Daejeon District Court2013Gudan1466 (2014.07.04)

In order to impose capital gains tax on a trustee, the title truster should have actually controlled, managed, and disposed of the capital gains.

It is difficult to regard title truster as "person who is liable to pay capital gains tax under the principle of substantial taxation" as "person who obtains de facto income."

Article 14 of the Framework Act on National Taxes

Daejeon High Court 2014Nu11098

Plaintiff, respondent, etc.

Economic Zone

The director of the tax office

Daejeon District Court 2013Gudan1466

2015.03.19

2015.04.23

1. Details of the disposition;

A. Han is the omission of the Intervenor’s Intervenor (hereinafter referred to as the “ Intervenor”), and the Plaintiff is the spouse of Han-A, and the changedCC is the spouse of the Intervenor.

B. On July 18, 2003, an intervenor obtained a decision to permit the sale of real estate from the Nos. 1 through 11 listed below in the auction procedure for real estate, and completed the registration of ownership transfer as to the real estate from the Nos. 1 through 8 listed below on July 18, 2003. An intervenor completed the registration of ownership transfer as to the real estate from the No. 12 listed below on July 14, 2003, based on a sales contract as of July 14, 2003.

On December 28, 2011, the Republic of Korea acquired an agreement of 793,283,350 won in total on the following real estate (hereinafter referred to as "real estate of this case" and hereinafter referred to as "the real estate of this case").

C. The Defendant: (a) deemed that the Plaintiff’s share on the instant real estate = 69.86% of the Plaintiff’s share on the instant real estate = (investment KRW 125,93,110 + KRW 500 million + KRW 895,93,110) ± 100 x 30.134% of the Intervenor’s share on the instant real estate (= investment KRW 270,000 + KRW 895,93,110 x 100); (b) deemed that the transfer value of the Plaintiff’s share on the instant real estate was 554,235,345 won (= KRW 793,283,350 + KRW 69.86%) ; (c) calculated the acquisition value as KRW 186,548,64; and (d) calculated the necessary expenses as KRW 10,656,041; and (d) imposed an additional tax on the Plaintiff on October 10, 20139.

D. On March 20, 2013, the Plaintiff filed an appeal with the Tax Tribunal on the instant disposition, but was dismissed on June 12, 2013.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 4, Eul evidence Nos. 1, 3, 6, 11, and 12 (including branch numbers), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

① The Plaintiff only lent KRW 125,93,110 to the Intervenor in the course of acquiring the instant real estate by the Intervenor, and did not have held title trust with the Intervenor’s partial shares in the instant real estate. ② Even if the Plaintiff held title trust with the Intervenor, such title trust agreement is null and void pursuant to the Act on the Registration of Real Estate under Actual Titleholder’s Name, and the Plaintiff’s real estate Nos. 1 through 11 was decided to grant sales permission in the course of voluntary auction. As such, the Intervenor is liable to pay capital gains tax only to the Intervenor who acquired ownership in the instant real estate, and there is no liability to pay capital gains tax on the Plaintiff. ③ Even if the Plaintiff was liable to pay capital gains tax on the Plaintiff, the Plaintiff’s investment amount is KRW 125,993,110, and the Intervenor’s investment amount is KRW 270,000,000,000, the Plaintiff’s share does not exceed 69.66%. Therefore

(b) Fact of recognition;

(1) On July 2003, the intervenor received a decision to permit the sale of a number of real estate (hereinafter referred to as "real estate at auction"), including the No. 1 or 11 of this case, in the free auction procedure for real estate, and the proceeds from the sale were fully paid, and the registration right to the real estate which completed the registration of ownership transfer among them was kept by the intervenor. Of the money for the payment of the proceeds from sale, 50 million won was loaned from OO on July 18, 2003 by taking as security the real estate at auction in the name of the intervenor and the real estate No. 125,93,110 won in order to raise the remaining funds to obtain the successful bid of this case in the name of the intervenor. The intervenor invested KRW 270,000,000 in the name of the intervenor.

