Article 110 Subparag. 1 proviso of the Local Tax Act amended by Act No. 9302, Dec. 31, 2008; Article 73(5) of the Enforcement Decree of the Local Tax Act amended by Presidential Decree No. 21217, Dec. 31, 2008; and Article 73(5) of the Enforcement Decree of the Local Tax Act is “acquisition of real estate for non-members from among real estate for partnership houses acquired from members of a housing association, etc. with money trusted by a cooperative and completed the registration of transfer of ownership

Notwithstanding the provisions of the Local Tax Act (wholly amended by Act No. 1021, Mar. 31, 2010; hereinafter “the amended Act”) amended by Presidential Decree No. 21217, Dec. 31, 2008; the contents and developments leading up to the amendment of the Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 22251, Jul. 6, 2010; hereinafter “amended Enforcement Decree”) which purchased real estate from a partner with money trusted by a housing association, etc. and completed the registration of ownership transfer in its name, deeming the acquisition tax as acquisition tax to be imposed on real estate under Article 10 of the former Enforcement Decree of the Housing Act (wholly amended by Act No. 9302, Dec. 31, 2010; hereinafter “former Act”) as acquisition tax imposed on real estate under the name of partner or non-member, and thus, it still does not constitute an object of the amended proviso to Article 10 of the former Enforcement Decree of the Housing Act to be imposed on real estate Association.

Article 104 subparag. 8 (see current Article 6 subparag. 1), Articles 105(1) (see current Article 7(1)), 105(2) (see current Article 7(2)), and 111(7) (see current Article 10(7)), Article 110 subparag. 1 (see current Article 9(3)), the former Local Tax Act (wholly amended by Act No. 9302, Dec. 31, 2008); Article 73(1) (2) (see current Article 7(2) and (8) (see current Article 7(8)), and Article 111(7) (see current Article 10(7)), Article 110 subparag. 1 (see current Article 9(3)), the former Enforcement Decree of the Local Tax Act (Amended by Presidential Decree No. 21217, Dec. 31, 2008); Article 73(2) (2) (2) (see current Article 710(2) and (3) (2) of the former Enforcement Decree of the Local Tax Act).

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Doz., Counsel for plaintiff-appellant)

Freeboard Regional Housing Association

The Nam-gu Incheon Metropolitan City

Seoul High Court Decision 2010Nu21053 decided November 26, 2010

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

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. According to Article 105(1) and (2) and Article 104 subparag. 8 of the former Local Tax Act (amended by Act No. 9302, Dec. 31, 2008; hereinafter “former Act”), acquisition tax is imposed on a person who acquires or acquires real estate, etc. Here, the term “acquisition” refers to acquisition by means of sale, exchange, inheritance, donation, investment in kind to a corporation, construction, reclamation of public waters, creation of land through reclamation, and any other similar acquisition without compensation which is deemed original acquisition, succession, or acquisition without compensation. Meanwhile, Article 105(10) of the former Enforcement Decree of the Act is not a housing association under Article 32 of the Housing Act and a housing reconstruction association under Article 16(2) of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (hereinafter collectively referred to as the “Housing Association, etc.”), and it is deemed that the former Enforcement Decree of the Housing Association is a real estate for which members acquire or without compensation, and it is deemed that it constitutes one piece of real estate and accessory to be established.

Meanwhile, the main text of Article 110 Subparag. 1 of the former Act provides that acquisition tax shall not be imposed when a trustee acquires trust property from a truster by a trust, etc., and the main text of the proviso provides that “acquisition of trust property between a housing association, etc. and a partner of a housing association, etc.” shall not apply to “acquisition of trust property between a housing association, etc.” under the proviso. This proviso is based on the purport that acquisition of real estate by a housing association, etc. shall be deemed to have been acquired by a partner pursuant to Article 105(10) of the former Act even if it is acquired by a trust method. Thus, “acquisition of trust property between a housing association, etc. and a partner of a housing association, etc.” under the proviso above does not mean transfer of trust property between a housing association, etc. and all partners of a housing association, etc., but is interpreted to mean transfer of trust property, i.e., transfer of real estate by a member of a housing association, etc., under Article 105(10) of the former Act.

