The meaning of "contract date" as stipulated in Article 79-3 (2) of the Enforcement Decree of the former Local Tax Act and the standard date for determining whether a person purchased real estate by consultation after the public announcement of the project is an absentee real estate owner (=public announcement of project authorization)

Article 79-3(2) of the former Enforcement Decree of the Local Tax Act (wholly amended by Presidential Decree No. 22395, Sep. 20, 2010) means only the date of contract before the authorization of the relevant project is granted, and it is reasonable to interpret that the “date of contract after the authorization of the relevant project is granted” does not include the “date of contract after the authorization of the project.” Therefore, it is reasonable to interpret that the relevant date of contract is determined as an absentee real estate owner by a person who purchased real estate, etc. after the authorization of the project is granted after the acquisition of the relevant real estate after the authorization of the

Article 109, paragraphs (1), and (2) of the former Local Tax Act (wholly amended by Act No. 1021, Mar. 31, 2010); Article 79-3 (2) of the Enforcement Decree of the Local Tax Act (wholly amended by Presidential Decree No. 22395, Sept. 20, 2010)

Eglblfing Co., Ltd. (Law Firm Snbling, Attorneys Yu-ju et al., Counsel for the plaintiff-appellant)

Kimpo-market

Seoul High Court Decision 2012Nu21446 decided November 14, 2012

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

The grounds of appeal are examined.

1. Details of relevant regulations and relevant legal principles

A. Details of the relevant provisions

Article 109(1) main text of the former Local Tax Act (wholly amended by Act No. 10221, Mar. 31, 2010; hereinafter “Local Tax Act”) provides that “Where a person who has obtained a project approval to expropriate land, etc. under the provisions of relevant Acts and subordinate statutes enters into a contract for real estate, etc. to be acquired by the person who has purchased, expropriated, or removed real estate, etc., or obtains a building permit and acquires real estate, etc. in an area under the classification of the following subparagraphs within one year from the date the compensation is finally received, acquisition tax on such acquisition shall not be imposed,” and Article 109(2) provides that “Where an absentee real estate owner prescribed by the Presidential Decree acquires real estate by substitution, notwithstanding the provisions of paragraph (1), the acquisition tax shall

Article 79-3(2) of the former Enforcement Decree of the Local Tax Act (wholly amended by Presidential Decree No. 22395, Sep. 20, 2010; hereinafter “Enforcement Decree of the Local Tax Act”) provides that “A resident or a business operator (including a corporation) who does not actually reside or operate a business even if he/she had a resident or a business registered for more than one year since the date of contract or the date of the public announcement of the public announcement of the project under the relevant Acts and subordinate statutes, is an absentee real estate owner as prescribed by Presidential Decree under Article 109(2) of the Local Tax Act.”

Meanwhile, Article 127-2 (2) of the Local Tax Act provides that "No registration tax shall be imposed on the registration or enrollment of real estate, etc. for which acquisition tax is not levied under Article 109."

B. The pertinent legal doctrine

(1) The amendment process of the relevant provisions

Article 109(1) of the former Local Tax Act prior to the amendment by Act No. 4995 of Dec. 6, 1995 provides that a substitute acquisition due to the expropriation of land, etc. shall be limited to the case where a contract for real estate, etc. to be acquired as substitute after the public announcement of the project is made. The person who purchased the real estate, etc. in his/her possession before the public announcement of the project is made through consultation is not eligible for non-taxation, such as acquisition tax. The Supreme Court interpreted that a public project operator’s acquisition by consultation with an inmate is not applicable to the case where “the person who purchased the real estate, etc. to whom the land, etc. can be expropriated” in the language and text of the above provision, on the ground that a public project operator means only the acquisition by consultation with the inmate based on the right of expropriation after the public announcement of the project approval (see Supreme Court Decision 95Nu4889 delivered on December 5,

