Cho High Court Decision 2018 Deputy746 (2018.05.03)

Construction rental housing subject to corporate tax on capital gains, such as land, corresponding thereto;

The argument that a rental business operator should add the rental period to the former rental business operator is not acceptable, and it is reasonable to interpret that Article 92-2 (4) 4 of the former Enforcement Decree of the Corporate Tax Act applies only when the corporation newly constructs the relevant house. Thus, the initial disposition is

Article 55-2 of the Corporate Tax Act (Special Taxation on Capital Gains on Land, etc.)

2018Guhap52127 Revocation of Disposition of Rejecting Corporate Tax

AAAAA Company

BB Director of the Tax Office

April 10, 2019

May 30, 2019

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

Each disposition rejecting correction of corporate tax listed in the attached Table 1 that the defendant against the plaintiff shall be revoked.

1. Details of disposition;

가. 구 임대주택법(2015. 8. 28. 법률 제13499호 민간임대주택에 관한 특별법으로 전부 개정되기 전의 것, 이하 같다)에 따라 등록한 임대사업자인 DD종합건설 주식회사('DD종합건설')는 국민주택기금을 지원받아 2000. 10. 30. KK시 ㅇㅇ면 DD리 687에 DD그린아파트 495세대('이 사건 주택')를 신축하여 임대하였다. DD종합건설은 2014. 7. 31. KK시로부터 이 사건 주택에 관하여 분양전환 승인을 받았다.

B. On October 22, 2014, the Plaintiff purchased the instant house from DD Integrated Construction, and completed the sale in accordance with the contents approved for conversion for sale from 2014 to 2016 under the former Rental Housing Act, but did not report and pay corporate tax under Article 55-2 (Special Taxation on Capital Gains from Land, etc.) 1 of the Corporate Tax Act to the Defendant.

C. According to the audit and inspection register that the sale of housing in this case is subject to Article 5-2 of the Corporate Tax Act, the Plaintiff, on March 17, 2017, filed a revised return of corporate tax for the business year 2014, 2015, and filed and paid corporate tax for the business year 2016, as follows.

1) Article 55-2 of the former Corporate Tax Act (amended by Act No. 12850, Dec. 23, 2014) shall apply to the income for 2014 business year ( Notwithstanding the foregoing statutory amendment, there is no particular difference in the interpretation and application of the provisions of the Corporate Tax Act applicable to the instant case; hereinafter the same shall apply).

D. On September 5, 2017, the Plaintiff filed a claim for correction of the tax base and the amount of corporate tax declared and paid as above on the ground that Article 55-2 of the Corporate Tax Act does not apply to the Defendant regarding the transfer income of the instant housing, but the Defendant rejected the Plaintiff’s claim for correction on October 16, 2017 (hereinafter “instant disposition”).

E. On January 11, 2018, the Plaintiff filed an appeal seeking the revocation of the instant disposition with the Tax Tribunal, but the appeal was dismissed on May 3, 2018.

[Reasons for Recognition] Unsatisfy, Gap 1, 2, 4, 6, 7, 9, Eul 1, 2 (including virtual numbers), the purport of the whole pleadings

2. Relevant statutes;

Attached Form 2 shall be as listed in attached Table 2.

3. Whether the disposition of this case is legitimate

A. The parties' assertion

1) Plaintiff’s assertion

A) The Defendant made the instant disposition by applying Article 55-2(1)2 of the Corporate Tax Act. According to the foregoing provision, when a domestic corporation transfers a house prescribed by Presidential Decree (including land annexed thereto), the tax amount calculated by multiplying 10/100 by the transfer income of land, etc. shall be paid as corporate tax on capital gains for each business year by adding the corporate tax amount on income for each business year to the corporate tax amount. However, Article 92-2(2) of the former Enforcement Decree of Corporate Tax Act (amended by Presidential Decree No. 26763, Dec. 28, 2015; hereinafter referred to as the “former Enforcement Decree of Corporate Tax Act”) provides that “a house prescribed by Presidential Decree” under Article 55-2(1)2 of the former Enforcement Decree of Corporate Tax Act means a house located in the Republic of Korea and does not fall under any of the following subparagraphs, and Article 2(2) of the former Rental Housing Act provides that “a house leased by the relevant corporation is a constructed rental house under Article 2(2) of the Rental Housing Act:

