Seoul High Court 2008Nu17839 ( November 07, 2008)

National High Court Decision 2007J 2178 (Law No. 279, 2007)

Whether one house non-taxation requirement for one household is satisfied where a person acquires and transfers a house under the status of non-resident.

Since the plaintiff moved to a foreign country and became a non-resident in any case of the remaining payment date and registration date claimed by the plaintiff, the plaintiff acquired the apartment house of this case under the status of becoming a non-resident. Thus, it does not fall under the non-taxation requirement for one house for one household.

The contents of the decision shall be the same as attached.

Article 1 of the Income Tax Act: Scope of houses for one household under Article 154(1) of the Enforcement Decree of the Income Tax Act within the scope of house for one household under Article 154(1) of the Enforcement Decree of the Income Tax Act at the time of transfer or acquisition under Article 89 of the Income Tax Act, Article 71(1) of the Enforcement Rule of the Income Tax Act

The appeal is dismissed.

The costs of appeal are assessed against the Plaintiff.

All of the records of this case and the judgment of the court below and the grounds of appeal were examined. However, the grounds of appeal on the grounds of appeal are not included in the grounds stipulated in each subparagraph of Article 4(1) of the Act on Special Cases Concerning the Procedure for Appeal, and the appeal is dismissed pursuant to Article 5 of the same Act. It is so decided as per

[Seoul High Court Decision 2008Nu17839 ( November 07, 2008)]

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked.

On April 20, 2007, the Defendant rendered a disposition of refusal against the Plaintiff’s request for a refund of KRW 72,680,40 for the capital gains tax belonging to the year 2006, ○○-dong, 465 ○○-dong, 465 ○○○ apartment, ○○-dong, ○○○○ apartment, ○○○

The court's explanation on this case is the same as the reasoning of the judgment of the court of first instance, and thus, citing this as it is in accordance with Article 8 (2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act

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

[Insuwon District Court 2007Guhap10618 (2008.06.04)]

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s refusal disposition against the Plaintiff on April 20, 200, ○○○○○-dong 000, 000 ○○○○-dong 00, 000 dong-dong 2006, 72,680, 400 capital gains tax for the year 2006, is revoked.

1. Details of the disposition;

A. On June 15, 2001, the Plaintiff entered into a sales contract with ○○○○○○○○○, ○○○○○-dong, 000 ○○ apartment, 000 00 dong (hereinafter “instant apartment”), and completed the registration of ownership transfer on August 1 of the same year.

B. Meanwhile, the Plaintiff moved to New Zealand on July 26, 2001, before completing the registration of ownership transfer on the instant apartment.

C. On January 31, 2006, the Plaintiff completed the registration of ownership transfer for the apartment of this case to Nonparty ○○ apartment reconstruction project association based on trust. On October 16 of the same year, the Plaintiff transferred the right to move into the apartment of this case to Nonparty Red○○ and ○○○○ on October 16 of the same year. On the 15th of the same month, the Plaintiff reported and paid KRW 72,680,400 for the transfer income tax for the year 2006 following the said transfer.

D. On February 5, 2007, the Plaintiff filed a claim for correction on the ground that the transfer of the right to move into the apartment of this case constitutes a transfer of one house for one household which is exempt from capital gains tax, and that the transfer income tax already paid was refunded. On April 20, 2007, the Defendant issued the instant disposition rejecting the said application on the ground that it does not constitute one house non-taxation requirement for one household since the Plaintiff acquired and transferred the apartment of this case as a non-resident’s status after the Plaintiff moved to a foreign country.

[Ground of recognition] A without dispute, Gap evidence 1, 2, Gap evidence 3-1, 2, Gap evidence 4-7, Gap evidence 8-1, 2, 3, Gap evidence 9, Eul evidence 1, Eul evidence 1, Eul evidence 1, witness Lee ○'s testimony, and the purport of whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) Since the Plaintiff purchased the instant apartment and moved to a foreign country while the intermediate payment was made, it can be deemed that it actually acquired the apartment of the instant case before moving to a foreign country. Therefore, even in such a case, it constitutes one house for one household under Article 89 (1) 3 of the Income Tax Act, and thus, the instant disposition rejecting a request for correction to refund the transfer income tax even though it constitutes a non-taxable object

(2) The Plaintiff left the Republic of Korea before completing the registration of ownership transfer on the instant apartment on September 14, 1999 with trust of the established rules posted by the National Tax Service on its website (Re-date 46014-1684). Thus, the instant disposition is against the principle of trust protection.

