Where a purchaser concludes a sales contract for real estate and pays all the purchase price prior to the registration of transfer of ownership, whether a liability to pay acquisition tax under Article 105(2) of the former Local Tax Act is established on the date of actual remainder payment (affirmative), and where a de facto acquisitor completes the registration of transfer of ownership based on sale and purchase, whether a new liability to pay acquisition tax arising from “acquisition” under Article 105(1) of the former Local Tax Act is established on the due date, such as when the de facto acquisitor completed the registration of transfer of ownership based on “acquisition” under Article 105(1) of the former Local Tax Act (negative)

[Majority Opinion] In full view of the language and text of Articles 105(1) and (2), and 111(7) of the former Local Tax Act (amended by Act No. 9924, Jan. 1, 2010; hereinafter the same) and the text of Article 73(1) and (3) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 22251, Jul. 6, 2010; hereinafter the same), “ de facto acquisition” under Article 105(2) of the former Local Tax Act refers to cases where a purchaser fails to meet the formalities for acquisition of ownership, such as registration, but the actual requirement for acquisition of ownership is not satisfied, if the purchaser entered into a sales contract for real estate and paid all the purchase price prior to the registration of transfer of ownership, the liability to pay acquisition tax under “ de facto acquisition” is established on the outstanding payment date, and even if the purchaser entered into the registration of transfer of ownership on the date of acquisition due to such de facto cause, it is merely a new requirement for acquisition on the date.

This legal doctrine applies likewise to cases where a person, who actually acquired real estate by paying the purchase price in full, completed the registration of ownership transfer under the name of a title trustee pursuant to a three-party registered title trust agreement.

[Dissenting Opinion by Justice Ko Young-han, Justice Kim Shin, Justice Lee Ki-taik, Justice Kim Jae-hyung, and Justice Cho Jae-chul] Even in cases where a title trustee transferred real estate from a seller under a three-party registered title trust agreement after the enforcement of the Act on the Registration of Real Estate under Actual Titleholder’s Name, the liability to pay acquisition tax on the ground of “acquisition” under Article 105(1) of the former Local Tax Act ought to be deemed to be established, regardless of the validity of registration. In such cases, even if a title truster concluded a sales contract on real estate and paid the purchase price in full, it cannot be deemed that the liability to pay acquisition tax on the “actual acquisition” under Article 105(2) of the former Local Tax Act is not established, and thereafter, if the title truster cancelleds the registration under the invalid name of the title trustee, and then transfers the ownership registration under the initial sales contract, or directly transfers the ownership registration from the title trustee or the title trustee, the title truster becomes liable to pay acquisition tax on the ground

Article 105(1) and (2) of the former Local Tax Act (Amended by Act No. 924, Jan. 1, 2010; see current Article 7(1) and (2)); Article 111(7) of the former Local Tax Act (see current Article 10(7)); Article 73(1) and (3) of the former Enforcement Decree of the Local Tax Act (Amended by Presidential Decree No. 22251, Jul. 6, 2010; see current Article 20(2) and (13) of the former Enforcement Decree of the Local Tax Act (Amended by Act No. 2251, Jul. 6, 2010); Article 4 of the Act on the Registration of Real Estate under Actual Titleholder’s Name; Article 186 of the Civil Act

Supreme Court Decision 2003Du10343 Decided January 13, 2005 (Gong2007Sang, 915) Supreme Court Decision 2010Du28151 Decided March 14, 2013 (Gong2013Sang, 668) Decided May 11, 2007, Supreme Court Decision 2013Du18018 Decided January 23, 2014

HanNcom Co., Ltd. (Law Firm Shin & Kim, Attorneys Kim Jong-soo et al., Counsel for the defendant-appellant)

The head of Yeongdeungpo-si Office

Seoul High Court Decision 2013Nu51628 decided September 19, 2014

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

The grounds of appeal are examined.

