The method of calculating the standard market price of the right to acquire immovables

The taxation is unlawful by regarding the amount paid by applying mutatis mutandis the standard market price of the right to acquire real estate to the date of transfer as the aggregate amount equivalent to the press premium as of the date of transfer.

1. The Defendant’s imposition of capital gains tax of KRW 39,127,890 against the Plaintiff on October 5, 2006 shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

The Defendant’s disposition of imposition of capital gains tax of KRW 52,723,710 against the Plaintiff on January 10, 2007 is revoked.

1. Details of the disposition;

A. On November 30, 1995, the Plaintiff entered into a contract with the Korea Land Development Corporation to purchase KRW 127,910,000 on a long-term installment basis for the site located in Suwon-si, Suwon-si, Suwon-si, a detached house site (hereinafter “instant site”).

B. On July 5, 1997, the Plaintiff paid 99,210,000 won in total, but transferred the right to acquire the instant site to Nonparty Y○○○ pursuant to the instant purchase contract (hereinafter “instant right”) to KRW 198,00,00, and then reported the transfer income tax to the head of ○○ Tax Office with the real transfer value of KRW 33,291,000 and the real acquisition value of KRW 28,55,90.

C. After that, the Commissioner of the National Tax Service confirmed that the actual transaction price at the time of the transfer of the instant right was KRW 168,00,000 in total, including KRW 99,210,000 and KRW 68,790,000 in total, which was paid to the date of transfer at the time of the transfer of the instant right, and notified the Defendant thereof.

D. On October 5, 2006, the Defendant assessed capital gains at KRW 68,504,441 on the ground that the actual acquisition value of the instant right was 99,210,000 (total sum of payments) and the actual transfer value was 168,00,000, and imposed capital gains at KRW 32,197,890 (hereinafter “instant disposition”). On October 5, 2006, the Defendant imposed capital gains at KRW 32,197,890 (hereinafter “instant disposition”).

2. Whether the instant taxation disposition is legitimate

A. The plaintiff's assertion

Inasmuch as the standard market price is not publicly announced, the transfer margin of the instant right is calculated based on the standard market price as a right to acquire real estate. As such, the instant taxation is unlawful for calculating the transfer margin of the instant right and imposing the transfer income tax on the basis of “the sum of the amount paid by the date of transfer and the amount equivalent to the press funds”.

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

(1) According to the facts of recognition under Article 94 (2) of the Income Tax Act and Article 157 (3) 2 of the Enforcement Decree of the same Act, the transfer of the right in this case by the Plaintiff constitutes "transfer of the right to acquire real estate". According to Article 96 (1) of the Income Tax Act, Article 165 (1) 1 (b) of the Enforcement Decree of the same Act, and Article 81 (1) of the Enforcement Rule of the same Act, the transfer value shall be based on the standard market price at the time of the transfer of the asset, i.e., the type, size, sale price of the transferred asset, and the sale price at the time of acquisition or transfer, which is determined by the Commissioner of the National Tax Service, considering the transaction price at

(2) In the instant case, as recognized in the above paragraph (1), the Defendant considered the Plaintiff’s “amount calculated by adding the press premium to the amount paid by the Plaintiff from the date of transfer of the instant right (hereinafter “value of this case”) as the transfer value, and accordingly, the instant taxation was unlawful, since there is no evidence to acknowledge it, the Defendant did not regard the value of the instant right as the transfer value as the transfer value, and then imposed the transfer income tax on the transfer margin.

