Incheon District Court 2014Gudan905 ( October 16, 2014)

If the object of capital gains tax reduction or exemption is to be farmland as of the date of transfer.

(At the time of transfer, the burden of proving that the land is farmland at the time of transfer is farmland is the Plaintiff, who is the person liable for payment of capital gains tax, but the land at the time of transfer is not used as farmland at the time of transfer.

Article 69 of the Restriction of Special Taxation Act for Self-Cultivating Farmland

Seoul High Court 2015Nu47029

Hyo

○ Head of tax office

Incheon District Court Decision 2014Gudan905 Decided May 26, 2015

September 23, 2015

October 21, 2015

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance is revoked. The transfer income tax reverted to the Plaintiff on July 25, 2013 by the Defendant to the Plaintiff on July 25, 2013

The imposition of KRW 190,076,560 shall be revoked.

1. Quotation of the reasons for the judgment of the first instance;

The reasoning for this Court’s explanation concerning this case is as stated in the reasoning of the first instance judgment, except for the addition of the judgment on the allegations emphasized by the Plaintiff in the first instance trial under Paragraph (2) below, and therefore, this Court cited it as it is in accordance with Article 8(2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act.

2. The addition;

A. The plaintiff's assertion

In full view of the fact that property tax is imposed on the land of this case as farmland, the characteristic survey table of the land of this case was prepared without a factual investigation, the land of this case was classified into residential land of this case in 2011, but can be entered as residential land according to the main land use situation of neighboring areas even if farmland was farmland, and all other public records and current status, etc., even though the land of this case falls under farmland of this case as of the transfer date, the disposition of this case

B. Determination

In light of the provisions of Article 69(1) of the former Restriction of Special Taxation Act (amended by Act No. 11133, Dec. 31, 201; hereinafter referred to as the “Act”), Article 66(4), (5), and (13) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 23590, Feb. 2, 2012), in order to apply the reduction or exemption of capital gains tax on self-arable farmland, the land subject to such reduction or exemption should be deemed to be the “farmland as of the date of transfer under the Income Tax Act” and the “farmland directly cultivated for 8 years or longer from the time of acquisition” to the time of transfer. In light of the aforementioned 8 years or more, it is difficult to view that the land category in the public register was actually used for farming as of the date of transfer, and it is difficult to recognize that the land was actually used for 20 years or more without being used for farming or for public health as evidence of the owner.

Furthermore, in order to fall under "direct cultivation" among the requirements for non-taxation of capital gains tax, the residents are constantly engaged in the cultivation of crops or the growing of perennial plants on their own farmland or at least 1/2 of the farming works with their own labor (Article 69(1) of the Act and Article 66(13) of the Enforcement Decree of the Act), and the evidence submitted by the Plaintiff alone is insufficient to recognize that the Plaintiff had directly cultivated the land in this case for at least eight years, and there is no other evidence to acknowledge this otherwise.

Therefore, the plaintiff's assertion is without merit.

3. Conclusion

Therefore, the judgment of the first instance court is legitimate, and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.