(3) If there is a case where capital gains tax is not imposed on the transfer of completed apartment after moving abroad during the intermediate payment of apartment, the instant disposition is against the principle of equality or the principle of self-regulation of administration.

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

(1) Whether the transfer of this case is exempt from capital gains tax

Article 89 (1) 3 of the Income Tax Act provides that income from the transfer of one house for one household as prescribed by the Presidential Decree shall be non-taxable; Article 154 (1) of the former Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 19327 of Feb. 9, 2006; hereinafter the same shall apply) which applies to the transfer of apartment house of this case under Article 30 (2) of the Addenda of the Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 19327 of the Income Tax Act) provides that "one house for one household" under Article 89 (1) 3 of the former Enforcement Decree of the Income Tax Act (amended by the Presidential Decree No. 19327 of Feb. 9, 2006; hereinafter the same shall apply) which belongs to a resident and his spouse who owns one house in Korea as of the date of transfer of the house at the same address or same, it shall be deemed that the period of possession of the house is non-taxable at the time of transfer under the former Enforcement Rule No. 14.7.

However, according to Article 98 of the Income Tax Act and Article 162 (1) of its Enforcement Decree, the time of acquisition of the relevant apartment shall be the date of liquidation of the price of the relevant asset, and if the date of liquidation is unclear, the date of receipt of registration recorded in the register if the date of acquisition of the relevant apartment is the date of settlement of the price, and it shall be the date of receipt of registration recorded in the register. Thus, as of July 31, 2001 or August 1 of the same year, which is the date of receipt of registration recorded in the register that the Plaintiff paid the remainder, and in any case, the Plaintiff moved into a nonresident and became a non-resident, the Plaintiff acquired and transferred the relevant apartment under the status of non-resident, and therefore, the Plaintiff’s transfer

(2) Whether the principle of trust protection is violated

According to the evidence Nos. 11-2 and 11-2, the National Tax Service, which was listed on the "established Rules on its website" column, posted a notice on December 31, 1992 that "in the event that all members of the household transfer the apartment after entering into the apartment sale contract and paying the proceeds of the sale, they moved abroad at the beginning of December 1994, while they paid the proceeds of the sale, they paid the proceeds of the sale in full on December 22, 1994, and made the registration of ownership transfer on March 27, 1995. The above apartment was transferred on November 19, 1998 after the three years passed, which is "whether the capital gains tax is not levied or not," and the above apartment was transferred on November 19, 198, which is not subject to transfer income tax under the Emigration Act, but it cannot be said that the plaintiff's request for correction was not in violation of the principle of public trust in this case.

(3) Whether the principle of equality is violated

On the other hand, there is no evidence to acknowledge that the Defendant exempted capital gains tax in the same case as the instant case, and the Plaintiff’s assertion on this part is without merit without further examination.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.

[Attachment List]

Relevant statutes

/ Income Tax Act

Article 1 Tax Liability

(1) Any individual who falls under any of the following subparagraphs shall be liable to pay income tax on his/her income under this Act:

1. Any individual who has a domicile in Korea or has a domicile in Korea for not less than one year (hereinafter referred to as "resident");

2. Any person who is not a resident (hereinafter referred to as "non-resident") and has income from domestic sources;

Article 89. Non-taxable Transfer Income

(1) No capital gains tax (hereinafter referred to as "capital gains tax") shall be levied on the following income:

3. Income accruing from transfer of such one house for one household as prescribed by the Presidential Decree (excluding expensive houses the value of which exceeds the standard prescribed by the Presidential Decree) and the appurtenant land within the area calculated by multiplying the area of land on which the building is built by the ratio as determined by region under the Presidential Decree (hereafter in this Article, referred to as the "land annexed to the

(2) Notwithstanding the provisions of paragraph (1), the provisions of subparagraph 3 of the same paragraph shall not apply to cases where one household prescribed by the Presidential Decree holds a house (including the land annexed to a house; hereafter the same shall apply in this Article) and the status of being selected as an occupant (limited to the status acquired (including that acquired from its members) as a member of a maintenance and improvement project association implementing a housing reconstruction project or a housing redevelopment project under the same Act, and including the land annexed thereto; hereinafter the same shall apply) that has been acquired by authorization for a management and disposal plan under Article 48 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents, and transfers the relevant house: Provided, That the same shall not apply to cases where it acquires a house to reside during the implementation period of a

In calculating gains on transfer of assets from transfer under Article 98, the time and time of such transfer shall be determined by Presidential Decree.