1. As to the ground of appeal on whether acquisition tax liability is established

A. Article 105 of the former Local Tax Act (amended by Act No. 9924, Jan. 1, 2010; hereinafter the same) provides that acquisition tax shall be imposed on a purchaser of real estate, etc. under paragraph (1). Paragraph (2) of the same Article provides that acquisition of real estate, etc. shall be deemed to have been acquired even if registration, etc. is not made under the Civil Act and other relevant Acts and subordinate statutes. Article 73 of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 2251, Jul. 6, 2010; hereinafter the same) delegated by Article 111(7) of the former Local Tax Act provides that acquisition by succession for value under paragraph (1) of the same Article shall be deemed to have been acquired on the date of actual payment (if acquisition by succession for value does not fall under this case, on the date of payment under a contract). Paragraph (3) of the same Article provides that acquisition by succession is deemed to have been made on the date of acquisition.

In full view of the language and text of the aforementioned relevant provisions and the fact that “ de facto acquisition” under Article 105(2) of the former Local Tax Act generally fails to meet the formal requirements for acquisition of ownership, such as registration, but the case where the actual requirements for payment of purchase price and acquisition of ownership are met. In the event a purchaser concludes a sales contract on real estate and pays all purchase price prior to the registration of transfer of ownership, the liability to pay acquisition tax pursuant to the “ de facto acquisition” under Article 105(2) of the former Local Tax Act is established on the date of actual payment (see Supreme Court Decisions 2003Du10343, Jan. 13, 2005; 2005Du1360, May 11, 2007; 2013Du18018, Jan. 23, 2014; and thereafter, even if the de facto purchaser completed the registration of ownership transfer due to sale of the real estate, it is merely a case where the actual purchaser satisfies the requirements for acquisition tax payment on the outstanding date, 130.

This legal doctrine applies likewise to cases where a person who actually acquired real estate by paying the purchase price in full completed the registration of ownership transfer under the name of a title trustee pursuant to a three-party registered title trust agreement, and thereafter completed the registration of ownership transfer under his own name. The reasons are as follows.

(1) In the case of a title trust registered between a title truster and a title trustee who takes over real estate, and executes a title trust agreement between the title truster and the title trustee, the title truster concludes a sales contract with the seller as a party to the sales contract, and pays the purchase price, and the legal effect pursuant to the sales contract is also attributed to the title truster. The Act on the Registration of Real Estate under Actual Titleholder’s Name (hereinafter “Real Estate Real Name Act”) does not have any provision denying the validity of the sales contract between the seller and the title truster, and it is difficult to deem that the sales contract is null and void. As such, in a third-party registered title trust, the status of the title truster is no fundamental difference from that of the general sales contract. There is no legal ground to deem that Article 105(2) of the former Local Tax Act does not apply to the title truster of the third-party registered title trust. Accordingly, if the title truster concluded a sales contract for real estate and paid the purchase price in full, acquisition tax liability is established as of the outstanding payment date.

(2) Even if a title truster completed the registration of ownership transfer under the name of a title trustee, not under his/her name, after the real estate was actually acquired, such registration is merely an circumstance that occurred after the establishment of a liability to pay acquisition tax. Moreover, a title truster’s tax liability to pay acquisition tax, and registration under the name of a title trustee, pursuant to Article 4(1) and the main text of Article 4(2) of the Real Estate Real Name Act, is null and void. Therefore, it cannot

(3) In the case of a three-party registered title trust, the title truster and the subsequent registration are null and void, while the sales contract between the seller and the title truster are valid. As such, the title truster may file a claim for the registration of ownership transfer pursuant to the sales contract with the seller, and may seek the cancellation of the registration under the name of the title trustee, which is null and void by subrogation of the seller, to preserve the seller’s right to claim for the registration of ownership transfer (see Supreme Court Decision 2001Da61654, Mar. 15, 2002). This supports that the title truster’

(4) In a three-party registered title trust, even if the title truster completed the registration of ownership transfer from the seller’s name on the real estate after the registration of ownership transfer was cancelled under the name of the title trustee, this is merely a reason for the initial sale, and it is merely an additional requirement for the acquisition of ownership on the real estate in which the actual acquisition was made on the outstanding payment date. Moreover, the fact that the title truster, instead of being transferred the registration of ownership from the seller due to the initial sale, was in the form of immediately transferring the registration of ownership from the title trustee, cannot be evaluated differently as above. Therefore, it cannot be deemed that a new liability for acquisition tax exists on

B. The lower court recognized and determined the following facts.

(1) On December 18, 2006, the Plaintiff purchased each of the instant land from the mobilization ready-mixed Co., Ltd. and paid the total purchase price, and completed the registration of ownership transfer on December 27, 2007 under the name of the Nonparty, who is his employee, pursuant to the three-party registered title trust agreement, and paid the acquisition tax, etc. on January 10, 2008 under the name of the Nonparty.