The instant housing constitutes a "built Rental Housing" under Article 2 subparagraph 2 of the former Rental Housing Act, and the requirements prescribed in each item of Article 92-2 (2) 1-2 of the former Enforcement Decree of the Corporate Tax Act are also stipulated as the requirements (Article 1-2 (b) of the former Enforcement Decree shall be leased for not less than five years). However, since the Plaintiff comprehensively succeeds to the status of a lease business operator of the instant housing pursuant to Article 16 (2) of the former Rental Housing Act, the Plaintiff and the Plaintiff shall add the lease period of the DNA Comprehensive Construction in the application of the above provision, and the said requirements shall also be satisfied if the said provision is aggregated for not less than five years. Therefore, the instant housing does not fall under the "house prescribed by Presidential Decree" under Article 5-2 (1) 2 of the Corporate Tax Act, and the provisions of the former Corporate Tax Act concerning the special taxation of capital gains, such as the land, do not apply to the sale

B) Article 55-2(4)3 of the Corporate Tax Act (amended by Presidential Decree No. 28640, Feb. 13, 2018) shall apply to income for the business year 2015 and 2016 pursuant to Article 55-2(4)3 of the former Enforcement Decree of the Corporate Tax Act.

(A) As to the instant housing, Article 2 subparag. 1-2 of the Special Act on Public Housing should be deemed to apply mutatis mutandis or analogically to the public rental housing prescribed in Article 2 subparag. 1-2 of the Enforcement Decree of the same Act. Except for this, the same shall apply to the interpretation and application of the Enforcement Decree of the same Act, notwithstanding the amendment of the Enforcement Decree on December 28, 2015.

Article 92-2 (4) 4 of the former Enforcement Decree of the Corporate Tax Act provides that capital gains, such as land, shall not be subject to paragraph (1). Accordingly, Article 92-2 (4) 4 of the former Enforcement Decree of the Corporate Tax Act provides that a corporation that newly constructs and sells a house (including the case of selling a constructed rental house under the Rental Housing Act or selling it to another rental business operator pursuant to the same Act) shall exclude "income accruing from the transfer of land less

However, the Plaintiff’s sale of the instant housing constitutes “sale of constructed rental housing pursuant to the Rental Housing Act” under Article 92-2(4)4 of the former Enforcement Decree of the Corporate Tax Act. Therefore, Article 55-2(1) of the Corporate Tax Act does not apply to the Plaintiff’s transfer income from the sale of the instant housing.

2) Defendant’s assertion

A) The lease period under Article 92-2 (2) 1-2 (b) of the former Enforcement Decree of the Corporate Tax Act shall be determined solely by the lease period of the relevant corporation, and shall not be added up to the lease period of the former rental business operator. Since the Plaintiff’s lease period of the instant house is less than five years, the above provision

B) Article 92-2(4)4 of the former Enforcement Decree of the Corporate Tax Act applies to cases where a corporation that newly constructed a house, including a newly constructed rental house, sells the relevant house (including cases where a newly constructed rental house under the Rental Housing Act is sold or sold to another rental business operator pursuant to the same Act). However, since the Plaintiff did not construct the instant house, the Plaintiff’s sale of the instant house does not fall under

B. Determination

1) The legal nature of the instant housing

As seen earlier, DD Integrated Construction, a rental business operator, constructed and leased the instant housing with the subsidization from the National Housing Fund. As such, the instant housing constitutes a publicly constructed rental house under Article 2 subparagraph 2-2 (b) of the former Rental Housing Act.

In addition, since a rental business operator sold a constructed rental house to another rental business operator, the rental house is not changed from a constructed rental house to a purchased rental house (see Supreme Court Decision 2006Da14103, Aug. 25, 2006). Even if the Plaintiff purchased the instant house from DD Integrated Construction, the instant house still constitutes a constructed rental house (On the other hand, the former Rental Housing Act was wholly amended by the Special Act on Private Rental Housing Act, Act No. 13499, Aug. 28, 2015, but Article 6 (2) of the Addenda to the same Act was amended after December 29, 2015.

2) As to the assertion that Article 92-2(2)1-2 of the former Enforcement Decree of the Corporate Tax Act constitutes (whether the Plaintiff succeeds to the rental period of the former rental business operator)

A) The principle of strict interpretation derived from the principle of no taxation without law is applicable not only to the cases meeting the taxation requirements, but also to the cases meeting the requirements for non-taxation and tax reduction and exemption. As such, expanding or analogical interpretation of the requirements for non-taxation or tax exemption and exemption as favorable to taxpayers without any justifiable reason causes a result contrary to the principle of no taxation, which is the basic ideology of the tax law, and thus, it is not allowed (see, e.g., Supreme Court Decision 2005Da19163, May 25,

B) In light of such legal principles, the Plaintiff’s assertion that calculating the rental period under Article 92-2(2)1-2(b) of the former Enforcement Decree of the Corporate Tax Act should include the rental period of the former rental business operator, cannot be accepted in light of the following circumstances:

(1) Article 92-2(2)1-2 of the former Enforcement Decree of the Corporate Tax Act provides that "where the relevant corporation is a constructed rental house under Article 2 subparagraph 2 of the Rental Housing Act leased by the relevant corporation and a house meeting all the following requirements is two or more, the relevant house shall be the same." Thus, it is natural to interpret that "a lease for five or more years" under Article 92-2(2)1-2 of the former Enforcement Decree of the Corporate Tax Act means a lease for five or more years.