(2) The detailed contents of the auction real estate of this case and the real estate Nos. 12 of this case have been calculated as follows with respect to the alternative that had been initially discussed on the A and the 29th of December. One of the two insides is requested to conclude an agreement. If the conditions of the transfer of farm registration are not agreed on the same alternative as the agreement or alternative 2, such as the separate alternative 1, it would be inevitable to resolve through transmission. In this regard, I would like to discuss the demand for delivery of the transfer income tax separately.

alternative 1: Conditions of Transfer for Transfer of Registration of HanB-Korea-Korea-AA (with respect to the transfer income tax and all expenses incidental to the transfer income tax shall be borne by HanA).

This is a place where Korea-A was operating 'O tourist farm' as owned by the FF and Kim GG, which had been in a relationship between Korea-AA and Korea-A-2 years or less, and agreed to pay interest on farm income, while inducing investment. As above, the Plaintiff and the Intervenor jointly invested funds and acquired the auction real estate in the name of the Intervenor, and the title 12 of this case was acquired from the seller due to the Plaintiff as a party to the sales contract. After acquiring the instant real estate in the name of the Intervenor, the Plaintiff registered the business with the name of 'OOOOO' in the said real estate with the husband, operated the tourist farm from July 2003 to December 201, when the Plaintiff acquired the instant real estate in the name of the Intervenor, and paid approximately KRW 2.5 million interest on the said O agricultural cooperative loan in the name of the Intervenor from around 250 million to December 25, 2011.

(3) The Intervenor consulted with the Ministry of Land, Transport and Maritime Affairs of KRW 793,283,350 on the compensation amount of the instant real estate (the total compensation amount including the land compensation, etc. is approximately KRW 874,228,00), and deposited the compensation amount into the passbook in the name of the Intervenor. On December 30, 2011, the Intervenor repaid the amount of loans KRW 500,000 to the OO agricultural cooperative.

(4) On December 31, 201, the DefenseCC sent to Han on December 31, 201 e-mail with the following content:

(5) On January 2012, the Plaintiff and the Intervenor entered into a contract for the transfer of the remaining real estate remaining after being transferred to the Republic of Korea and purchased from the dueF among the auctioned real estate of this case, as follows: OO 399-1 No. 1 of O 399-1, 24.84 square meters (hereinafter “the remaining real estate”).

In transferring the remaining real property of this case to the Plaintiff by the seller, the seller of Korea-B (the Intervenor) agreed to include the loan interest paid by the Plaintiff from July 18, 2003 to December 29, 201 and the loan interest amount of KRW 263,495,780 paid by the purchaser from July 18, 2003 to December 29, 201, the amount of KRW 589,48,890 deducted from the total amount of KRW 125,93,110, and KRW 125,93,110, when acquiring the Plaintiff’s successful bid.

(6) On January 11, 2012, the Plaintiff and the Intervenor entered into a contract to sell the remaining real estate in KRW 589,48,890. The Intervenor received KRW 200 million from the Plaintiff and completed the registration of ownership transfer concerning the remaining real estate on January 16, 2012.

C. Determination

(1) Relevant legal principles

In cases where a person who intends to purchase real estate in the real estate auction procedure obtains a decision to permit the sale under his/her own name with another person to pay the purchase price, and later obtains a return of the real estate from another person, and later obtains a permission to sell the real estate from such other person, the person who takes the position of purchaser at the auction procedure is the title holder, and thus, he/she acquires the ownership of the real estate for the purpose of auction inside and outside the country, and the transfer income from the transfer of the real estate is in principle vested in the title holder, unless there are special circumstances. Provided, That where a person who takes the purchase price in the real estate auction procedure transfers the real estate to a third person upon his/her own intention after he/she received a decision to permit the sale under another person's name, and the title holder directly receives the transfer price, and directly obtains a registration of ownership transfer to the third person, the person who takes the purchase price is liable to pay transfer income tax under the substance over form principle (see Supreme Court Decision 2002Du9649, Nov. 25, 2010).

In addition, this legal doctrine also applies where a title truster and a title trustee entered into a contract title trust agreement, and the title trustee did not know the fact that the title trustee was a party to the contract and concluded a contract to sell real estate and completed the registration of ownership transfer in the future of the title trustee, thereby the title trustee acquires the internal and external ownership of the real estate under Article 4 of the Act on the Registration of Real Estate under Actual Titleholder’s Name, notwithstanding the

(2) Whether the Plaintiff held title trust with the part of the instant real estate owned by the intervenors

In full view of the following circumstances, it is reasonable to view that the Plaintiff, in the process of acquiring the instant real estate in the name of an intervenor, has held a title trust on the part of the instant real estate in the entirety of the pleadings.

