[1] Whether the pertinent real estate itself is not incorporated into the trustee's trust property before completing the registration of ownership transfer in the trust of real estate (affirmative)

[2] The case holding that where Party A’s regional housing association, which was established for the purpose of implementing the apartment development project but did not obtain authorization for the establishment, entered into an implementation agency contract with Party B, Company B, Company C, Company C, and Company A, a executing agent, concluded a business agreement to purchase the project site and dispose trust, and Party B completed the registration of each ownership transfer and trust with respect to the land purchased from the previous owners under the business agreement, and Party B entered into a trust agreement with the former owner as the truster and beneficiary, but the former owner was not able to carry out the apartment construction project under the regional housing association method, but the above project site was designated as a renewal promotion zone, and Party A’s association was unable to carry out the construction project under the regional housing association method, and the judgment was rendered and finalized, and the head of the competent tax office rendered a favorable judgment by filing a lawsuit against Party A and the previous owners for the implementation of the registration procedure of cancellation of trust registration and the registration procedure of transfer of ownership, etc. based on the notification data of property tax on the above land including the above land, and calculated only one tax base as Party A’s association.

[1] Article 2 of the Trust Act / [2] Article 2 of the Trust Act, Article 12(1)1 of the Comprehensive Real Estate Holding Tax Act, Article 13(1) of the Comprehensive Real Estate Holding Tax Act, Article 107(1) and 107(2)5 of the former Local Tax Act (Amended by Act No. 12153, Jan. 1, 2014) (see current Article 107(1)3)

○○○-dong District Housing Association (Law Firm Namsan, Attorneys Hah Ho-ho et al., Counsel for the defendant-appellant)

head of Dongjak-gu Tax Office

Seoul High Court Decision 2016Nu60852 decided December 6, 2016

The appeal is dismissed. The costs of appeal are assessed against the plaintiff.

The grounds of appeal are examined.

1. Case summary

A. The Plaintiff is not an organization established for the purpose of carrying out apartment development projects (hereinafter “instant project”) with the content of constructing 24 square and 32 square and 512 units of apartment units from the land located in Yeongdeungpo-gu Seoul Metropolitan Government ( Address omitted) (hereinafter “instant project site”), but the Plaintiff did not obtain authorization for the establishment of a regional housing association under the Housing Act.

B. While planning the instant project from the late half of 2001, a local housing association aimed at the instant project site was established, and accordingly, was prepared to establish a regional housing association on the basis of the non-party’s name. From the end of 2001, the non-party prepared to prepare for the establishment of a regional housing association on the ground of the non-party. The non-party prepared for the establishment of a regional housing association from around 2001 by preparing a cooperative code of “○○○○ Dong regional housing association” and conducting a physical inspection of the time construction work. On April 30, 2003, the non-party entered into an implementation contract with the Plaintiff as the executor of the instant project, and as the executing agent, the non-party entered into an execution contract with the non-party as the execution agent.

C. Around May 28, 2004, the executory agent signed a business agreement to purchase the instant project site and dispose of and trust to the instant trust. Around May 28, 2004, a new project executor, a central construction company, a company scheduled to execute the construction, a single project company, and a single project trust (a multilateral real estate trust, a corporation prior to the alteration; hereinafter “one project”).

D. From November 2002 to June 2005, New Security Co., Ltd. purchased land and buildings belonging to the instant project site from November 2002 to June 2005. However, from November 2005 to November 2005, New Security Co., Ltd. completed each ownership transfer registration and trust registration with respect to the instant land 6,817.3m2 of the instant project site that New Co., Ltd purchased from the previous owners. The trust period was fixed from the date of conclusion of the trust agreement to December 31, 2010, and each trust agreement concluded with the former owner of each land as the truster and beneficiary.

E. From June 22, 2004 to November 12, 2004, or from April 28, 2005 to December 20, 20 of the same year, the Plaintiff’s members entered into an agreement to enter into an association membership agreement with the Plaintiff (in its executor) and New Frostian (in 250,000 won (in 2.4 square meters) or KRW 285,000,000 (in 32 square meters) in which the members would be supplied with one apartment household.

F. Meanwhile, on October 19, 2006, Seoul Metropolitan Government designated the project site of this case as an urban renewal acceleration district, including the project site of this case, and the project site of this case was designated as an urban renewal acceleration district by the head of Yeongdeungpo-gu Office on May 2, 2007 by designating the project site of this case as an urban renewal acceleration district and the type of the project as a housing redevelopment project, thereby making it impossible to implement the apartment construction project according to the regional housing association method.

G. On January 3, 2011, the Plaintiff filed a lawsuit claiming for the change of the truster and beneficiary’s name with respect to each real estate held in trust as the Defendant, which was the Seoul Central District Court 201Da4000, Seoul Central District Court 201. On May 16, 2013, the said court rendered a judgment ordering the Plaintiff to implement the registration procedure for cancellation of each trust registration on January 1, 201 with respect to each trust on the grounds of termination of trust relationship, and the registration procedure for ownership transfer on January 1, 201 with respect to each trust on the grounds of reversion of trust property. The said judgment became final and conclusive on July 26, 2013.

