Cho Jae-2018-20152 (Law No. 21, 2018)

It is also consistent with the principle of equity in taxation to strictly interpret that it can be seen as a clearly preferential provision among the requirements of reduction or exemption.

Application of non-taxation requirements for one house for one household to the Plaintiff with only the possibility to form an independent household, may not be permitted to extend and interpret the exemption requirements for one house for one household without reasonable grounds to give preference to the Plaintiff.

Article 89 of the Income Tax Act

2018Guhap6809 Revocation of Disposition of Imposing capital gains tax

AA

CC director of the tax office

December 13, 2018

on October 24, 2019

1. The plaintiff's claim is dismissed.

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

In February 2, 2018, the Defendant included KRW 00,000,000 (additional tax of KRW 0,000,000) for the Plaintiff in 2016.

Although there is no special mentioning about additional tax, the disposition of imposition of additional tax is separate from the disposition of imposition of principal tax and it is clear that the Plaintiff includes additional tax in terms of the amount stated in the purport of the claim, so the disposition of imposition of additional tax is revoked.

1. Details of the disposition;

A. On January 25, 2003, the Plaintiff newly acquired and owned the Yangsan BB Eup BB apartment No. 000 BB apartment No. 0000, 000 (hereinafter referred to as the “former Housing”) in Busan, AAAdong 00, Busan, and subsequently acquired another house on September 9, 2013.

B. On March 8, 2016, the Plaintiff donated the previous house to ABC, and KRW 24,000,000,000, to be acquired by ABC as the obligation to refund the lease deposit (hereinafter referred to as “the previous house transfer transaction”).

C. As to the gift tax on the gift tax on the transfer transaction of the previous house, ABC calculated the taxable value of the gift tax and paid gift tax by deducting the lease deposit obligation acquired pursuant to Article 47 of the Inheritance Tax and Gift Tax Act (amended by Act No. 14388, Dec. 20, 2016; hereinafter the same).

D. However, with respect to the transfer income tax, the Plaintiff determined that the transfer transaction of the instant previous house constitutes a requirement of exemption from the transfer income tax on one house for one household under Article 89(1)3 (b) of the Income Tax Act (amended by Act No. 14389, Dec. 20, 2016; hereinafter the same) and declared that there was no transfer income tax payable to the head of BB office.

E. On February 2, 2018, the director of the BB tax office decided and notified the Plaintiff of the transfer income tax of KRW 00,000,000 (including additional tax of KRW 0,000,000) for the year 2016 on the ground that the transfer transaction of the instant previous house did not meet the requirements for non-taxation for one household under Article 89 of the Income Tax Act (hereinafter “instant disposition”).

F. The Plaintiff filed a petition with the Tax Tribunal for an inquiry against the instant disposition, but the Tax Tribunal dismissed the petition on June 21, 2018.

G. The instant disposition taken by the Director of the Tax Office BB following the opening of theCC Tax Office was succeeded by the Defendant.

H. Meanwhile, as the Plaintiff’s children, ABC had the same resident registration with the Plaintiff at the time of the transfer transaction of the previous house in this case.

[Ground of Recognition] Facts without dispute, Gap's 1 to 3, 5 (including virtual numbers), Eul's 1 to 3, the purport of the whole pleadings

2. The plaintiff's assertion

The instant disposition should be revoked because it is unlawful in the following respect.

① Article 155(1) of the Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 27074, Mar. 31, 2016; hereinafter the same) provides for an interpretation that requires a requirement other than the requirement expressly provided by Article 155(1) by adding the requirement for non-taxation on one house for one household to non-households. This goes against the principle that the interpretation of tax laws should be interpreted in accordance with the statutory text, barring any special circumstance.

(2) Even if a household transfers a house to the same household member, if the same household member is able to form an independent household pursuant to the main sentence of subparagraph 3 of Article 152-3 of the Enforcement Decree of the Income Tax Act, it shall not be deemed that the house is transferred to the same household member.

3. Related statutes;

It is as shown in the attached Table related statutes.