② Article 16(2) of the former Rental Housing Act is merely a provision to promote stability in the residential life of citizens by allowing a buyer to succeed to the status of a seller even if a rental business operator is changed due to sale of a constructed rental house, and by allowing a lessee to hold the lease contract and the rights and obligations prescribed by the former Rental Housing Act as they are. The foregoing provision cannot be applied as it is to Article 55-2 of the Corporate Tax Act and Article 92-2(2)1-2 of the former Enforcement Decree of the Corporate Tax Act, which provides for the requirements for imposing corporate tax. In accordance with the foregoing provision, the buyer’s succession to the status of a seller pursuant to Article 16(2) of the former Rental Housing Act is not a comprehensive succession of all the rights and obligations of a seller, such as corporate merger or inheritance. Therefore, in calculating the lease period under Article 92-2(2)1-2(b) of the former Enforcement Decree of the Corporate Tax Act,

③ According to the Plaintiff’s assertion, in the case of a constructed rental house leased for at least five years, even if gains on transfer accrue each phase after it was transferred to another rental business operator, taxation under Article 55-2 of the Corporate Tax Act may not be made. This is contrary to the purport of the said provision, which seeks to restrain real estate speculation, and the purport of the said provision is also contrary to the purport of the said Enforcement Decree, which seeks to stabilize the national residential life through a long-term lease (in this regard, Article 92-2(2)1-2 of the former Enforcement Decree of Corporate Tax Act applies not only to the publicly constructed rental house but also to the privately constructed rental house, and also to the interpretation of the said provision as to the addition

C) Thus, unless there is a dispute between the parties as to the fact that the Plaintiff purchased the instant house from DDD Construction and thereafter leased it for less than five years, the Plaintiff’s assertion that the instant house does not constitute “house prescribed by Presidential Decree” under Article 55-2(1)2 of the Corporate Tax Act as it constitutes a house under Article 92-2(2)1-2 of the former Enforcement Decree of the Corporate Tax Act, is without merit.

3) As to the assertion that the Plaintiff satisfies the non-taxation requirement under Article 92-2(4)4 of the former Enforcement Decree of the Corporate Tax Act (whether the said provision applies even where the Plaintiff did not construct a new house)

A) Considering the aforementioned circumstances in light of the legal principles of the Supreme Court Decision 2005Da19163, it is reasonable to interpret Article 92-2(4)4 of the former Enforcement Decree of the Corporate Tax Act that Article 92-2(4)4 of the former Enforcement Decree only applies to a case where a corporation that sells a house (including the case of selling a constructed rental house under the former Rental Housing Act or selling it to

① Article 92-2(4)4 of the former Enforcement Decree of the Corporate Tax Act seems to be a provision for promoting the construction of housing by exempting a corporation that newly constructs and sells a house from corporate tax imposed under Article 55-2 of the Corporate Tax Act on "income accruing from the transfer of the relevant house and the appurtenant land within a certain size." Therefore, even in cases where a newly constructed rental house is sold in lots or sold by a corporation that did not newly construct such house, applying the above provision to such cases does not comply with the legislative intent as above.

② The Plaintiff asserts that, in the case of a constructed rental house, there is little possibility of speculation in light of the fact that the rental business operator could not arbitrarily determine the timing of sale or the price of sale in lots, and that the rental business operator should make a preferential sale in lots to the lessee, such as a homeless person. Considering such circumstances and the public interest of constructed rental housing, Article 92-2(4)4 of the former Enforcement Decree of the Corporate Tax Act, the Plaintiff asserts that, “The purpose of Article 92-2(4) of the former Enforcement Decree of the Corporate Tax Act is not to apply the special provisions

However, it cannot be readily concluded that there is no possibility of real estate speculation in the process of selling housing for sale in lots or between rental business operators on the basis that such restrictions are applied to public rental housing subject to the foregoing restrictions on conversion price for sale in lots. In addition, the above provisions apply to private constructed rental housing other than public rental

There is no special restriction (in light of the language and text of the above provision, there is no ground to interpret that the new construction requirement is excluded only in the case of the preceding one by treating the publicly constructed rental houses and privately constructed rental houses differently in interpreting the above provision).

