Changwon District Court-2018-Gu Group-1600 ( October 20, 2019)

(former quoted in the previous judgment)In order to reduce and exempt self-defense, at least 1/2 of the farming work must be cultivated with its own labor;

(previous Quotation) It is not sufficient to recognize that the evidence presented by the plaintiff alone cultivated or cultivated not less than 1/2 of the farming work with its own labor force.

Article 69 of the Restriction of Special Taxation Act (Reduction or Exemption of Transfer Income Tax for Self-Cultivating Farmland)

Busan High Court (Chowon) 2019Nu10514 Revocation of Disposition to Impose Transfer Income Tax

Maap○

Kim Jong-soo

Changwon District Court Decision 2018Gudan1600 Decided February 20, 2019

August 21, 2019

September 18, 2019

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance is revoked. The transfer income tax reverted to the Plaintiff on June 11, 2017, which the Defendant rendered to the Plaintiff on June 11, 2017

The imposition of KRW 152,458,114 shall be revoked.

1. Quotation of judgment of the first instance;

This court's reasoning is as stated in the reasoning of the judgment of the court of first instance except for the addition of the judgment on the matters asserted by the plaintiff in the court of first instance as stated in Paragraph (2) below. Thus, it is not sufficient to recognize that "the grounds for appeal by the plaintiff are not significantly different from the allegations in the court of first instance except for the "decision to add" in Paragraph (2) below, and that additional evidence (including evidence Nos. 11 through 17, number No. 17, number) is added in the court of first instance, and it is not sufficient to recognize that "the plaintiff has been engaged in cultivation of crops in the land of this case or cultivated or cultivated with his own labor not less than half of farming work, and there is no other evidence to acknowledge this differently."

2. Determination on addition

A. The Plaintiff’s assertion (unconstitutionality of the Act on the Grounds of Disposition of this case)

1) Claim for infringement of property right

Article 95(4) proviso of the former Income Tax Act (amended by Act No. 1358, Dec. 15, 2015; hereinafter the same shall apply) which provides the basis for the disposition of this case "in the case of non-business land under Article 104-3, which is acquired and held before January 1, 2016, the period shall be reckoned from January 1, 2016 (hereinafter referred to as "the legal provision of this case")." The portion of "in the case of the non-business land under Article 104-3, which is acquired before January 1, 2016, the non-business land shall be deemed acquired before January 1, 2016, and the owner of the non-business land shall be entitled to special deduction for long-term possession after the expiration of at least three years from the date 2016 to December 20, 2016, which is determined to be unconstitutional and invalid as the owner of the land in this case's excessive disposition of land.

2) Claim of equality infringement

This case's legal provision provides that a person who transfers non-business land from January 1, 2016 to January 1, 2017 may not be granted special deduction for long-term holding on January 1, 2016. However, according to the revision of the Income Tax Act, a person who transfers non-business land after January 1, 2017 can be granted special deduction for long-term holding after being recognized the period of holding. Accordingly, the instant legal provision violates the principle of equality because the person who transfers non-business land from January 1, 2016 to January 1, 2017 and the person who transfers non-business land after December 31, 2016 are treated as discrimination without reasonable grounds. Therefore, the instant disposition based on the law of this case, which is unconstitutional and invalid, is also unlawful.

(b) Related statutes;

Attached Form is as shown in the attached Form.

C. Determination

1) Legislative history of the legal provisions of this case

A) The Income Tax Act amended by Act No. 7837 on December 31, 2005 set the transfer income tax rate of the land for non-business use as 60/100 (Article 104(1)2-8). After several revisions, the said tax rate was maintained as it is for the land for non-business use transferred from January 1, 2007 to December 31, 2013. During the said period, the special deduction for long-term possession of the land for non-business use was not applied.

B) The Income Tax Act amended by Act No. 9672 on May 21, 2009 stipulated that the transfer income tax rate of 60/100 shall not apply to the non-business land transferred from March 16, 2009 to December 31, 2013 in order to normalize the real estate transaction and revitalize the economy, and that the income tax rate of 60/10 shall apply to the non-business land except for the real estate owned for less than two years (hereinafter referred to as "short-term holders") on global income of residents under Article 55(1) of the Income Tax Act (hereinafter referred to as "basic tax rate"). The special deduction for long-term possession of the non-business land was not applied during the above period.

C) The Income Tax Act amended by Act No. 12169, Jan. 1, 2014 stipulated the tax rate calculated by adding 10/100 to the basic tax rate for capital gains on non-business land (Article 104(1)8). However, the enforcement of the said provision was postponed from January 1, 2014 to December 31, 2015, and the basic tax rate was applied in principle during the said period except for short-term holding assets. During the said period, the special deduction for long-term possession of land for non-business purposes was not applied.

D) Article 104(1)8 of the Income Tax Act amended by Act No. 1358 on December 15, 2015 decided to terminate the deferment of taxation of capital gains for non-business land according to the real estate market situation at the time, and stipulated the period from January 1, 2016 to December 31, 2016 by adding ten percent to the basic tax rate based on the tax base (Article 104(1) Subparagraph 8). Meanwhile, the aforementioned Act allows a resident to obtain special deduction for long-term holding even in cases where the resident transfers the non-business land, the period of possession of which is acquired on or before January 1, 2016 (Article 95(2)), and Article 104(1) of the Income Tax Act (amended by Act No. 10651, Jan. 1, 2016) to be calculated from January 1, 2016 to December 31, 2016 (Article 104(1)8) of the Act)201.