(2) On November 8, 201, the Defendant imposed acquisition tax, etc. on the Plaintiff on the ground that the Plaintiff was the actual acquisitor of each of the above land, and the Plaintiff paid the said acquisition tax, etc. on November 30, 201.

(3) On May 10, 2012, the Plaintiff reported and paid acquisition tax, etc. to the Defendant after completing the registration of ownership transfer based on “sale on April 13, 2012” as to each of the above lands.

(4) On October 19, 2012, the Plaintiff filed a claim for rectification with the Defendant for the return of acquisition tax, etc. already reported and paid, on the ground that “the acquisition tax, etc. was paid twice following the acquisition of each land above.” On October 23, 2012, the Defendant rendered the instant disposition rejecting the said claim for rectification.

(5) The Plaintiff’s completion of the registration of ownership transfer under one’s name on each of the above lands is not because the Plaintiff newly acquired each of the above lands from the Nonparty pursuant to a separate sales contract, but merely constitutes a new acquisition because it satisfies the formal requirements for the acquisition of ownership after the purchase price was paid in full and the purchase price was actually acquired. Therefore, the instant disposition made on a different premise is unlawful.

C. Examining the records in accordance with the aforementioned provisions and legal principles, such determination by the lower court is justifiable. In so doing, it did not err by misapprehending the legal doctrine on the title truster’s duty to pay acquisition

2. As to the ground of appeal on the scope of revocation of the instant disposition

The gist of this part of the grounds of appeal is that even if the Plaintiff satisfied the formal requirements for acquisition of ownership after the Plaintiff actually acquired each of the instant land, the registration tax and the local education tax amount equivalent to the amount of the registration tax may be denied, since the registration was made not on the ground of acquisition. However, this is the first assertion made during the final appeal, and thus, cannot be a legitimate ground

3. Conclusion

Therefore, the appeal is dismissed, 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, except for a dissenting opinion by Justice Ko Young-han, Justice Kim Shin, Justice Lee Ki-taik, Justice Kim Jae-hyung, and Justice Cho Jae-chul, and a concurrence with the Majority by Justice Kim Chang-suk and Justice Kim So-young, and a concurrence with the Dissenting

4. Dissenting Opinion by Justice Ko Young-han, Justice Kim Shin, Justice Lee Ki-taik, Justice Kim Jae-hyung, and Justice Cho Jae-chul

The conclusion of the instant case depends on whether the title truster is liable to pay acquisition tax based on “actual acquisition” on the outstanding payment date, even though registration made under the name of the title trustee was made in the name of the title trustee when the former owner completed the registration of ownership transfer of real estate in the name of the title trustee in the name of the title trustee in the name of the third party registered title trustee. As to the Majority Opinion affirming this, we cannot agree with the Majority Opinion in light of the nature of acquisition tax as a distribution tax, the amendment process of the Local Tax Act, the status of the title trustee in the third party registered title trust, the scope of application of Article 105(2) of the former Local Tax

A. Acquisition tax is a kind of distribution tax in which the person who acquired real estate takes advantage of the fact of the transfer of goods and imposes tax on the person who acquired the real estate by taking advantage of the fact that the transfer of goods is a transfer of goods, and it does not impose profits from the use, profit, or disposal of the real estate. Therefore, “acquisition of real estate” under Article 105(1) of the former Local Tax Act includes all cases where the person who acquired the real estate acquires real estate in the form of transfer of ownership regardless of whether the person who acquired the real estate acquires the ownership substantially complete ownership (see, e.g., Supreme Court Decision 200Du7896, Jun. 28, 2002). In such purport, the Supreme Court determined that the transfer of real estate by taking advantage of money, or the transfer of ownership of the real estate by providing the real estate as a transfer for security, and the transfer of ownership is completed in the name of the creditor after paying the loan, and that the registration of ownership transfer constitutes acquisition tax subject to acquisition tax (see, e.g., Supreme Court Decision 7009Nu198.

