Whether a sale guarantee company constitutes “acquisition of real estate” under Article 105(1) of the former Local Tax Act in cases where a trust contract is concluded with a truster for the guarantee of sale of housing and the trust property is transferred from a truster for that reason (affirmative)

Articles 105(1) (see current Article 7(1) and 110 subparag. 1(a) (see current Article 9(3)1)) of the former Local Tax Act (wholly amended by Act No. 1021, Mar. 31, 2010)

[Plaintiff-Appellant] Plaintiff 2005Du9491 decided Apr. 12, 2007 (Gong2007Sang, 737)

Korea Housing and Urban Guarantee Corporation (Law Firm Dcaro temperature, Attorneys Seo Seo-ho et al., Counsel for the defendant-appellant)

Gwangju Market

Seoul High Court Decision 2015Nu47654 decided December 4, 2015

The appeal is dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

1. Article 105(1) of the former Local Tax Act (wholly amended by Act No. 10221, Mar. 31, 2010; hereinafter the same) provides that “The acquisition tax shall be imposed on the person who has acquired real estate, vehicle, mechanical equipment, standing timber, aircraft, ships, mining rights, fishing rights, golf membership rights, riding club membership rights, condominium membership rights, or sports complex membership rights,” and Article 110 Subparag. 1(a) of the same Act provides that “The acquisition tax shall not be imposed on the person who has acquired the trust property through a trust (limited to the trust under the Trust Act and accompanied by a trust registration) and where the truster transfers the trust property to the trustee.”

Real estate acquisition tax is not imposed on a person who acquires real estate by taking advantage of the fact that it is the transfer of goods and by taking advantage of the distribution tax that recognizes and imposes a tax-bearing force. “Acquisition of real estate” under Article 105(1) of the former Local Tax Act includes all cases of acquisition of real estate by taking advantage of the transfer of registration of ownership, regardless of whether the person who acquired the real estate acquires the ownership substantially complete (see, e.g., Supreme Court Decision 2005Du9491, Apr. 12, 2007). Article 110 Subparag. 1(a) of the former Local Tax Act provides that acquisition tax shall not be imposed on a person who acquired the trust property by reason of trust under the Trust Act, and it does not impose acquisition tax on the premise that it falls under “acquisition” under Article 105(1) of the former Local Tax Act.

If a sales guarantee company entered into a trust contract with a truster for the guarantee of sale of housing and received a transfer of land, which is a trust property, from the truster on the ground thereof, it constitutes “acquisition of real estate” as prescribed by Article 105(1) of the former Local Tax Act. Following the occurrence of a guarantee accident, even if the sales guarantee company refunds the sale price to the buyer or sells the land, which is a trust property, to a third party, due to the performance of a housing sale guarantee contract, it cannot be deemed that the land already acquired is not again acquired. In such cases, the acquisition tax on the acquisition of land, which is a trust property, based on a trust contract, is not imposed pursuant to Article 110

2. According to the reasoning of the lower judgment, the following facts are revealed.

A. On November 19, 2007, with respect to the new construction of the instant apartment on the instant land, the Plaintiff entered into a housing sale trust agreement under which the Plaintiff would be entrusted with the instant land from Jinjin-gu Loan Co., Ltd. (hereinafter “Yinjin-do”) and registered the ownership transfer of the instant land on the ground of trust in the future of the Plaintiff.

B. At the same time, the Plaintiff entered into a housing sale guarantee contract with the Dog-jin on the same day, and the contents thereof are to bear the responsibility of the Plaintiff to pay the sales performance or the paid down payment and the intermediate payment where the sales contract cannot be executed due to a guarantee accident by the Dog-jin, the principal debtor.

C. After that, the Plaintiff refunded the sales price to the buyers by November 26, 2009, when a guarantee accident stipulated in the housing sales guarantee contract occurred.

D. As above, the Defendant: (a) deemed that the Plaintiff acquired the instant land substantially by granting a refund of the sales price due to the occurrence of a guarantee accident; and (b) imposed acquisition tax, etc. on the Plaintiff (hereinafter “instant disposition”).

3. The lower court’s determination that the instant disposition was unlawful is justifiable in light of the foregoing legal doctrine. In so determining, the lower court did not err by misapprehending the legal doctrine on transactions, etc. subject to acquisition tax,

4. The Defendant’s appeal is dismissed as it is without merit, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Poe-young (Presiding Justice)