Whether multiple houses transferred by a housing construction and sales business operator are eligible for value-added tax exemption.

The subjective circumstance that the current state of multi-user housing is used in the form of independent residence without obtaining permission for change of the purpose of use, can not be viewed as a "house below the scale of national housing under the Housing Act", and it cannot be viewed as a subject of value-added tax exemption.

Article 106 of the Restriction of Special Taxation Act, Article 51-2 of the Enforcement Decree of the Restriction of Special Taxation Act, Article 2 of the Housing Act

Daejeon District Court-2018-Gu 106783 Disposition to revoke the imposition of value-added tax.

AA

Daejeon Head of the District Tax Office

oly, 2019.06

8.21.20

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s KRW 75,389,590 of value-added tax for the second period of December 5, 2016 against the Plaintiff on December 5, 2017 (additional tax)

(including) revoke the disposition of imposition.

1. Details of the disposition;

A. On April 27, 2007, the Plaintiff registered a housing construction and sales business under the trade name of “BCD,” and on July 9, 2015, the Plaintiff newly constructed multi-use house 20 (hereinafter “instant house”) on the ground of 867 land (hereinafter “instant house”) and leased the registration of initial ownership after completing the registration of initial ownership. However, on December 7, 2016, the Plaintiff completed the registration of initial ownership transfer on the instant house to DD on October 26, 2016. On January 24, 2017, the Plaintiff submitted to the Defendant a written notification on the closure of business as of October 31, 2016.

C. On February 28, 2017, the Plaintiff filed a preliminary return on capital gains tax with the Defendant on February 28, 2017, but filed a global income tax return on September 13, 2017 as global income tax, however, an additional tax on the amount of income from

The value-added tax was not reported on the subject of tax exemption.

D. On December 5, 2017, the Defendant dealt with the Plaintiff’s reported portion of capital gains tax, and deemed that the sales revenue amount of the instant housing is not subject to value-added tax exemption, and imposed value-added tax of KRW 75,389,590 (including additional tax) on the Plaintiff on December 5, 2017 (hereinafter “instant disposition”).

E. On March 22, 2018, the Plaintiff filed an objection and filed an appeal with the Tax Tribunal. On October 1, 2018, the Tax Tribunal dismissed the said appeal.

[Ground of recognition] Facts without dispute, Gap evidence 1 to 5, Eul evidence 1, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) As the Plaintiff was unable to sell the instant housing, and was in a de facto discontinuance of the housing construction and sales business around the end of October 2015, and transferred the instant housing on December 7, 2016, which was after the closure of the housing construction and sales business as of October 31, 2016, the instant disposition based on the premise that the Plaintiff is a business operator under the Value-Added Tax Act is unlawful.

2) The instant house constitutes a multi-family house determined by Ordinance of the Ministry of Strategy and Finance in substance, such as only obtaining a building permit for the instant house, being equipped with bathing rooms and cooking facilities for each household, etc.

In addition, even if it is not a multi-family house for household affairs, it falls under the category of national housing which is less than 85 square meters per household and is subject to value-added tax exemption, and thus, the instant disposition imposing value-added tax on the sale of the instant house is unlawful.

B. Whether the Plaintiff constitutes a business entity under the Value-Added Tax Act

1) Relevant legal principles

Article 2 subparag. 1 and subparag. 3 subparag. 1 of the Value-Added Tax Act provide that a person who independently supplies goods or services for business purposes is a person liable for value-added tax, regardless of whether it is for profit-making purposes. Here, “person who independently supplies goods or services for business purposes” refers to a person who supplies goods or services for continuous and repeated intent with a business form sufficient to create added value. The commencement, discontinuance, etc. of such business shall be determined by the substance of the relevant fact regardless of legal registration or reporting. As such, even if a new building has been constructed during the period of possession as part of a real estate transaction as part of a business activity, it does not affect the business feasibility of the real estate transaction (see, e.g., Supreme Court Decisions 9Du7609, Oct. 24, 200; 2010Du8430, Sept. 9, 2010).

The aforementioned evidence, Gap evidence, Eul evidence Nos. 2 and Eul evidence Nos. 2 through 5, and the overall purport of arguments, are as follows. ① The plaintiff registered a business as a housing construction and sales business on Apr. 2, 2007, ② the plaintiff appears to have received intermediate payment and balance from DD after Oct. 31, 2016, which was indicated as the cessation date, ③ the plaintiff newly constructed multiple houses on September 201, 201 and sold them around September 2012. Since it is difficult to view that the plaintiff continued to build a new multi-use house on the ground of 817 land inCC-Gu CCC-dong 817, 201, the plaintiff's assertion that it was difficult to view that the plaintiff had continued to build a new multi-use house on Jan. 2, 2014 and sold it on Jan. 1, 2014, by constructing a new multi-unit house on the ground of CC-dong 189.