B. The registration tax is a tax imposed on a person who is subject to registration, on the ground that the mere fact of the acquisition, transfer, change, or extinction of a property right or other rights is a tax imposed on a person who is subject to registration, in the case of registration in the public book. Such registration tax is not related to whether the registration or enrollment is void or substantially reverted to a right. As such, even if the registration or enrollment is void after the registration or enrollment is different from the nominal owner of the registration or the actual title holder of the rights, or once registered in the public book, the above reason does not affect the duty to pay registration tax according to the registration or enrollment (see Supreme Court Decision 200Du7896, Jun. 28, 2002). The Local Tax Act originally prescribed the acquisition tax as a tax item separate from the registration tax, but the local tax law was wholly amended by Act No. 10221, Mar. 31, 2010; it was also integrated into the acquisition tax rate based on the premise that the acquisition tax was acquired, and its nature should be adjusted by the tax revision of the previous local tax system.

C. Meanwhile, even if the purchaser satisfied the form of registration of ownership transfer, it cannot be deemed that there was a valid acquisition if it is invalid from the initial date (see Supreme Court Decision 2013Du2778, Jun. 28, 2013). However, registration under the name of the title trustee in a three-party registered title trust should be deemed different from registration of invalidation of general cause.

Article 4(2) main text of the Real Estate Real Name Act provides that any change in the real right to real estate made by a registration made pursuant to a title trust agreement shall be null and void under paragraph (3) of the same Article, but the invalidation thereof shall not be asserted against a third party. In such cases, any bona fide or bad faith by a third party cannot be held, which is, where a title trustee arbitrarily disposes of real estate held in a title trust, a title trustee acquires ownership even if he/she knew of the fact of the title trust. On the other hand, in cases of a general invalidation registration, even if a title trustee disposes of real estate registered in a title trust, the other party may not acquire ownership. In such a case, registration made in the name of a title trustee is distinguishable from registration invalidation of general cause. In that sense, to the extent that a title trustee’s transfer of property right is effective in a third party’s future, a title trustee may be deemed to have acquired the status to dispose of real estate held in a valid manner. Furthermore, in the area of “transfer of goods” where a title trustee acknowledges the ability to pay acquisition tax based on the title.

D. If a title trustee disposes of trust real estate to a third party at will, as seen earlier, the third party acquires ownership effectively, and thus becomes liable to pay acquisition tax as a matter of course. However, if a title trustee is deemed not liable to pay acquisition tax on a third party who acquired real estate based on registration under the name of a title trustee even if the registration of ownership transfer in the name of a title trustee is established, it would result in the conclusion that a title trustee who holds registration, which is the premise for such acquisition, does not constitute acquisition tax liability on a title trustee. Such form goes against the nature of acquisition tax, which recognizes and imposes tax on the transfer itself whenever the property is transferred in the process of distributing the property.

E. Article 105(2) of the former Local Tax Act provides that the acquisition of real estate, etc., which is an object of acquisition tax, shall be deemed to have been acquired even if the acquisition is not performed without registration, etc. under the Civil Act or other relevant Acts and subordinate statutes. The foregoing provision provides that a seller and a purchaser, who enters into a bilateral transaction between a seller and a buyer, shall be deemed to have been acquired if the purchaser actually acquired the real estate, even though the purchaser has paid the purchase price and completed the registration of ownership transfer under his/her own name, even if the purchaser could acquire the real estate, and even if the purchaser fails to meet the formal requirements for acquisition of ownership, such as registration, in order to prevent any unreasonable taxation of acquisition tax, if the purchaser fails to arbitrarily adjust the timing of establishment of liability for acquisition tax, or fails to meet the substantive requirements for acquisition of ownership, such as registration, for the purpose of preventing any unreasonable unreasonable occurrence of the requirement of establishment under the Civil Act. In other words, the foregoing provision does not stipulate whether a taxpayer is liable to pay acquisition tax or who is liable to pay the remainder of ownership transfer registration.

In the case of a three-party registered title trust, the title truster does not withhold or avoid the registration under his/her name in order to adjust the timing of establishment of acquisition tax liability, and the acquisition tax paid by the title trustee while completing the registration of ownership transfer under the name of the title trustee is generally borne by the title truster. Therefore, the title truster of a three-party registered title trust is not subject to Article 105(2) of the former Local Tax Act.

