Examination and transfer 2017-0078 ( October 24, 2017)

Whether the exclusion from special deduction for long-term holding of non-business land is unconstitutional.

The provision excluding the special long-term holding deduction for the transfer of non-business land in 2016 cannot be deemed to constitute an unconstitutional law because it violates property rights or does not violate the principle of equality, and the disposition related to this provision is legitimate.

Article 95 of the Income Tax Act

Article 104-3 of the Income Tax Act

2017Gudan71720 Revocation of Disposition rejecting capital gains tax rectification

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○ Head of tax office

March 14, 2018

March 28, 2018

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The defendant's rejection disposition of reduction or correction of capital gains tax of 000 won against the plaintiff on October 0, 2017 shall be revoked.

1. Details of the disposition;

A. On October 0, 204, the Plaintiff acquired 00 mal. 00 m. 00 m. 00 m. 00 m. (hereinafter collectively referred to as the “land”). B. thereafter, the land as defined in Article 104-3 of the Income Tax Act (hereinafter referred to as “land for non-business”) was excluded from the special deduction for long-term holding of capital gains tax (hereinafter referred to as “special deduction for long-term holding”), which was 10 m. 6 m. 10 m. (Article 95(2) and 104(1)2-7 of the Income Tax Act, for 10 m. 6m. 10 m. (hereinafter referred to as “long-term holding special deduction for non-business”). The Plaintiff’s acquisition of land for non-business under the proviso of Article 16(1) of the Income Tax Act for 20 m. 6m. 15 m. (hereinafter referred to as “non-special deduction for long-business holding”).

(e) The Income Tax Act, which was amended by Act No. 14389, Dec. 20, 2016; enacted on January 1, 2017, which was enforced on or before January 1, 2017, was deleted under the proviso to Article 95(4) and also acquired on or after January 1, 2016, the period of holding shall be calculated from the date of acquisition pursuant to the main sentence of Article 95(4). Article 14 of the Addenda provides that "where the non-business land is transferred before this Act enters into force, the provisions of the revised Income Tax Act shall be governed by the previous provisions, notwithstanding the provisions of Article 95(4)."

G. However, on October 0, 2017, the Defendant rejected the Plaintiff’s request for the above reduction and correction (hereinafter “instant disposition”). The Plaintiff filed a request for examination with the Commissioner of the National Tax Service on October 0, 2017, but the Commissioner of the National Tax Service dismissed the request for examination on October 0, 2017.

[Ground of recognition] Facts without dispute, Gap evidence 0 to 0, Eul evidence 0 to 0 (including branch numbers for those with more than one number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Defendant issued the instant disposition on the ground that the Plaintiff’s period of possession of the instant land is less than three years after calculating the Plaintiff’s period of possession pursuant to the instant legal provision. However, the instant legal provision violates the principle of excessive prohibition for the following reasons, thereby infringing on property rights and violating the principle of equality. Thus, the instant disposition based on the instant legal provision is unlawful.

1) The National Assembly’s amendment of the Income Tax Act by Act No. 13558, Dec. 15, 2015, included land for non-business in the special deduction for long-term possession, unlike previous ones, is intended to reduce the tax burden following the transfer of land for non-business purposes to activate the transaction of land for non-business purposes. However, the provision of this case violates the principle of the law prohibiting excessive tax burden on the transferor of land for non-business purposes by prescribing the initial date of the holding period of land acquired before January 1, 2016 as of January 1, 2016, which is after the acquisition date, to make it difficult to meet the requirements for the special deduction for long-term possession, thereby going against the intent of the amendment of the law of promoting land transaction promotion. In addition, the provision of this case is not legitimate. Moreover, the provision of this case violates the minimum principle of infringement by fundamentally making it impossible to apply the special deduction for long-term possession of land for non-business purposes acquired before January 1, 2016.

"2) In addition, according to the legal provisions of this case, the initial date of the non-business land acquired before January 1, 2016 differs depending on the transfer date, and if the transfer date falls between January 1, 2016 and December 31, 2016, the initial date of January 1, 2016 shall be the initial date, and if the transfer date falls between January 1, 2016 and December 31, 2016, the date of acquisition shall be the initial date of the transfer. The legal provisions of this case shall be treated differently in essence, and thus, it violates the principle of equality under the Constitution."

It is as shown in the attached Table related statutes.

C. Determination

1) Relevant legal principles

In the field of tax law, the State needs to flexibly and reasonably operate tax and financial policies (see, e.g., Supreme Court Decision 2010Du17281, Oct. 25, 2012). Therefore, legislative discretion should be respected to the extent that it does not violate the constitutional ideology of guaranteeing fundamental rights and the constitutional principles supporting the legislative discretion.

In addition, a legal provision that does not impose capital gains tax in a specific case, unlike the law that limits the rights of the people or imposes new obligations on the legislative body, is recognized as a broad range of freedom of legislative formation. Therefore, the legislators have the authority to enact a law that determines that the contents of the law so enacted are reasonable, taking into account the legislative purpose, beneficiary status, and national budget, and the contents of the law so enacted are not in violation of the Constitution unless the contents of the law clearly lack rationality (see Constitutional Court Order 98Hun-Ba14, July 22, 199). Such legal principle also applies to whether the initial date of holding period, which is the requirement for special deduction for long-term holding, is unconstitutional or not, and it cannot be viewed that such legal provision has been introduced in the process of amendment to the law as a special deduction for long-term holding of assets excluded from the special deduction for long-term holding.

