Whether the transfer of title trust assets constitutes the transfer of unregistered assets

In addition, in the case of title trust, the registration of transfer of ownership under title trust cannot be deemed as a case where the person who acquires assets with the real estate itself has not registered the registration thereof, and in the case of title trust, it can be sufficiently prepared for tax evasion, etc. under various provisions, such as the principle of substantial taxation under tax law or the constructive gift, etc. Therefore, in a case where a title trust was transferred to a third party without registration of inheritance concerning the land inherited from the prior buyer, it cannot be deemed as a transfer of unregistered assets.

Article 62(1) of the Regulation of Tax Reduction and Exemption Act; Articles 50(1), 52(2)2 of the Enforcement Decree of the Regulation of Tax Reduction and Exemption Act; Article 5 subparag. 6(d), 5 subparag. 6(e)(e)(j), 70(3)3, and 70(7) of the Income Tax Act; Article 121-2 of the Enforcement Decree of the Income Tax Act

Supreme Court Decision 85Nu310 Decided October 22, 1985

Plaintiff 1 et al., Counsel for the plaintiff-appellant

Head of the Cleanness Tax Office

Seoul High Court Decision 85Gu943 delivered on January 24, 1986

The judgment below is reversed and the case is remanded to Seoul High Court.

We examine the grounds of appeal.

Article 62(1) of the Regulation of Tax Reduction and Exemption Act, and Articles 50(1) and 52(2)2 of the Enforcement Decree of the same Act provide that even if a domestic corporation transfers land to a national housing construction business operator, capital gains tax reduction or exemption shall not apply to unregistered transfer land as provided in Article 70(7) of the Income Tax Act, and Article 70 Subparag. 7 of the Income Tax Act provides that "unregistered transfer assets" means that a person who acquires assets as provided in Article 23(1)1 and 2 of the Income Tax Act transfers assets without registering the acquisition of the assets without registering the acquisition of the assets, if a title trust was made to a third party without registering the inheritance of the inherited land from the prior owner, such transfer does not constitute "unregistered transfer assets" and if the transfer meets the requirements for reduction or exemption under the Regulation of Tax Reduction and Exemption Act, it shall not be subject to the reduction or exemption, and therefore, it shall not be subject to taxation of defense tax.

This is because the purpose of applying the heavy taxation rate to "unregistered assets" is to restrain real estate speculation without tax evasion and transfer margin in light of the purport of Article 121-2 of the Enforcement Decree of the Income Tax Act, Article 5 (6) 6 (d), (e) and (j) of the Income Tax Act, and it cannot be deemed that the person who acquires assets without delay due to the lack of the title trust registration constitutes a case where the ownership transfer registration under the title trust does not constitute a real estate registration, and it can sufficiently prepare for tax evasion, etc. (see Supreme Court Decision 85Nu310 delivered on October 22, 1985). However, the court below's decision that the transfer registration of the real estate in this case was made on April 17, 1979, and that the plaintiffs did not have any influence on the transfer of the real estate in this case due to the lack of the legal principles as to the transfer registration under the title trust under the above Article 27 (1) of the Income Tax Act, which affected the transfer registration under the title trust registration.

The judgment of the court below on the party member (Law No. 83Nu156, Jun. 28, 1983) appears to be related to the case where the actual owner has severely transferred the building to another person without making preservation registration of the newly constructed building upon obtaining a building permit, and it is not appropriate to the case where the actual owner has transferred the title trust to another person.

Therefore, the judgment below is reversed, and the case is remanded to the Seoul High Court. It is so decided as per Disposition by the assent of all participating judges.

Justices Kim Jong-hee (Presiding Justice)