③ In light of the language and text, it is natural to view that the part inside of the overall protection under Article 92-2 (4) 4 of the former Enforcement Decree of the Corporate Tax Act is not a new construction and sale, but a "sale" formula.

The plaintiff asserts that, as a matter of course, "sale" includes "sale of constructed rental housing or sale to another rental business operator in accordance with the same Act," the part within the overall title becomes an unqualified provision. However, as seen below, Supreme Court Decision 94Nu13091 Decided June 30, 1995, which stated the same purport as the above provision of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 14080 of December 31, 1993), is interpreted to mean that the Enforcement Decree of the former Corporate Tax Act stipulates Article 124-3 (5) of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 14080 of December 31, 1993), as well as that the rental housing and general housing under the Rental Housing Construction Promotion Act are scheduled to be newly constructed and sold for sale, and therefore, there are different legal treatment in its newly constructed and sold housing, so it cannot be applied to "sale of rental housing or rental business operator under the same Act."

④ Under Article 2 subparag. 6 of the former Rental Housing Act, the term “sale conversion” means selling rental housing to a person other than a rental business operator. Therefore, if it is interpreted that the provisions of special taxation on capital gains, such as land, do not apply to the sale of constructed rental housing under the former Rental Housing Act or the sale of constructed rental housing to another rental business operator under the same Act without asking whether to construct a new house, as alleged by the Plaintiff, the provisions of Article 92-2(2)1-2 of the former Enforcement Decree of the Corporate Tax Act, excluding the cases of sale of constructed rental housing under the former Rental Housing Act, which are subject to corporate tax taxation under the former Rental Housing Act. However, in such interpretation, it would result in the de facto uncertainty of the provisions of Article 92-2(2)1-2 of the former Enforcement Decree of the Corporate Tax Act

⑤ The former Corporate Tax Act (amended by Act No. 6558 of Dec. 31, 2001) imposed special surtax along with the corporate tax on the transfer margin accruing from the transfer of real estate of a corporation. In this regard, Article 124-3(5) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 14080 of Dec. 31, 1993) included the provision that "where a new house is built and sold, the land within a certain size of the land attached to the house and the land attached to the house is excluded from the land and the building subject to special surtax, and the above provision of the Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 13091 of Jun. 30, 1995) was intended to newly construct and transfer the house for sale (see Supreme Court Decision 94Nu13091 of Jun. 30, 199).

Since then, the above provision was revised as "a case where a constructed rental house under the Rental Housing Act was sold in lots pursuant to the same Act as the former Rental Housing Act was revised as the former Rental Housing Act," and the Constitutional Court Decision 96Hun-Ba95, 97Hun-Ba1, 64 (merged) on January 27, 2000 that the provision of the Corporate Tax Act on special surtax was in violation of Article 75 of the Constitution prohibiting comprehensive delegation legislation, etc., it was amended as Act No. 6259, Feb. 3, 2000, and Article 10 (1) 5 of the former Corporate Tax Act (amended as Act No. 6558, Dec. 31, 2001) was amended as the special surtax Article 10 (2) of the former Enforcement Decree of the Corporate Tax Act (amended as Act No. 6558, Dec. 31, 2001; 201.

In light of such legislative history, it is reasonable to view the provision to clarify the scope of “sale of housing” in Article 92-2(4)4 of the former Enforcement Decree of the Corporate Tax Act. It is difficult to deem that the provision to expand the scope of the non-taxation provision to a corporation that did not build a new housing on the grounds that it is inconsistent with the purport of Article 124-3(5) of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 14080, Dec. 31, 1993) (the public interest of the constructed rental housing or the possibility of relatively low speculation).

B) As seen earlier, insofar as the Plaintiff was not a corporation that newly built the instant house, the Plaintiff’s assertion that the sale of the instant house satisfies the non-taxation requirement under Article 92-2(4)4 of the former Enforcement Decree of the Corporate Tax Act is without merit.

4) Sub-determination

The income accrued by the Plaintiff from the transfer of the instant house constitutes subject to corporate tax assessment under Article 55-2(1)2 of the Corporate Tax Act, and does not fall under income prescribed in Article 55-2(4)3 of the same Act and Article 92-2(4)4 of the former Enforcement Decree of the Corporate Tax Act. Thus, the instant disposition is lawful.

4. Conclusion

The plaintiff's claim is dismissed on the ground that it is without merit.