4. Determination on the lawfulness of the instant disposition

A. Determination on the relevant argument under Article 155(1) of the Enforcement Decree of the Income Tax Act

1) Legal principles

In light of the principle of no taxation without law, or the requirements for tax exemption or tax exemption, the interpretation of tax laws is to be interpreted in accordance with the text of the law, barring any special circumstance, and it is not allowed to expand or analogically interpret without reasonable cause, and in particular, it accords with the principle of fair taxation to strictly interpret that the provision is clearly preferential in terms of the requirements for tax exemption or exemption (see Supreme Court Decision 2001Du731, Apr. 12, 2002).

2) Determination

Based on the above legal principles, in light of the following circumstances, it is reasonable to view that the requirements for non-taxation of the income tax on one house for one household are applicable only to cases where the non-household is transferred to a non-household. Thus, the plaintiff's assertion on a different premise is without merit.

① According to Article 89(1)3(b) of the Income Tax Act, which is a law based on Article 155(1) of the Enforcement Decree of the Income Tax Act, where “one household acquires another house by substitution before transferring one house” is stipulated as a requirement for non-taxation from income tax on one house for one household. In other words, the meaning of one household to transfer one house is derived from the provision itself that only one household acquires a substitute house by transferring one house.

② Article 155(1) of the Enforcement Decree of the Income Tax Act provides that “If one household which owns one house in Korea has come to possess two houses temporarily by acquiring another house before transferring the house, at least one year after the date of acquiring the previous house, and transfers the previous house within three years from the date of acquiring the other house, it shall be deemed to be one house for one household and shall be subject to Article 154(1).” However, it stipulates that “one household shall be two houses temporarily.”

③ Ultimately, it is stipulated in the text of the law that one household should still hold only one house even after the previous house is transferred. Therefore, it cannot be deemed that the Defendant added the requirements for non-taxation of the income tax on one house for one household to non-household members, even though there is no provision in the law.

B. Determination on relevant arguments under Article 152-3 subparag. 3 of the Enforcement Decree of the Income Tax Act

The main sentence of Article 89 (6) of the Income Tax Act provides that "one household means a family unit comprised of a resident and his spouse together with a person sharing the same livelihood at the same address or same place of residence." However, in the proviso of Article 89 (1) of the Income Tax Act, "if there is no spouse, if there is no spouse, it shall be deemed one household." One of the Presidential Decree referred to in the proviso is Article 152-3 (3)

Therefore, in full view of these laws, the meaning of Article 89 subparag. 6 of the Income Tax Act and Article 152-3 subparag. 3 of the Enforcement Decree of the Income Tax Act is that if the relevant resident has income above 40% of the standard median income under Article 4 of the Income Tax Act and Article 2 subparag. 11 of the National Basic Living Security Act, he/she can maintain his/her livelihood independently, and if he/she has dealt with an independent household separately, he/she may be recognized as a "one household" under the Income Tax Act even if his/her spouse has no spouse (see, e.g., Supreme Court Decision 98Du13

Based on such interpretation of the law, even if the Plaintiff’s assertion that the instant case had income above 40% of the standard median income under Article 4 of the Income Tax Act and Article 2 subparag. 11 of the National Basic Living Security Act at the time of transfer transaction of the previous house, it is insufficient to recognize that ABC had achieved separate independent households (the Plaintiff’s children as well as the Plaintiff’s children, and this constitutes one household under the Income Tax Act), and there is no other evidence to acknowledge otherwise, and therefore, the Plaintiff cannot apply the non-taxation requirement on one house per household to the Plaintiff.

On the other hand, the Plaintiff appears to have asserted the purport that if it is practically possible to form one household, regardless of the actual composition, it shall be deemed that the Plaintiff constitutes another household regardless of the actual composition. However, applying the non-taxation requirement of one house for one household only with the possibility of constituting an independent one household cannot be allowed to apply the Plaintiff to the Plaintiff without reasonable grounds by extensively interpreting the requirements for tax reduction or exemption without reasonable grounds.

This part of the plaintiff's assertion is without merit.

5. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit. It is so decided as per Disposition.