Accordingly, the former Local Tax Act, amended by Act No. 4995 of Dec. 6, 1995, actively cooperates in the implementation of a project and, in order to include the case of entering into a contract with respect to the real estate to be replaced after the date of acquisition through consultation prior to the date of the public announcement of the project approval, as well as the case of entering into a contract with respect to the real estate to be replaced after the date of the public announcement of the project approval, Article 109(1) of the former Enforcement Decree of the Local Tax Act provides that “the case of entering into a contract with respect to the date of the contract or the real estate to be replaced after the date of the public announcement of the project approval shall be subject to the exemption of acquisition tax, etc.” Furthermore, Article 79-3(2) of the former Enforcement Decree of the Local Tax Act, amended by Presidential Decree No. 15211 of Dec. 31, 1996, the scope of the

(2) The legal doctrine on Article 79-3(2) of the Enforcement Decree of the Local Tax Act stipulating an absentee real estate owner

As above, considering the following factors along with Article 109(1) of the Local Tax Act and Article 79-3(2) of the Enforcement Decree of the Local Tax Act, the term “contract date” as provided in Article 79-3(2) of the Enforcement Decree of the Local Tax Act means only the contract date before the authorization of the relevant project is granted, and it is reasonable to interpret that “the contract date after the authorization of the relevant project is granted” does not include “the contract date after the acquisition of real estate by consultation is made. Therefore, the reference date to determine whether a person who purchased real estate after the authorization of the relevant project is an absentee real estate owner because he/she had not registered his/her business continuously for one year prior to the date of the authorization of the

① In light of the language and text of Article 109(1) of the Local Tax Act, “the date of a contract” refers to the date when the executor of a public-service project does not have the authority to expropriate land, etc. in response to “after the date of the public-service approval.” If the date of the above public-service approval becomes the date of a contract after the public-service approval is given, it would not be necessary to keep the phrase “the date of a contract.” Therefore, the term “the date of a contract” under Article 109(1) of the Local Tax Act refers to only the date of a contract before the public-service approval is given. Moreover, the term “the date of a contract” under Article 79-3(2) of the Enforcement Decree of the Local Tax Act refers to the same meaning as “the date of a contract” under Article 109(1) of the Local Tax Act is natural

② The purport of non-taxation of acquisition tax, etc. on substitute acquisition due to land expropriation, etc. lies in providing support for residents or business operators who inevitably lose base of livelihood or basis of a project due to expropriation, etc. from a tax policy perspective (see Supreme Court Decision 2008Du19864, Dec. 23, 2010). However, inasmuch as it is not necessary to exempt acquisition tax, etc. on real estate acquired by substitution, such as where real estate is acquired with prior knowledge of a project implementation plan in advance, the aforementioned provision stipulates that a person, etc. who is not registered as an absentee real estate owner for a given period based on the “contract date or business approval date” as an absentee real estate owner. If a person purchased real estate through consultation after the project approval date is determined as to whether a business registration, etc. has been made for a certain period based on “contract date,” the said provision goes against the purport of excluding non-taxation of acquisition tax, etc. as it can escape from the requirement of absentee real estate owner by late responding to the acquisition through consultation.

2. Judgment on the grounds of appeal

The court below held that the "contract date" stipulated in Article 79-3 (2) of the Enforcement Decree of the Local Tax Act means only the contract date after the public announcement date of the project approval, and held that the basic date to determine whether a person who has obtained the project approval has not been registered as an absentee real estate owner since one year before the public announcement date of the project approval is the public announcement date of the project approval. Furthermore, the court below rejected the Plaintiff's assertion that the Plaintiff should be determined as an absentee real estate owner as of the contract date, because the Plaintiff was an absentee real estate owner who is an absentee real estate owner, who is not eligible for non-taxation of acquisition tax, etc., as of the date of the public announcement of the project approval.

The judgment of the court below is just and acceptable as it is in accordance with the above legal principles, and there are no errors in the misapprehension of legal principles as to the scope of application under Article 79-3 (2) of the Enforcement Decree of the Local Tax Act, or in contradiction in the grounds, as alleged in the grounds of appeal. The grounds of appeal cannot

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.

Justices Ko Young-han (Presiding Justice)