Seoul Administrative Court 2014Guhap60207 ( October 10, 2014)

Each real estate owned in Korea under the Private International Act falls under the common property of couple and thus the key issue amount of this case is not subject to gift tax.

The plaintiffs are couple who are U.S. citizens, and each of the real estate owned by the plaintiffs in Korea under the Private International Act constitutes joint property of husband and wife and used to acquire domestic real estate owned by the husband 400 million won out of the deposit money generated from domestic real estate owned by the husband, not subject to gift

Article 2 of the Inheritance Tax and Gift Tax Act

2015Nu30212 Demanding revocation of imposition of gift tax

1. AA;

2. BB

Seoul 000 00000, 000

(00 Dong, 0000)

Plaintiffs (Law Firm 000)

Attorney 000

00. Head of tax office

Litigation performers 000

Seoul Administrative Court Decision 2014Guhap60207 decided November 27, 2014

June 9, 2015

July 7, 2015

1. The defendant's appeal is dismissed.

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

1. Purport of claim

On December 3, 2013, the Defendant rendered a decision that the imposition of gift tax of KRW 105,777,00 against the Plaintiffs is revoked.

2. Purport of appeal

The judgment of the first instance is revoked and the plaintiffs' claims are dismissed.

1. Quotation of judgment of the first instance;

The reasoning for the court's explanation on this case is as stated in the judgment of the court of first instance, except for the following: "The registration of transfer of ownership was completed on April 24, 2009, on March 9, 2009, on the part of the court of first instance, "the relevant real estate" (hereinafter "the real estate of this case") and "the registration was completed on March 9, 2009," and "the registration was completed on March 9, 2009," and "the real estate of this case" as stated in the reasoning for the judgment of the court of first instance. Thus, this is cited as it is in accordance with Article 8 (2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act.

[Supplementary Use]

C. Determination

1) Relevant legal principles and governing law

Article 2 (1) 2 of the former Inheritance Tax and Gift Tax Act (amended by Act No. 10411, Dec. 27, 2010; hereinafter "the Inheritance Tax and Gift Tax Act") provides that "where a donee is a non-resident, gift tax shall be imposed on all property in Korea among the property donated by a non-resident, as prescribed by this Act," and Article 4 (5) of the same Act provides that "where a donee is liable to pay gift tax on gift property in Korea as of the date of donation, the donor shall be jointly and severally liable to pay gift tax with the donee." Article 2 (3) of the same Act provides that "where a donee is liable to pay gift tax on gift property in Korea as of the date of donation, the donor shall also be jointly and severally liable to pay gift tax."

Therefore, if Plaintiff AA, a non-resident, receives remittance of the key amount of the instant case, which is part of the lease deposit received by the said Plaintiff from Plaintiff BB, constitutes donation, Plaintiff AA is liable to pay gift tax, and Plaintiff BB, a donor, also becomes jointly and severally liable to pay taxes.

However, the plaintiffs are married with U.S. nationality, and Article 38 (1) of the Private International Act provides that "the provisions of Article 37 shall apply mutatis mutandis to the marital property system", and Article 37 of the same Act provides that "the general effect of marriage shall be in accordance with the order of law (the same law of nationality of the couple as that of the couple: 1) stipulated in each of the following subparagraphs." Thus, in relation to the reversion of the plaintiffs' property, the provisions of the same law of nationality of the plaintiffs are applied preferentially, not the provisions

"On the other hand, according to the CCC State Family Law, the plaintiffs' residential domicile, the property acquired by both spouses during the marriage period is presumed to be public property of the married couple. It includes real estate, real estate and claim, property owned by the spouse before marriage, property owned by the spouse prior to marriage, gift during the marriage period, testamentary gift, and property acquired by inheritance (the "the "the "the land"), and property acquired by inheritance (the "the "the land"), which is unique property. The property provided for in the above provision includes real estate, property and claim, ownership of the real estate, property owned by the spouse prior to marriage.

In light of the provisions of Articles 38(1) and 37 of the above Private International Act, and the CCC Family Law, it is reasonable to view that, unless there are special circumstances, the pertinent real estate acquired by the Plaintiffs, who are the married couple of the U.S. nationality (CCC residents) during the marriage period, and the lease deposit that leased and received the pertinent real estate belongs to the sharing of the Plaintiffs.

Therefore, even if Plaintiff BB leased the pertinent real estate in its sole name and received the lease deposit, since the lease deposit is co-owned property between the Plaintiffs, Plaintiff AA cannot be deemed to have received the instant key amount, which is a part of the lease deposit, from Plaintiff BB, and thus, the instant disposition is unlawful on a different premise, and thus, the Plaintiffs’ assertion pointing this out has merit.

3) Whether Article 7 of the Private International Act applies

The defendant first asserts that the disposition of this case is legitimate as it is in accordance with Articles 2 and 4 of the Inheritance Tax and Gift Tax Act, which is a mandatory provision of the Republic of Korea applied under Article 7 of the Private International Act.

Article 7 of the Private International Act provides that "The mandatory provisions of the Republic of Korea to be applied to the relevant legal relationship, regardless of the governing law, shall apply to the case where the foreign law is designated as the governing law under this Act."

However, Articles 2 and 4 of the Inheritance Tax and Gift Tax Act apply to the ownership of the plaintiffs' property, namely, the real estate related to this case, and the loan of this case and the issue amount of this case, after the confirmation of whether they are special property or common property of both spouses.

However, Article 830 (1) of the Civil Act provides that "a property acquired by one of the father in his/her name during marriage shall be the unique property," and as seen earlier, the Family Act of the home heading in the United States provides that "the property acquired by both spouse during marriage shall be presumed to be the common property of the couple." Thus, Articles 2 and 4 of the Inheritance Tax and Gift Tax Act shall not be deemed to be a mandatory provision that shall be applied to determine the attribution of the property of the plaintiffs, and the above argument is without merit.

4) Whether Article 38(3) of the Private International Act applies

Next, the defendant asserts that Article 38 (3) of the Private International Act provides that "a marital property under foreign law shall not be set up against a bona fide third party with respect to juristic acts performed in the Republic of Korea and the property located in the Republic of Korea," and that the defendant constitutes a bona fide third party under Article 38 (3) of the Private International Act, and that the disposition of this case is lawful.

However, Article 38 (4) of the Private International Act provides that "a matrimonial property contract concluded under foreign law may be set up against a third party, notwithstanding the provisions of paragraph (3) where it is registered in the Republic of Korea." Thus, it is reasonable to view that a bona fide third party provided for in Article 38 (3) of the same Act refers to a person who enters into a new legal relationship with the plaintiff BB, knowing that even if the property is public property of a foreign couple pursuant to a foreign law or a marital property contract concluded under a foreign law or a foreign law, if the property is registered in the Republic of Korea in the Republic of Korea, if the property is registered in the Republic of Korea. Thus, the defendant cannot be deemed to have entered into a new legal relationship with the plaintiff BB with the knowledge that the real property in this case is the special property of

3. Conclusion

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

The presiding judge shall admonish a judge;

Judges Seo-soon

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