Whether Article 60(1) and (3) of the former Inheritance Tax and Gift Tax Act infringe on the property rights of taxpayers under the Constitution or violate the principle of prohibition of excessive restriction (negative)

Articles 23(1) and 37(2) of the Constitution of the Republic of Korea; Article 60(1) and (3) of the former Inheritance Tax and Gift Tax Act (Amended by Act No. 9916, Jan. 1, 2010);

Applicant 1 and 3 others (Law Firm LLC, Attorneys Song-dong et al., Counsel for the plaintiff-appellant)

The request for adjudication on the constitutionality of the instant case is dismissed.

1. Article 60(1) of the former Inheritance Tax and Gift Tax Act (amended by Act No. 9916, Jan. 1, 2010; hereinafter “Inheritance Tax Act”) declares the principle of market value by stipulating that “the value of property on which inheritance tax is levied under this Act shall be based on the market price as at the date on which the inheritance commences.” Article 60(2) provides that “if it is difficult to calculate the market price when the market price is freely traded between many and unspecified persons, the market price shall be determined by the method prescribed in Articles 61 through 65, taking into account the type, scale, transaction circumstances, etc. of the property.”

The issue related to the legislation related to inheritance or the content of inheritance, such as how to calculate the value of inherited property in relation to the imposition of inheritance tax, is left to a policy decision based on the legislative discretion of legislators. If the interpretation and application of the legislation or the tax authority or the court are within the reasonable scope that is not arbitrary or discretionary in light of the fundamental rights or basic principles stipulated in the Constitution, the legislative limit of restriction on fundamental rights, and the legislative purpose of the relevant law, etc., it shall not be deemed unconstitutional (see Constitutional Court en banc Decision 2008Hun-Ba140, Oct. 28, 2010).

2. However, Article 60(1) of the Inheritance and Gift Tax Act provides that the value of inherited property shall be appraised according to the market price, as well as Article 60(3) of the Inheritance and Gift Tax Act provides that the application of the value appraised by the methods prescribed in Articles 61 through 65 of the Act is limited to cases where it is difficult to calculate the market price, and thus, the requirements and the order thereof are specified in the legal text. Therefore, it is difficult to deem that there is a possibility of arbitrary or discretionary interpretation and application.

In addition, as alleged by the applicant, even if the tax authority calculates the value of inherited property by the supplementary valuation method solely on the ground that the market price of inherited property is lower than the value assessed by the supplementary valuation method under Article 60(3) of the Inheritance and Gift Tax Act, if the market price of inherited property is proved by the time the lawsuit seeking revocation of the tax disposition is closed at the trial court, then the tax disposition is unlawful depending on whether the reasonable tax amount calculated by the market price exceeds the legitimate tax amount (see Supreme Court Decision 2004Du1834, Feb. 1, 2008). This is not a matter of whether Article 60(1) and (3) of the Inheritance and Gift Tax Act is unconstitutional, but it is merely a matter of fact-finding as to whether the market price takes precedence over the value of the inherited property according to the supplementary valuation method and its amount.

Therefore, Article 60 (1) and (3) of the Inheritance and Gift Tax Act cannot be deemed to violate the principle of excessive prohibition against property rights of taxpayers.

3. Therefore, the motion for adjudication on the constitutionality of the instant case is without merit, and it is dismissed. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Ki-taik (Presiding Justice)