F. Where a person intends to register due to the acquisition of real estate in practice, acquisition tax shall be paid and paid until the registration is made. Accordingly, in the case of a three-party registered title trust, a title truster shall pay and pay acquisition tax in his/her name while completing the registration of transfer of ownership in the name of a title trustee, and thereafter, a title truster is paying and paying acquisition tax even when the registration of transfer of ownership is made in the name of a title truster or a title truster. As such, deeming that the liability to pay acquisition tax is established for each registered titleholder when the registration is made in the name of a title trustee or a title truster. Accordingly, deeming that each registered titleholder is liable to pay acquisition tax accords with the general public’s awareness of tax payment. Furthermore, the legal relationship regarding acquisition tax is clear based on the registration of legal relationship, thereby assisting taxpayers in the tax payment convenience of taxpayers and reducing the expenses incurred by local governments in separately imposing and collecting acquisition tax. It also accords with the purport of the amendment

G. In light of the aforementioned various circumstances, even in cases where a title trustee received the registration of real estate from a seller under a three-party registered title trust agreement after the enforcement of the Real Estate Real Name Act, the liability to pay acquisition tax on the ground of “acquisition” under Article 105(1) of the former Local Tax Act shall be deemed to be established, regardless of the validity of such registration. In such cases, even if the title truster concluded a real estate sales agreement and paid the purchase price in full, it cannot be deemed that the liability to pay acquisition tax under the “actual acquisition” under Article 105(2) of the former Local Tax Act exists even if the title truster concluded a real estate sales agreement and paid the purchase price, and thereafter, if the title truster cancelleds the registration under the name of the title trustee, and transfers the ownership registration under the initial sales agreement or directly transfers the ownership registration from the title trustee, the title truster becomes liable to pay acquisition tax on the ground of “acquisition” under Article 10

H. As can be seen, in a three-party registered title trust, a title truster and a title truster are liable to pay acquisition tax at the time of completing the registration of transfer of ownership in the future, and the title truster is not liable to pay acquisition tax on the balance payment date. Therefore, even if the fact of title trust is revealed after the registration, acquisition tax cannot be imposed again on the title truster on the ground of “actual acquisition.” In such cases, it would be sufficient to impose penalty surcharges or non-performance penalty under the relevant Act on the violation of the Real Estate Real Name Act. In short, if a title truster registers under his/her name after completing the registration in the name of a title trustee, both the liability to pay acquisition tax is established, and the title truster is obliged to pay acquisition tax at the time of completion of each registration. On the other hand, according to the Majority Opinion, even if a title truster registers under his/her name after completing the registration in the name of a title trustee, the liability to pay acquisition tax is established only once on the outstanding payment date. In such case, deeming that acquisition tax is established only once more than once paid when acquisition tax is actually paid

I. Ultimately, when the Plaintiff registers the transfer of ownership to each of the instant land in its name, it should be deemed that the Plaintiff is liable to pay acquisition tax following such registration. Therefore, even though the instant disposition rejecting the Plaintiff’s request for correction is lawful, the lower court’s judgment that deemed it unlawful on different premise is erroneous, thereby adversely affecting the conclusion of the judgment, and thus,

For the foregoing reasons, we express our concurrence with the Majority Opinion.

5. Concurrence with the Majority by Justice Kim Chang-suk and Justice Kim So-young

In this case, when a title truster who purchased real estate and paid the purchase price completed the registration under the name of a title trustee pursuant to a three-party registered title trust agreement, and thereafter completed the registration under his/her own name, the question is when the title truster is liable to pay acquisition tax. The Majority Opinion is that the status of a title truster is established on the outstanding payment date pursuant to Article 105(2) of the former Local Tax Act, and the Dissenting Opinion is established on the fixed date. Since the status of a title truster is not different from the status of a purchaser of a general sales contract, the Majority Opinion’s logic that the legal doctrine in the general sales contract is applied as it is to the fact that the liability to pay acquisition tax is established on the outstanding payment date and the new liability to pay acquisition tax is not established on the fixed date.

