[1] In a case where a party to a transaction of land or a building reported a real estate transaction under the former Act on Business Affairs of Licensed Real Estate Agents and Report of Real Estate Transactions, but fails to verify the appropriateness of the reported details pursuant to the real estate transaction price verification system, whether it falls under Article 111(5)5 of the former Local Tax Act (negative)

[2] In a case where a purchaser of a commercial building has reported the transaction of the commercial building to an administrative agency and received a certificate of completion of report on transaction of the commercial building, but failed to verify the appropriateness of the reported details due to the establishment of a system for verifying transaction price of the real estate, the case affirming the judgment of the court below that it does not fall under Article 11

[1] Articles 11(1), 111(2), and 111(5)5, and 130 of the former Local Tax Act (amended by Act No. 9302, Dec. 31, 2008; hereinafter the same), and Articles 27(1)1, 28(1), and 28(2) of the former Act on Business Affairs of Licensed Real Estate Agents and Report of Real Estate Transactions (amended by Act No. 9127, Jun. 13, 2008; hereinafter the “former Report of Real Estate Transactions Act”), comprehensively taking into account the legislative purport and legislative purport of Article 111(5) of the former Local Tax Act, the grounds listed in Article 111(5) of the former Local Tax Act are limited and limited requirements that can determine the tax base by acquisition price, even if a party to a transaction of land or building has reported real estate transactions in accordance with the former Report Act, the case does not constitute the requirements for Article 15(1)15(1)5) of the Local Tax Act.

[2] In a case where a purchaser of a commercial building with KRW 400 million filed a report on real estate transaction with an administrative agency and received a certificate of completion of report, but the Minister of Land, Transport and Maritime Affairs failed to establish a system for verifying real estate transaction prices and did not verify the appropriateness of the reported details, the case affirming the judgment below that the acquisition of the commercial building does not fall under Article 111 (5) 5 of the former Local Tax Act (amended by Act No. 9302 of Dec. 31, 2008) on the ground that the report on real estate transaction with respect to the commercial building was issued, and there was no other data to deem that the above verification was made.

[1] Article 11(1) and (2) of the former Local Tax Act (Amended by Act No. 9302, Dec. 31, 2008; see current Article 10(2)); Article 111(1)5 (see current Article 10(5) and Article 130 (see current Article 27(3)); Articles 27(1)1 and 28 of the former Licensed Real Estate Agents’ Business Affairs and Report of Real Estate Transactions Act (Amended by Act No. 9127, Jun. 13, 2008; see current Article 10(1) and (2) of the former Local Tax Act (Amended by Act No. 9302, Dec. 31, 2008; see current Article 10(5) and (2)5); Article 130 (2) of the former Licensed Real Estate Agents’ Business Affairs and Reporting of Real Estate Transactions Act (Amended by Act No. 9302, Dec. 31, 2008)

Plaintiff (Attorney Yoon-soo et al., Counsel for the plaintiff-appellant)

The head of Sungnam-si Subdivision

Seoul High Court Decision 2009Nu15731 decided November 24, 2009

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

The grounds of appeal are examined.

1. Article 111(1) and (2) of the former Local Tax Act (amended by Act No. 9302, Dec. 31, 2008; hereinafter the same) provide that "the tax base of acquisition tax shall be the value as at the time of acquisition, and the value as at the time of acquisition shall be the value reported by the acquisitor, but if there is no indication of reported or reported value or such reported value falls short of the current base value, it shall be based on the current base value." Paragraph (5) 5 of the same Article provides that "The actual acquisition price shall be the tax base of acquisition tax by submitting a report in accordance with Article 27 of the Business Affairs of Licensed Real Estate Agents and Report of Real Estate Transactions Act, and Article 130 of the former Local Tax Act provides the same purport as above with respect to the tax base of registration tax."

In addition, Article 27(1)1 of the former Business Affairs of Licensed Real Estate Agents and Report of Real Estate Transactions Act (amended by Act No. 9127, Jun. 13, 2008; hereinafter “former Report of Real Estate Transactions Act”) provides that the party who has entered into a sales contract for the land or building shall report the actual transaction price, etc. to the head of the Si/Gun/Gu having jurisdiction over the location of the land or building (hereinafter “report of Real Estate Transactions”) and Article 28(1) of the same Act provides that the Minister of Land, Transport and Maritime Affairs shall establish and operate a system to verify the transaction price of real estate, and the head of the Si/Gun/Gu shall verify the appropriateness of the report of real estate transactions in accordance with the system to verify the transaction price of the real estate

In full view of the language and text and legislative intent of the above provisions, the grounds listed in Article 111(5) of the former Local Tax Act are limited and limited requirements that can determine the tax base based on actual acquisition price. Even if a party to a transaction of land or building reported real estate transactions pursuant to the former Report on Real Estate Transactions Act, it is reasonable to deem that the case where the verification of the appropriateness of the details of the report is not made based on the real estate transaction price verification system does not constitute the requirements under Article 111(5)5 of the former Local Tax Act

2. (1) According to the reasoning of the judgment below, on June 5, 2008, the court below acknowledged that the Plaintiff purchased at KRW 400,00,00 the price of the 221-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong-dong (hereinafter “instant commercial building”). On July 18, 2008, the Plaintiff reported the acquisition tax and registration tax (hereinafter “instant disposition”) to the Defendant on July 18, 2008 based on the market price base of the instant commercial building as the tax base of KRW 2,318,17,720, etc.

In light of the above provisions and relevant legal principles and records, such determination by the court below is just, and there is no error in the misapprehension of legal principles as to the guarantee of property rights under the Constitution or Article 111(5)5 of the Local Tax Act, Articles 27 and 28 of the former Report of Real Estate Transactions Act.

(2) As the grounds of appeal, the Plaintiff asserts that since the Plaintiff reported the transaction of the instant commercial building and received the certificate of completion of report, it shall be deemed that the verification on the appropriateness of the reported details was made pursuant to Article 27(4) of the former Report on Real Estate Transactions Act, and even if not, the said verification was not made, since the Minister of Land, Transport and Maritime Affairs failed to establish a real estate transaction price verification system with respect to the commercial building, it shall be deemed that the said verification was made. However, Article 27(4) of the former Report on Real Estate Transactions Act only provides that if a party to the transaction of real estate files a report on real estate transaction and receives the certificate of completion of report, it shall be deemed that the confirmation was obtained pursuant to Article 3(1) of the former Report on Real Estate Transactions Act, and it shall not be deemed that the verification on the appropriateness

3. 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 on the bench.

Justices Lee In-bok (Presiding Justice)