(3) Under the circumstances where the standard market price applied at the time of transfer of the instant right was not publicly announced, the Defendant asserts that the calculation of transfer margin is lawful by citing Article 51(2) of the Enforcement Decree of the Inheritance Tax and Gift Tax Act by regarding the instant value as the transfer value of the instant right. However, even if the standard market price is not publicly announced, the Commissioner of the National Tax Service, after the transfer of the instant right, may assess the transfer value and calculate the transfer margin based on the assessment, shall not be calculated by applying mutatis mutandis the provisions of the Inheritance Tax and Gift Tax Act to the principle of strict interpretation of tax laws and regulations. Therefore, the Defendant

3. Conclusion

Therefore, the claim of this case is justified and it is so decided as per Disposition.

public official law, order of law,

(1) Income Tax Act (amended by Act No. 5580 of Dec. 28, 1998)

The scope of transfer income under Article 94 shall be the following incomes generated in the concerned year:

1. Income accruing from transferring buildings or land;

2. Income accruing from transfer of any right to real estates determined by the Presidential Decree; and

Article 96 (Transfer Price) The transfer price shall be as follows:

1. In the case of assets under subparagraphs 1, 2 and 5 of Article 94 (excluding the assets determined by Presidential Decree), the standard market price at the time of transfer of the relevant assets: Provided, That in the case prescribed by Presidential Decree in view of the kinds, holding period, scale of transactions, transaction methods, etc. of the relevant assets, it shall be based on the

2. In the case of assets other than those in subparagraph 1, the actual transaction price at the time of transfer of the assets concerned: Provided, That it is impossible to confirm the actual transaction price at the time of transfer

Article 99 (Assessment of Standard Market Price) The standard market price provided for in Articles 96, 97 (1) 1, and 100 shall be as follows:

2. Assets as prescribed in subparagraphs 2 through 5 of Article 94:

The value appraised by the method prescribed by Presidential Decree in consideration of the types, scale, transaction conditions of transferred assets and the appraised value of inherited property, etc.

(1) Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 17032 of Dec. 29, 2000)

Article 157 (Scope of Land, etc.)

(3) The term "right to real properties as prescribed by Presidential Decree" in subparagraph 2 of Article 94 of the Act means as follows:

1. Superficies, chonsegwon, and registered right of lease of immovables;

2. Right to acquire real estate (including the right to acquire a building upon completion of its construction and its appurtenant land).

Article 165. Calculation of Standard Market Price of Assets Other Than Land and Buildings

(1) The term “value appraised by such method as prescribed by the Presidential Decree” in Article 99 (1) 2 of the Act means the value under each of the following subparagraphs:

1. Rights on real estates as prescribed in subparagraph 2 of Article 94 of the Act:

(a) The value appraised by applying mutatis mutandisArticle 51 (1) of the Inheritance Tax and Gift Tax Act under Article 157 (3) 1;

(b) Value appraised by the Commissioner of the National Tax Service according to the method prescribed by the Ordinance of the Ministry of Finance and Economy in consideration of the types, scale, transaction conditions, etc. of transferred assets;

Enforcement Rule of the Income Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 78 of May 7, 199)

Article 81. Calculation of Standard Market Price of Assets Other Than Land and Buildings

(1) The term "value appraised by the method determined by the Ordinance of the Ministry of Finance and Economy" in Article 165 (1) 1 (b) of the Decree means the value appraised by the method determined by the Commissioner of the National Tax Service in consideration of the types, scale, sale price of transferred assets and sales actual value

(1) Enforcement Decree of the Inheritance Tax and Gift Tax Act (amended by Presidential Decree No. 15486 of September 30, 1997)

Article 51 Appraisal of Superficies, etc.

(1) The value of superficies under Article 61 (5) of the Act shall be based on the price calculated by multiplying the value of the land on which the superficies is established by the rate as determined by the Ordinance of the Prime Minister, by the remaining number of years of the superficies, by the method as determined by the Ordinance of the Prime Minister. In this case, the duration of the superficies as prescribed in Articles 280 and 28

(2) The value of the right to acquire real estate (including the right to acquire a building and its appurtenant land when a building is completed) and the right to use a specific facility under Article 61 (5) of the Act shall be the sum of the amounts paid not later than the standard date of appraisal and the amount equivalent to the frame as of the standard date of appraisal: Provided, That in case where there is a value under Article 165 (1) 1 (b) of the Enforcement Decree of the Income Tax Act