A. The legal effect of the transfer of ownership of real estate does not take place if a registration is not completed because the real right to real estate becomes effective by a juristic act. However, even if a registration is not completed without the acquisition of ownership of real estate, if the substance of acquisition exists, it is necessary to enhance equity in taxation by imposing a tax on a place where a tax-bearing force exists in the field of tax law. Article 14(1) of the former Framework Act on National Taxes (amended by Act No. 9911, Jan. 1, 2010) provides that the ownership of income, profit, property, act, or transaction subject to taxation is merely nominal, and a separate person to whom such ownership actually belongs exists, and Article 82 of the former Local Tax Act provides that the aforementioned principle shall be applied mutatis mutandis to legal relations concerning local taxes. Furthermore, the former Local Tax Act provides that the acquisition of real estate shall be deemed to have been actually acquired even if a registration is not performed pursuant to the Civil Act, and thus, it shall be deemed that the provisions on taxation of acquisition tax are clearly established based on the principle of substantial taxation.

Meanwhile, in a case where a title truster purchased real estate and completed the registration under the name of a title trustee pursuant to a title trust agreement, the registration is null and void, and the ownership is still deemed null and void, and the title truster is entitled to file a claim for the registration of ownership transfer concerning the relevant real estate with the seller. Such status of the title truster is entirely different from the status of the buyer in the general sales contract without registration. Therefore, Article 105(2) of the former Local Tax Act naturally applies

According to the Dissenting Opinion, if the purchaser of real estate fully pays the purchase price, if the purchaser is a title truster of a three-party registered title trust, then the obligation to pay acquisition tax is established only when the purchaser registers under the name of the title trustee, and if the purchaser is not a title truster but a general purchaser, the obligation to pay acquisition tax is established on the outstanding payment date pursuant to Article 105(2) of the former Local Tax Act. However, in cases where the tax authority, which imposed the purchaser who did not make the registration even after the payment of the purchase price, claims that “it is scheduled to register under the name of the title trustee, so there is no obligation to pay acquisition tax,” the Dissenting Opinion takes advantage of the difficult problem to determine whether the acquisition tax liability is established among the title truster and the title trustee. In this case, if the title truster is not liable for acquisition tax, and the tax authority is obliged to pay acquisition tax from the title trustee by entering into the registration under the name of the title trustee, it is questionable when the purchaser satisfies another issue, such as whether the purchaser is scheduled to resell the registration under title trust or whether the registration is not registered.

B. It is difficult to deny that acquisition tax has the nature of distribution tax that recognizes and imposes tax-bearing capacity on the fact that it is the transfer of property. However, unlike registration tax, acquisition tax is not subject to the simple existence of fact, such as registration or enrollment, but is subject to the acquisition of property. In other words, acquisition tax can be classified as distribution tax in the sense that it is taxed on the face of transfer or distribution of property. However, since acquisition tax is subject to taxation on the acquisition of property through such transfer, it is necessary to examine whether there was a tax-bearing capacity to justify the imposition of acquisition tax due to such transfer.

However, even if the acquisition act appears to exist on the external basis, where the act of acquisition becomes null and void, it cannot be deemed that there exists an effective acquisition that serves as the premise for the realization of the ability to pay taxes. Therefore, in such a case, the requirements for taxation of acquisition tax cannot be satisfied, and no liability for payment of acquisition tax should be established. Ultimately, deeming that a liability for payment of acquisition tax is established if a registration is completed on the sole ground of the nature as a distribution tax without considering the act of causing acquisition or the validity of registration based thereon, without considering the underlying nature of acquisition tax.

Meanwhile, the Supreme Court affirms the establishment of acquisition tax liability in cases where the ownership registration of real estate is transferred through the transfer of security for a bond is valid because the contract to establish a security for transfer and the registration of ownership transfer is valid. However, given that a title trust agreement and the registration under the name of a title trustee pursuant to a title trust agreement are invalid, it cannot be treated equally as the transfer of security. Therefore, it cannot be interpreted that the establishment of acquisition tax liability should be determined depending on whether a title trust agreement satisfies

In addition, on the ground that the Civil Act adopts the requirement of establishment as to the change in real right to real estate, it is difficult to determine whether a title trustee is liable to pay acquisition tax, disregarding Article 105(2) of the former Local Tax Act explicitly stipulating that “If a real estate is actually acquired even if a registration under the Civil Act is not performed, the liability to pay acquisition tax is established” and solely on the basis of registration. It is more so taking account of the fact that a title trustee cannot acquire ownership of the real estate under the Real Estate Real Name Act even

In short, the Dissenting Opinion’s interpretation that, in the case of a three-party registered title trust, the establishment of acquisition tax liability should be determined based on the registration is unreasonable as it clearly violates Article 105(2) of the former Local Tax Act.