2) Determination as to whether a property right has been infringed

In light of the legal principles as seen earlier, comprehensively taking account of the history and purport of the amendment of relevant Acts and subordinate statutes, and the respective entries in Gap, Nos. 0, 0, 0, 0, and 0, and the purport of the entire pleadings, it cannot be deemed that the legal provision of this case excessively infringes upon the property right guaranteed by the Constitution because it violates the principle of excessive prohibition. The Plaintiff’s assertion on this part is without merit.

① The main purpose of the National Assembly’s amendment of the Income Tax Act by Act No. 1358 on December 15, 2015 is to reduce the tax burden following the transfer of land for non-business and to activate the transaction of land for non-business by including land for non-business in the special deduction for long-term holding. However, the introduction of the National Assembly’s exclusion system from the special deduction for long-term holding by amendment of the Income Tax Act (Act No. 7837 on December 31, 2005) was to classify land for non-business as land owned by an individual and transferred by means of property increase without using it for production according to the actual demand, and to exclude the special deduction for long-term holding, to reduce the speculative demand for land, to promote the sound development of the national economy, and to promote the balanced utilization, development, and preservation of land (see Supreme Court Decision 2001Du178137, Dec. 31, 2005).

In light of this point, it is reasonable to understand that the National Assembly abolished the system of excluding special deduction for long-term holding by amending the Income Tax Act on December 15, 2015 based on the policy decision that it is necessary to promote land transaction activation beyond the direction of concentrating only the suppression of speculative demand in consideration of the real estate market at that time. It is difficult to view that the abolition of the system resulted from the purpose of removing the unconstitutionality of the system itself or from reflective consideration.

Furthermore, as long as the exclusion system from special deduction for long-term holding cannot be deemed unconstitutional, it cannot be deemed that the National Assembly has a legislative obligation to stipulate that the period of possession of all non-business land should be calculated from the date of acquisition. There is no evidence to deem that there was an urgent need to activate land transaction even when the period of acquisition should be calculated for all non-business land regardless of the time of acquisition at the time of amendment of the Income Tax Act.

In light of the above circumstances, it is reasonable to deem that the National Assembly abolished the system of excluding special deduction for long-term holding, which was implemented for a long time at the time of the amendment of the Income Tax Act on December 15, 2015, and that the legislative provisions of this case were made in a sort of transitional regulation. From this perspective, the legitimacy of the purpose of the legal provisions of this case can be fully accepted (the plaintiff did not have the same provisions of the Income Tax Act, which was submitted by the Government to the National Assembly, but it was included in the legislative provisions of this case in the National Assembly. However, in light of such legislative process, it is argued that the above provision of this case was included in the legislative provisions of this case. However, while the Constitution of the Republic of Korea attached the legislative power to the National Assembly (Article 40), the government granted only the legislative right (Article 52), the legislative bill submitted by the Government to the National Assembly can be presumed to have been unconstitutional since such amendment was made).

② If the National Assembly abolished the system of excluding the special deduction for long-term holding, which has been implemented near nine years prior to the date of acquisition through the amendment of the Income Tax Act on December 15, 2015, and the period of possession is calculated from the date of acquisition, it appears that the aforementioned system would have been maintained as it is, and that the issue of equity with the transfer of non-business land prior to the date of transfer could have been raised. The instant legal provision provides that the special deduction for long-term holding may be approved if the non-business land acquired prior to January 1, 2016 owns more than three years from January 1, 2016 (the instant legal provision does not fundamentally block the possibility of special deduction for long-term holding of the non-business land acquired prior to January 1, 2016, such as the Plaintiff’s assertion). In light of the foregoing, it is determined that the instant legal provision satisfies the suitability of the means and the minimum of legal interests and interests of the means of infringement.

3) Determination on whether the principle of equality is violated

The plaintiff asserts that the initial date of holding period has changed depending on whether the transfer date was before January 1, 2017, in cases where non-business land acquired before January 1, 2016 is transferred, due to the legal provisions of this case.

"However, this case's legal provision stipulates that the period of possession of land for non-business acquired before January 1, 2016 shall begin from January 1, 2016, and does not vary depending on whether the period of transfer of land for non-business is from January 1, 2016 to December 31, 2016 or after January 1, 2017. The difference between the plaintiff's assertion is not arising from the legal provision of this case, but from the legal provision of this case, the proviso of Article 95 (4) of the Income Tax Act of 2017 deleted and the non-business land acquired before January 1, 2016 also constitutes a violation of the former provisions of Article 95 (4) of the Income Tax Act of 2017, and the plaintiff's assertion that the remaining portion of land for non-business business should be counted from the date of entry into force of the Income Tax Act before the date of entry into force of the Act can no longer be seen as a violation of the former provisions of Article 95 (4).

In addition, the National Assembly, while amending the Income Tax Act on December 20, 2016, reflects the situation of the real estate market fluctuations by up to the time after the enforcement of the Income Tax Act in 2016, and thus undermining legal stability by reconcing the established legal relations, and taking into account the issue of securing financial resources when a part of the capital gains tax already paid is refunded, it seems that there is a supplementary provision of the Income Tax Act in 2017. In light of such legislative purpose, social situation, reason and circumstance of the amendment of the Act, the above legislative decision does not seem to be remarkably unreasonable or unfair beyond the scope of reasonable legislative discretion.

4) Sub-committee

The legal provision of this case cannot be deemed to constitute an unconstitutional law. The instant disposition made pursuant to the legal provision of this case is lawful.

3. Conclusion

The plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.