However, the proviso of Article 110 Subparag. 1 of the Local Tax Act (wholly amended by Act No. 9302, Mar. 31, 2010; hereinafter “the amended Act”) newly established Article 73(5) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 21217, Dec. 31, 2008; hereinafter “amended Enforcement Decree”) to exclude the application of the main text from “acquisition of real estate for non-members of a housing association, etc.” as the subject of the exclusion from the application of the main text. Moreover, the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 22251, Jul. 6, 2010; hereinafter “amended Enforcement Decree”) newly established that “where a housing association, etc. acquires land that is not attributed to its members while conducting a housing construction project, it shall be deemed that it has acquired such land on the date it under Article 29 of the Housing Act.”

Article 110 Subparag. 1 of the former Enforcement Decree of the Housing Act provides that acquisition tax shall be imposed, regardless of the proviso of Article 110 Subparag. 1 of the former Act (see, e.g., Supreme Court Decision 98Du10950, May 30, 200) on the acquisition of real estate for non-members of a housing association, etc. as the housing association, etc. purchased in money from its members and completed the registration of ownership transfer under its name without being whether it is a partner’s or non-member’s use. In light of the language and text, the proviso of Article 110 Subparag. 1 of the former Enforcement Decree of the Housing Act provides that acquisition tax shall not be imposed on the acquisition of real estate for non-members of a housing association, etc., regardless of whether it is a partner’s use or non-member’s use, and it shall not be deemed that the housing association, etc., which acquired real estate under the name of Article 110 Subparag. 1 of the Enforcement Decree of the Housing Act and Article 75 of the Enforcement Decree of the Housing Act is still imposed on the housing association.

2. Review of the reasoning of the lower judgment and the evidence duly admitted by the lower court reveals the following facts.

① The Plaintiff is a regional housing association established pursuant to Article 32 of the Housing Act for the purpose of a joint housing construction project. From February 24, 2004 to March 9, 2006, the Plaintiff purchased the entire project site of this case, including the land for non-members, and completed the registration of ownership transfer in the name of the Plaintiff, and reported and paid the acquisition of the entire project site including the land for non-members.

② The Defendant imposed acquisition tax and special rural development tax on April 23, 2009 on the Plaintiff’s partner who acquired the entire project site of this case, including the land for non-members. The Plaintiff, who acquired the entire project site of this case, is liable to pay acquisition tax and special rural development tax. The Plaintiff, on May 11, 2009, imposed imposition of acquisition tax of KRW 263,508,980 and special rural development tax of KRW 26,350 and KRW 26,350,780 on the apartment newly constructed in the entire project site of this case, by acquiring the land for non-members of this case after undergoing the inspection of use under Article 29 of the Housing Act (hereinafter collectively referred to as the “disposition of this case”). The Plaintiff, on March 31, 2009, imposed imposition of acquisition tax of KRW 869,570 and additional rural development tax of KRW 86,950,950 (hereinafter referred to as the “disposition of this case”).

3. Examining these facts in light of the legal principles as seen earlier, the Plaintiff’s acquisition of the land for non-members from February 24, 2004 to March 9, 2006, including the date of actual payment or registration of the remainder of non-members’ land. Thus, the Plaintiff’s acquisition of land for non-members of the instant non-members, and the Plaintiff’s acquisition of new apartment on March 31, 2009, on the premise that the Plaintiff acquired the land for non-members of the instant non-members’ non-members’ land on March 31, 2009, which was the date of usage inspection under Article 29 of the Housing Act.

4. The court below's reasoning is somewhat insufficient, but its conclusion that the disposition of this case is unlawful is just, and there is no error of law by misunderstanding the proviso of Article 110 subparagraph 1 of the amended Act or Article 73 (5) of the amended Enforcement Decree, which affected the conclusion of the judgment, as otherwise alleged in the ground of appeal.

5. 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 Ko Young-han (Presiding Justice)