C. The acquisition tax and registration tax are generally classified as distribution tax if it is classified based on the taxable object indicating the tax-bearing capacity. However, the essence of the relevant tax cannot be determined on the basis of such classification, and each tax classified as distribution tax differs from each other. Therefore, the nature of the tax is bound to be determined by considering the taxation requirements, etc. by each item of tax. However, while the registration tax is subject to the simple fact of registration or registration, while the acquisition tax is subject to the acquisition of the property, the two characteristics of the two taxes, such as the acquisition of the property subject to taxation. Where the Supreme Court recognizes the establishment of the registration tax liability in the event of invalidation of the registration of ownership transfer, the establishment of the registration tax liability is denied for such reason.

Upon the amendment of the Local Tax Act on March 31, 2010, the portion of the previous registration tax under the premise of acquisition and the acquisition tax were integrated, and the tax rate was adjusted by combining the existing registration tax rate and the acquisition tax rate. However, such amendment is merely the simplification of tax items in the case of real estate acquisition with ordinary registration, and it does not intend to stipulate the nature of acquisition tax differently from that of the past. This is also known through no change in the taxation requirement of acquisition tax, except for the tax rate. Furthermore, the Local Tax Act did not combine both by absorbing the acquisition tax into registration tax, but only abolished registration tax and adjusted the acquisition tax rate. Accordingly, solely because the acquisition tax rate was adjusted by adding the previous registration tax rate, the intrinsic nature of the acquisition tax cannot be emphasized, disregarding the original nature of the registration tax and emphasizing only the character of the registration tax.

D. According to the Real Estate Real Name Act, the registration under the name of the title trustee and the change in the real right to real estate, which was made based on the registration, are null and void, and thus, are not entirely different from the registration under the name of the title trustee. However, in a case where the title trustee disposes of the real estate to a third party at will, the third party acquires the ownership of the real estate, and in this respect, there is difference from the registration under the general invalidity of cause. However, such a third party’s effective acquisition of the real estate is merely the result that the Real Estate Real Name Act provides that the title trust agreement and the invalidation of the registration pursuant thereto shall not be asserted against the third party in order to promote the safety of transaction. In other words, the third party’s acquisition of the real estate held in a trust is merely a violation of the title trust agreement and the invalidation of the registration pursuant thereto. Therefore, it cannot

Meanwhile, there is no ground to deem that acquisition tax liability is established for a third party who acquired real estate based on the registration under the name of a title trustee. As seen earlier, even if a third party acquires ownership of real estate held in a trust based on the registration under the name of a title trustee, the title trustee does not acquire ownership, and thus, the title trustee is not liable to pay acquisition tax.

In addition, the fact that a title trustee arbitrarily disposes of the trusted real estate to a third party cannot be considered as a general phenomenon. In such an exceptional case, establishing a legal doctrine that a title trustee is liable to pay acquisition tax on the ground of the legal effect of an exceptional case is a weak logic.

E. In the case of a three-party registered title trust, acquisition tax is deemed to have been paid when the registration was made under the name of the title trustee and the title truster. However, this is only the result formed by the relevant parties to the title trust as a general transaction in order to conceal the fact of the title trust. In other words, in a general transaction, the tax authority is aware of the acquisition by registering the real estate purchaser, and the acquisition is also effective, barring any special circumstance, on the premise that the acquisition by the tax authority is paid when the registration is made, barring any special circumstance. Therefore, it cannot be deemed that a tax liability is established when acquisition tax is actually paid and paid based solely on such other similar appearance

The establishment of acquisition tax liability should be objectively determined depending on whether the requirements for taxation are satisfied, and it does not depend on the appearance of a taxpayer’s illegal intent. Considering that acquisition tax liability is established at the time a title trustee, etc. filed and paid acquisition tax on the ground that a title trustee, etc. paid and paid acquisition tax as above, it would result in permitting illegal acts violating the Real Estate Real Name Act to the tax law, and it is difficult to deem it reasonable from the perspective of harmony with the overall legal order. In registering under the name of a title trustee, the issue of reporting and paying acquisition tax to conceal illegal acts, even if there is no objective obligation to pay acquisition tax

F. The Dissenting Opinion argues that it is unreasonable to view that a title truster’s liability to pay acquisition tax is established only once on the outstanding payment date, even if the registration was made twice and acquisition tax was paid twice by the title truster through the title trustee.

