserted by Presidential Decree No. 2010, Feb. 5, 2016

(3) "A lineal descendant prescribed by Presidential Decree" in Article 71 (1) of the Act, with the exception of its subparagraphs, means a person who meets all of the following requirements (hereafter referred to as "a lineal descendant, etc." in this Article):

1. Any lineal descendant of at least 18 years of age as of the date of donation of farmland, etc.;

2. It shall be directly engaged in farming in the farmland, etc. donated in compliance with the requirements under paragraph (1) 1 by the deadline for filing the tax base of gift tax under Article 68 of the Inheritance Tax

(4) "Development project zone prescribed by Presidential Decree" in Article 71 (1) 3 of the Act means a project zone specified in attached Table 6-2.

4. Related cases;

○ Inheritance or Donation-0690, October 15, 2019

The land attached to a stable or stable for which gift tax may be reduced or exempted pursuant to Article 71 of the Restriction of Special Taxation Act shall not exceed the extent of the area calculated by dividing the actual area of the relevant stable by building-to-land ratio under Article 55 of the Building Act.

○ Inheritance or Donation-1208, October 12, 2019

Where a self-employed farmer provided for in Article 68 (1) of the Enforcement Decree of the Restriction of Special Taxation Act, who resides in the seat of farmland, etc. that satisfies all the requirements of each subparagraph of Article 71 (1) of the same Act and directly engages in farming on or before December 31, 2020, donates to farming children, etc. provided for in paragraph (3) of the same Article, the tax amount equivalent to 100/100 of the gift tax on the value of the relevant farmland, etc. shall be reduced or exempted, and the standard for determination of cases directly engaged in farming is that Article 16 (4) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act shall apply mutatis mutandis to the standards for determination of cases of direct engaged in farming.In such cases, the reduction or exemption shall apply to the land attached to the donated farmland, etc. and the actual building area of the relevant stable