① In the process of acquiring the instant real estate in the name of the Intervenor, the Plaintiff and the Intervenor invested their respective funds (the Plaintiff alleged to the effect that the Intervenor lent KRW 125,93,110 to the Intervenor, but there is no evidence to acknowledge that the said money is a loan).

② After acquiring the instant real estate in the name of the Intervenor, the Plaintiff used and made profits from all the instant real estate and paid the interest for KRW 500 million in the name of the Intervenor for about eight years from the proceeds accrued therefrom.

③ In light of the Intervenor’s e-mail content sent by the Intervenor’s spouse Han-A on December 31, 201, and the terms and conditions of the transfer agreement and sales agreement on the remaining real estate of this case, the Intervenor appears to have allowed the Plaintiff to use and benefit from the instant real estate for up to eight years after investing KRW 270 million in the process of acquiring the instant real estate, and then disposing of the instant real estate thereafter, the Intervenor would be entitled to a certain amount of profit (the Plaintiff asserted to the effect that it was entrusted with the management of the instant real estate by the Intervenor, but there is no evidence to acknowledge it).

④ In light of the fact that the Intervenor jointly invested part of the money in the process of acquiring the instant real estate in the name of the Intervenor, it is difficult to view that the circumstance that the Intervenor kept the registration right certificate as to a part of the instant real estate, is a circumstance to deny the title trust relationship between the Plaintiff and the Intervenor with respect to a

(3) Whether the Plaintiff is liable to pay capital gains tax on partial shares of the instant real estate

In the process of acquiring the instant real estate in the name of the intervenor, the Plaintiff trusted the title of part of the instant real estate to the intervenor. However, as seen earlier, the real estate Nos. 1 through 11 of the instant case was acquired by the intervenor within and outside the country after obtaining a decision of permission for sale in the procedure of voluntary auction as a whole, as revealed in full view of the facts acknowledged earlier and the purport of the entire pleadings. The real estate Nos. 12 of the instant case concluded a sales contract with E (no evidence to prove that the intervenor was aware of the fact of the title trust agreement) as a title trustee of the so-called contract title trust, and concluded such contract with E (no evidence to prove that the title trust agreement was known) and acquired the ownership of the intervenor within and outside the country (the seller proves that the registration made in the name of the title trustee was null and void, and all the parties of the instant contract of title trust are not asserting that the acquisition of ownership in the name of the intervenor was null and void, and there is no evidence to prove that the seller was a title trust agreement).

In addition, as acknowledged earlier, the intervenor directly received compensation of the real estate of this case, and repaid the amount of KRW 500 million to the plaintiff's loans to the OO agricultural cooperative in the name of the intervenor, and there seems to be circumstances to deem that the plaintiff actually controlled, managed, and disposed of the amount equivalent to the plaintiff's share among the above compensation, or that the money was reverted to the plaintiff. Thus, it is difficult to view that the intervenor is "the person who is liable to pay capital gains tax under the principle of substantial taxation" (the intervenor is a joint investor of the real estate of this case and a joint investor of the above security loan of 500 million won, and it is difficult to view that the above loan was repaid by the intervenor according to the direction of the plaintiff. It is difficult to view that the plaintiff controlled, managed, or disposed of capital gains equivalent to KRW 500 million used to repay the above loan of this case, or that the above capital gains actually accrue to the plaintiff. In addition, even if the remaining amount remaining after the payment of the compensation of the real estate of this case is reverted to the intervenor, there is no conclusion that

Therefore, the obligation to pay capital gains tax on the instant real estate is not the Plaintiff but the Intervenor.

(4) Sub-determination

Therefore, the instant disposition against the Plaintiff, who is not a taxpayer of capital gains tax on the instant real estate, shall be revoked as it is unlawful.

3. Conclusion

Therefore, the plaintiff's claim of this case shall be accepted on the grounds of its reasoning, and the judgment of the court of first instance is just, and the defendant's appeal is dismissed as it is without merit. It is so decided as per Disposition.