H. On August 28, 2012, when the said lawsuit was pending, the Plaintiff reported and paid acquisition tax on 49 real estate including the land in Yeongdeungpo-gu Seoul ( Address omitted) and 33 parcels, to the head of Yeongdeungpo-gu. On September 24, 2013, the head of Yeongdeungpo-gu imposed property tax, etc. on the Plaintiff on the total of 58 parcels of land including the said 49 parcels of land (hereinafter “each parcel of land”).

(i) The Defendant calculated the Plaintiff’s total real estate tax base on November 18, 2013 by classifying the amount of KRW 115,708,390 for comprehensive real estate tax on which 2013 existed, KRW 23,141,670 for special rural development tax (i.e., comprehensive real estate tax on installment, KRW 57,854,200 for special rural development tax, KRW 11,570,840 for special rural development tax, and KRW 11,570 for special rural development tax on which 139,696,730 for comprehensive real estate tax on which 2013 reverts, KRW 7,939,340 for the Plaintiff on February 6, 2014 (the amount of payment was 57,854,190 for comprehensive real estate tax, special rural development tax on which 11,570,830 for special rural development tax or on June 30, 2014 for each of the instant tax base.

2. Relevant provisions;

Article 12(1)1 of the Gross Real Estate Tax Act provides that “A taxpayer of the property tax on land as of the base date for taxation who is in excess of 500 million won in total of the published prices of the land subject to general aggregate taxation located in Korea shall be the taxpayer of the comprehensive real estate holding tax on land” and Article 13(1) of the same Act provides that “The tax base of the comprehensive real estate holding tax on land subject to general aggregate taxation shall be an amount calculated by multiplying the amount obtained by deducting KRW 500 million from the aggregate prices of the

Article 107 of the former Local Tax Act (amended by Act No. 12153, Jan. 1, 2014; hereinafter the same) provides for “a person who actually owns property as of the property tax base date” with respect to a person liable to pay property tax, which is the aggregate unit of comprehensive real estate holding tax. However, the main sentence of Article 107(1)5 of the former Local Tax Act provides that, in cases of trust property registered under the name of a trustee pursuant to the Trust Act, a truster shall be deemed a person liable to pay property tax: Provided, That as the latter part of Article 107(1)3 of the Local Tax Act (amended by Act No. 12153, Jan. 1, 2014; hereinafter the same) does not provide for “a person liable to pay property under trust law

Meanwhile, Article 2 of the Trust Act provides that “a trust under this Act refers to the legal relationship that, based on the fiduciary relationship between the truster and the trustee, the truster transfers or disposes of a specific property to the trustee, and causes the trustee to engage in necessary conduct, such as management, disposal, etc. of the relevant property for the benefit of the beneficiary.”

3. The judgment of the court below

On June 1, 2013, the tax base date of comprehensive real estate holding tax on each of the instant land as of June 1, 2013, the lower court determined that the taxpayer of comprehensive real estate holding tax on each of the instant land was the actual truster pursuant to the main sentence of Article 107(2)5 of the former Local Tax Act, and determined that the instant disposition was lawful on the basis that the assessment standard of comprehensive real estate holding tax was not separately

The legal principle that “in the case of trust property under the Trust Act, the tax base shall be calculated separately for each truster” is applicable to the case where a trustee is a person who actually owns the property and becomes a taxpayer because the trustee did not complete the registration or record of a trust, even though the trustee received a trust based on an individual trust relationship from a large number of trusters. However, each of the instant land constitutes a case where the truster bears tax liability pursuant to the main sentence of Article 107(2)5 of the former Local Tax Act as it constitutes a case where a trust registration made as a trustee is completed, and thus, the aforementioned legal principle does not apply.

4. Judgment of the Supreme Court

A trust under the Trust Act shall require a trustee to manage and dispose of the relevant property for the purpose of the trust by transferring a specific property to a trustee or disposing of it (Article 2 of the Trust Act). The relevant real estate itself shall not be incorporated into the trust property of the trustee before completing the registration of ownership transfer in the trust of real estate.

In light of the aforementioned provisions and the record, there is no record of the Plaintiff’s ownership transfer registration regarding each of the instant land as of June 1, 2013, which is the tax base date, and thus, each of the instant land cannot be deemed to have been incorporated into trust property under the Trust Act among the Plaintiff and its members.

Therefore, while the lower court’s reasoning was inappropriate, it is justifiable to calculate the tax base of comprehensive real estate holding tax on each of the instant land on the premise that there is no trust relationship between the Plaintiff and its members under the Trust Act. In so doing, contrary to what is alleged in the grounds of appeal, the lower court did not err by misapprehending the legal doctrine on trust relationship and the method of adding up the tax base of comprehensive real estate holding tax, thereby adversely affecting the conclusion of the judgment. Meanwhile, the Supreme Court Decision 2012Du26852 Decided November 27, 2014 cited in the grounds of appeal is inappropriate as it differs from

5. Conclusion

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Jae-hyung (Presiding Justice)