However, as a title trustee only possesses registration without any validity pursuant to an invalid title trust agreement, it cannot be deemed that a title trustee is liable to pay acquisition tax. On the contrary, the title truster is liable to pay acquisition tax because the title truster actually acquired the relevant real estate by concluding a sales contract with the seller and paying the purchase price. Furthermore, deeming that the title truster’s liability to pay acquisition tax is established on the outstanding payment date, rather than on the registration date, is reasonable as it is based on the express text of Article 105(2) of the former Local Tax Act, which is based on the substantive principle.

As can be seen, the establishment of tax liability ought to be objectively determined based on whether the tax liability satisfies the taxation requirements stipulated by the tax law upon the request of the principle of no taxation without representation, and it is not determined based on whether the act was unlawful or not, and the need to impose sanctions thereon. It is not possible to impose tax even if the act of violating the law did not meet the taxation requirements on the ground that the act of violating the Real Estate Real Name Act was committed. The punishment on the act of violating the Real Estate Real Name Act

G. The fundamental issue of the Dissenting Opinion is that: (a) in the case of a sales contract involving a title trust, the liability to pay acquisition tax is recognized depending on the appearance formed with an unlawful intent; (b) in the case of a general sales contract other than that, the liability to pay acquisition tax is recognized when the substance of acquisition is recognized pursuant to Article 105(2) of the former Local Tax Act; (c) thereby causing serious confusion in the imposition of acquisition tax by recognizing the liability to pay acquisition tax. If there is no clear ground to accept the legal doctrine of why acquisition tax or the principle of substantial taxation should be separately interpreted in the case of an illegal title trust, it is difficult to assert its validity

As above, I express my concurrence with the Majority Opinion.

6. Opinion concurring with the Dissenting Opinion by Justice Kim Shin

In the case of a three-party registered title trust, such as the instant case, the issue is whether the title truster who purchased real estate pays the purchase price (the first-party page), the phase of registration made under the name of the title truster (the second-party page), and the phase of registration re-registration made under the name of the title truster (the third-party page) after the completion of the purchase price. The Majority Opinion holds that the liability to pay acquisition tax is established on the face of a title truster who did not make a registration, and that the liability to pay acquisition tax is not established on the face of a title trustee or a title truster who makes a registration under the name of the title truster (the second and third-party page page). On the contrary, the Dissenting Opinion is that there is no liability to pay acquisition tax on the face of a title truster who pays the purchase price (the first-party page page), and each

The Dissenting Opinion argues that a person who registers is obligated to pay acquisition tax as a matter of course and accords with the public’s awareness of tax payment and tax payment reality of the person who pays acquisition tax on such premise. According to the Dissenting Opinion, the legal relationship of acquisition tax is based on the registration of registration, and there are advantages that can resolve disputes over the establishment of tax liability, or that tax authorities can minimize expenses incurred in imposing or collecting acquisition tax. Not only the advantages in the tax practice but also the theoretically reasonable point is as mentioned in the Dissenting Opinion, referring to the nature of acquisition tax as a distribution tax, the status of a title trustee in a three-party registered title trust, and the scope of application of Article 10

In view of the Majority Opinion, even if there is a somewhat light view to the Majority Opinion, the outcome of the opinion would be likely to cause confusions to the taxation site by putting the advantages that would be gained when following the Dissenting Opinion. Furthermore, even though legislators revised the Local Tax Act to the effect that acquisition tax liability is established at the time of registration by integrating registration tax and acquisition tax, the Majority Opinion’s attitude that would not accept the purport of the amendment and reject the past precedents is difficult.

As above, I express my concurrence with the Dissenting Opinion.

Justices Kim Young-soo (Presiding Justice)