If there is a taxable period in which total salary is at least 37 million won, it shall be excluded from the cultivation period of the resident.

If there is a taxable period in which the total amount of gross pay is at least 37 million won, the period is excluded from the period cultivated by the resident even before the enforcement date of the provisions of the Enforcement Decree.

Article 69 of the Restriction of Special Taxation Act (Reduction or Exemption of Transfer Income Tax for Self-Cultivating Farmland)

Seoul High Court 2017Nu52423 Revocation of Disposition of Imposing Capital Gains Tax

AA

00. Head of tax office

November 1, 2017

November 15, 2017

1. The plaintiff's appeal is dismissed.

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

Cheong-gu and purport of appeal

The judgment of the first instance shall be revoked. The imposition of capital gains tax of KRW 123,575,810 (including additional tax) for the Plaintiff on July 1, 2016 by the Defendant shall be revoked.

1. Details of the disposition;

The court's explanation on this part is identical to the reasoning of the judgment of the court of first instance (Article 8 (2) of the Administrative Litigation Act and the main text of Article 420 of the Civil Procedure Act (hereinafter the meaning of the language used in this part is the same as the judgment of the court of first instance).

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Article 66(14) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 25211, Feb. 21, 2014; Presidential Decree No. 26600, Oct. 23, 2015; hereinafter referred to as the "former Enforcement Decree") enters into force on July 1, 2014 pursuant to Article 1 of the former Enforcement Decree (hereinafter referred to as the "Annex"), and the period for which the Plaintiff cultivated the farmland of this case before the enforcement date shall be included in the period of cultivation regardless of whether the Plaintiff’s total amount of benefits exceeds 37 million won.

B. Determination

1) The main sentence of Article 69(1) of the former Restriction of Special Taxation Act (amended by Act No. 13560, Dec. 15, 2015; hereinafter referred to as the "former Act") provides that "the amount of tax equivalent to 100/100 of capital gains tax on the income accruing from the transfer of land prescribed by Presidential Decree, among land cultivated directly by a resident prescribed by Presidential Decree who resides in the seat of farmland for not less than eight years by means prescribed by Presidential Decree, shall be reduced or exempted." Article 66(4) of the former Enforcement Decree provides that "the land prescribed by Presidential Decree" means the land which he/she cultivated for not less than eight years from the date of its acquisition to the date of its transfer, except that falling under any of the following subparagraphs, and Article 66(11) of the former Enforcement Decree provides that "the period of inheritance shall be deemed the period for which his/her heir cultivates, and Article 69(1)1 of the former Enforcement Decree provides that "the period of inheritance shall be excluded from the total amount of predecessor under Article 160(2) of the former Enforcement Decree.

According to the above relevant provisions, in order to obtain a reduction or exemption of capital gains tax on self-Cultivating farmland pursuant to Article 69(1) of the former Act, it should be the case where the farmland he/she cultivated for at least eight years is transferred. In such cases, where the inheritor continuously cultivated the inherited farmland for at least one year, the period cultivated by the decedent shall be deemed the period cultivated by the heir, but where the transfer is made after July 1, 2014, the effective date of Article 66(14) of the former Enforcement Decree, if the total amount of gross income of the resident is at least 37 million won, the period shall be excluded from the period cultivated by the resident even if the above provisions of the former Enforcement Decree were enforced (if the transfer act, which is the cause of taxation, was conducted after the enforcement of the above provisions of the former Enforcement Decree, the above provisions of the former Enforcement Decree shall be applied. If, as the plaintiff's assertion, the scope of reduction or exemption of capital gains tax would be contrary to the purport of the Addenda of this case.

2) In full view of the purport of the argument in the instant case, the Plaintiff, as a police official, can be acknowledged as having acquired the ownership of farmland in 205,710 won, 52,710 won, 52,469,720 won, 54,445,400 won, 55,710,940 won, 58,843,890 won, and 67,106,650 won, 67,710 won, 650 won, 67,718, 910 won, 67, 2013, 67,7818, 430 won, 2014, 67,430 won, 204, 2015, 306, 205, 205, 207, 205, 205, 2015.

3) Therefore, as long as the farmland in this case was transferred to the Corporation on July 1, 2015, which was after the enforcement date of Article 66(14) of the former Enforcement Decree, the transfer of the farmland in this case pursuant to Article 6(14) of the former Enforcement Decree, even if it was obtained through consultation, is also applicable to the transfer of the farmland in this case pursuant to Articles 1 and 2(3) of the Addenda of this case. Since the period from 2007 to 2015 is excluded from the period the Plaintiff cultivated the farmland in this case, the Plaintiff cannot be deemed to have met its own requirements, and it cannot be deemed that the inherited farmland has been continuously cultivated for at least one year, and the period the LLLL, the decedent, cannot be included in its own cultivation period. The Plaintiff’s transfer of the farmland in this case cannot be deemed to be subject to the reduction or exemption of capital gains tax under Article 69(1) of the former Enforcement Decree.

4) As to this, the Plaintiff asserts that Article 69(1) of the former Enforcement Decree of the Act only delegates a resident, cultivation method, land, etc. to the Enforcement Decree, and thus, it is desirable for a resident with a certain income to be excluded from the cultivation period. However, the legislative purpose of Article 69 of the former Enforcement Decree is to reduce the tax burden due to transfer of farmland as part of the land farming policy. In particular, the purpose of Article 69(1) of the former Enforcement Decree is to prevent external farmland speculation and reduce the tax burden of self-employed farmers for not less than eight years in order to promote agriculture and rural communities, the Plaintiff delegated the subject of exemption to the Presidential Decree so that it can be determined flexibly in accordance with changes in the land farming policy. Such preferential measure of tax reduction or exemption is contrary to the principle of tax equality and to expand the scope thereof, and thus, it is not desirable for the Plaintiff to have a limited scope of exemption from the capital gains tax to be delegated by the State or a local government, and thus, it cannot be accepted within the scope of 201 of the former Enforcement Decree.

3. Conclusion

Therefore, the judgment of the court of first instance is just and the plaintiff's appeal is dismissed. It is so decided as per Disposition.