E) The Income Tax Act amended by Act No. 14389, Dec. 20, 2016, increased the maximum transfer income tax rate for non-business land to 50 percent (Article 104(1)8). The said tax rate was applied to non-business land transferred from January 1, 2017 to December 31, 2017.On the other hand, the said Act, with respect to the calculation of the special deduction for long-term holding, provides that the period of possession of non-business land shall be calculated from the date of acquisition of the relevant assets, even in cases of non-business land by eliminating the instant legal provisions (the main sentence of Article 95(4)).

2) Determination on the assertion of infringement of property rights

A) Criteria for review

Today, since taxes have various functions such as re-distribution of income, proper distribution of resources, and adjustment of the economy, it is necessary to make comprehensive policy decisions throughout the whole nation, such as financial, economic, and social policies, in determining the citizens' tax burden. Whether to provide for tax laws or regulations is a matter to be determined by policy and technical decisions based on accurate data on the actual state of national finance, social economy, national income, people's lives, etc., so this can be said to be left to a policy and technical decision based on the legislative formation discretion of the legislator (see Constitutional Court Order 200Hun-Ba54, Dec. 20, 2001).

Since special deduction for long-term holding gives a kind of tax benefits to taxpayers by inducing the long-term holding of real estate so that they can reduce real estate speculation and facilitate efficient utilization of land by specially deducting a certain amount from gains on transfer of assets, thereby calculating capital gains subject to taxation (see Constitutional Court Order 96HunBa80, Jul. 22, 1999). As to the formation of specific contents, such as physical and visual scope, limits of deduction, methods of deduction, etc., in which deduction is allowed, broad legislative discretion is recognized. Therefore, the decision of the legislative body should be respected unless it is clearly unreasonable or unfair (see Constitutional Court Order 2007HunBa13, Jul. 31, 2008).

Ultimately, it is reasonable to determine whether the legal provision of this case violated the Plaintiff’s property right or not, depending on whether it deviates from the limit of legislative discretion (see Constitutional Court Order 2009HunGa22, Mar. 31, 201).

B) Determination

Since land is limited goods, it is necessary to restrict its ownership and use for the public interest purpose in order to maximize its utility by efficiently using it. Since effective use of land is impeded if short-term speculation takes place on land, it is necessary to prevent it and induce its users to use it for production activities while holding land for a long time. The special deduction for long-term holding is a system that particularly deducts a certain amount in calculating gains on transfer of long-term holding real estate in order to restrain real estate speculation and promote efficient utilization of land (see Constitutional Court Order 96HunBa80, Jul. 22, 199). Such special deduction for long-term holding is a principle that the period of possession should be calculated from the date of acquisition of assets [see Supreme Court Decision 1358, Dec. 15, 2015; Supreme Court Decision 200Hun-Ba16, Dec. 20, 2016; Constitutional Court Decision 2010Hun-Ba16, Jul. 27, 2016; Constitutional Court Decision 2017Da36106.

The Income Tax Act: (a) increased the rate of capital gains tax on land for non-business on January 1, 207; (b) increased 1.2. At the same time, the transfer income tax rate of 1.0% from 2.0% to 1.0% of the acquisition of land for non-business purposes was 2.0% of the acquisition of land for non-business purposes, 1.0% of the total amount of capital gains tax to 1.0% of the acquisition of land for non-business purposes, 1.0% of the total amount of 1.0% of the acquisition of land for non-business purposes, 2.0% of the total amount of capital gains tax for non-business purposes, 1.0% of the acquisition of land for non-business purposes, 2.0% of the total amount of capital gains tax for non-business purposes, 1.0% of the acquisition of land for non-business purposes, 2.0% of the total amount of capital gains tax for non-business purposes, 1.0% of the acquisition of land for non-business purposes.

In addition, in accordance with the legal provisions of this case, the owner of land for non-business use satisfies the requirements that he/she should hold at least three years after January 1, 2016, and thus, he/she can benefit from the special deduction for long-term possession, which was completely excluded before the enforcement of the legal provisions of this case. Thus, the taxpayer may reduce the tax burden by adjusting the timing of transfer according to his/her choice.

In addition, since January 1, 2017, the period of holding the special deduction for long-term holding is calculated from the date of acquisition of the pertinent asset, the Plaintiff is in an unfavorable position compared to the transferor of land for non-business (see Article 95(4) of the Income Tax Act (amended by Act No. 14389, Dec. 20, 2016); Article 14 of the Addenda of the Income Tax Act (Act No. 14389, Dec. 20, 2016). As long as the economic situation differs and the real estate taxation policy differs respectively at the time of the legislation, the legitimacy of the legal provisions of this case is not lost solely on the ground that the legislative decision changed after the legislative decision.

In full view of the above, the legal provision of this case cannot be deemed to have violated the Plaintiff’s property right by deviating from the limit of legislative discretion (see Constitutional Court Decision 2017HunBa517, 2018HunBa200, 267, Nov. 29, 2018). The Plaintiff’s assertion on this part is rejected.

3) Determination as to the assertion of equality infringement

The Plaintiff asserts that there exists unreasonable discrimination between the transferor of non-business land from January 1, 2016 to December 31, 2016 and the transferor of non-business land after January 1, 2017, and therefore, the legal provision of this case infringes the Plaintiff’s right to equality. However, this is merely a result of the amendment of the legal provision of this case, not the discrimination arising from the legal provision of this case itself, but the subsequent amendment of the legal provision of this case (see Constitutional Court Order 2017Hun-Ba517, 2018Hun-Ba200, 267, decided November 29, 2018).

D. Sub-determination

Ultimately, since the legal provision of this case cannot be deemed unconstitutional and invalid, the disposition of this case based on this cannot be deemed unlawful.

3. Conclusion

Therefore, the judgment of the first instance court is just and the plaintiff's appeal is dismissed as it is without merit. It is so decided as per Disposition.