C. Whether sales of the instant housing are subject to value-added tax exemption

1) Relevant legal principles

A) According to Article 106(1)4 of the Restriction of Special Taxation Act, Articles 106(1)1 and 51-2(3) of the Enforcement Decree of the Restriction of Special Taxation Act, and Article 2 subparag. 3 of the former Housing Act (amended by Act No. 14344, Dec. 2, 2016; hereinafter the same shall apply), the supply of national housing and construction services for such housing prescribed by Presidential Decree is exempted from value-added tax. (2) The term “national housing and construction services for such housing prescribed by Presidential Decree” refers to housing smaller than the national housing size under the Housing Act (referring to the area based on the exclusive area per household in cases of multi-family houses prescribed by Ordinance of the Ministry of Strategy and Finance), and (3) The term “scale of the national housing” refers to housing the area of which used exclusively for residential purposes (referring to the area of exclusive residence) is 85 square meters or less per house or household (referring to the area of Eup or Myeon area other than the Seoul Metropolitan area under Article 2 subparag. 1 of the Seoul Metropolitan Area Readjustment Planning Act).

Meanwhile, pursuant to Article 2 subparagraph 1 of the former Housing Act and Article 2 subparagraph 2 of the Enforcement Decree of the Housing Act, "house" means a house with a structure wherein members of a household can carry on an independent residential life for a long time as well as land annexed thereto. <2> The types and scope of detached houses are the same as detached houses, multiple houses, and multi-family houses under subparagraph 1(a), (b), and (c) of attached Table 1 of the Enforcement Decree of the Building Act. Multi-family houses are built with a structure where many people can reside for a long time, such as a student or workplace within the scope of a house, and are not in the form of independent residence (referring to a bathing room for each house, but a cooking facility is not installed), and the total floor area used for one house is not more than 30 square meters and not more than 30 square meters, and multi-family houses are used for not more than 10 square meters of the total floor area of a building (excluding underground floors) and are used for not more than 6. The total floor area of a house for which is used for not more than 1.

B) Under the principle of no taxation without law, or the requirement for tax exemption or tax exemption, and the interpretation of tax laws shall be interpreted as the law, barring any special circumstance, and it shall not be allowed to expand or analogically interpret the tax laws and regulations with the benefit of taxpayers without reasonable grounds (see, e.g., Supreme Court Decision 2007Du21242, Feb. 14, 2008). In addition, it accords with the principle of fair taxation to strictly interpret the requirements for tax exemption (see, e.g., Supreme Court Decision 2007Du21242, Feb. 14, 2008). A national housing exempt from value-added tax under Article 106(1)4 of the Restriction of Special Taxation Act is limited to a building constructed for a housing purpose at least after obtaining a construction permit, and where it is remodeled into a housing without obtaining a permit for use after completing the construction inspection with a neighborhood living facility, even if its area constitutes a national housing scale (see, e.g., Supreme Court Decision 96Nu758, Jul.

2) Determination

In light of the contents and legal principles of the above related Acts and subordinate statutes, in full view of the following facts and circumstances that can be recognized by comprehensively taking into account the above evidence and the overall purport of the statements and arguments as stated in Gap's 6 through 10, the housing of this case cannot be deemed to constitute "national housing" under Article 106 (1) 4 of the Restriction of Special Taxation Act. Thus, the plaintiff's assertion on this part

A) Article 2 of the former Housing Act strictly distinguish between housing and its subordinate concepts, and the detached housing, multi-user housing, and multi-family housing, as shown in attached Table 1 of the Enforcement Decree of the Building Act, are divided into detached housing, multi-user housing, and multi-family housing. Multi-user housing and multi-family housing are different from each other. Since multi-family housing does not have the form of independent dwelling, which requires the installation of cooking facilities, and multi-family housing requires that 19 or less households reside, multi-family housing and multi-family housing shall not be deemed to have the same structure

B) The details of the building on the registry of the instant housing are indicated as three multi-story houses of reinforced concrete structure (20). The current status of the building on the building ledger is indicated as one-story multi-house (6), two-story multi-house (7), and three-story multi-house (7). The floor area of the first floor is 11.94 square meters, each room is equipped with independent bathing rooms and cooking facilities.

C) Meanwhile, the value-added tax provides that “the supply of goods” as one subject to taxation (Article 4 of the Value-Added Tax Act), and the issue of whether the supply of a building is subject to tax exemption is bound to be determined based on the objective type or use of the building at the time of the supply, in particular on the public account book. Although each room of the instant house is equipped with cooking facilities, the owners and occupants of the instant house may at any time not install cooking facilities according to the original multi-user housing requirements. Thus, interpreting that the taxation of value-added tax on the supply of goods differs depending on the existence of cooking facilities, etc. at any time at any time, would seriously undermine the legal stability of the tax relationship.

D) Ultimately, whether the supply of a house below the scale of national housing under the Housing Act, which is a tax-exempt requirement under the Restriction of Special Taxation Act, constitutes “supply of a house below the scale of national housing under the Housing Act” should be objectively determined according to the purpose of public record, such as building permission, approval for use, building management ledger, and real estate register, barring any special circumstances. “Housing below the scale of national housing under the Housing Act” constitutes only a building constructed by obtaining a building permit lawfully for the use of a house for the purpose of use of a house. On the contrary, even though any building was stated in the building management ledger and real estate register as multiple houses, it cannot be deemed as a “house below the scale of national housing under the Housing Act” solely on the sole basis that the current status is used as an independent residential form with bathing and cooking facilities

3. Conclusion

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