(1) The Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 19327 of Feb. 9, 2006)

§ 154. Scope of “one house for one household”

(1) The term “one house for one household prescribed by the Presidential Decree” in Article 89 (1) 3 of the Act means the case where a household comprised by a resident and his spouse together with the family members living together with him at the same address or same place of residence (hereinafter referred to as “one household”) in Korea as of the date of transfer and where the relevant house is held for not less than three years (in the case of a house located in the Seoul Special Metropolitan City, Metropolitan City, Si, and Si, and Do, which is designated and published as a planned area for housing site development under Article 3 of the Housing Site Development Promotion Act, the relevant house is held for not less than three years and the period of residence is not less than two years during the period of possession): Provided, That where one household possesses one house in Korea as of the date of transfer and falls under any of the following subparagraphs, the period of possession and residence shall not be restricted:

2. The case falling under one of the following subparagraphs. In this case, the remaining house and its appurtenant land which are transferred within two years from the relevant transfer date or expropriation date shall be deemed to be included in the case of item (a):

(c) Emigration or other cases prescribed by the Ordinance of the Ministry of Finance and Economy;

§ 155. Special case of “one house for one household”

Where one household [limited to the household possessing the existing house falling under Article 154 (1) as of the date of authorization of management and disposal plans under Article 48 of the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (where the existing house is removed before the date of authorization, the date of removal of the existing house)] possessing one association member's relocation right under the provisions of the main sentence of Article 89 (2) of the Act (hereinafter referred to as the "association member's relocation right") transfers the relevant association member's relocation right, and where it falls under any one of the following subparagraphs, it shall be deemed as one house for one household under the provisions of Article 154 (1), notwithstanding the provisions of Article 94

1. Where no other house exists as of the transfer date;

Article 162 (Time of Transfer or Acquisition) (1) The time of transfer or acquisition under Article 98 of the Act shall be the date of liquidation of the price of relevant assets (in case where the transferee has agreed to pay the capital gains tax and additional tax of capital gains tax on the transfer of relevant assets, excluding such capital gains tax and additional tax of capital gains tax), except in the following cases:

1. Where the date on which the price is settled is not certain, the date of registration, receipt of registration, or transfer date entered in the register, registry, list, etc.;

2. Date of receipt of the registration entered in the register, register, list, etc. where the transfer of ownership (including the registration and the opening of the name) has been made before the price is settled;

Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 19327, Feb. 9, 2006)

§ 154. Scope of “one house for one household”

(1) The term "one house for one household prescribed by the Presidential Decree" in Article 89 (1) 3 of the Act means that a household comprised by a resident and his/her spouse together with the family members living together with him/her at the same address or same place of residence (hereinafter referred to as "one household") in the Republic of Korea as of the date of transfer, has one house for not less than three years (in cases of a house located in the Seoul Special Metropolitan City, Metropolitan City, Si, and Si, and Do, which is designated and publicly notified as a planned area for housing site development under Article 3 of the Housing Development Promotion Act, the period of possession of the relevant house shall be not less than three years and the period of residence shall be not less than two years during the period of possession): Provided, That where one household has one house in the Republic of Korea as of the date of transfer and falls under any of the following subparagraphs, the period of possession and residence shall not be restricted:

2. The case falling under any of the following items. In such cases, the remaining house and its appurtenant land which are transferred within two years from the relevant transfer date or expropriation date shall be deemed to be included in the cases of item (a):

(b) Where all members of a household depart from the country due to emigration under the Emigration Act: Provided, That it is limited to the transfer made within two years from the date of departure in cases where one house was held as of the date of departure;

(c) Where all members of a household depart from Korea due to such conditions as study or work needing continuous overseas residence for not less than one year: Provided, That it shall be limited to the transfer made within two years from the date of departure;

Article 30 (Transitional Measures concerning Scope of “One House for One Household”)

(2) Where all members of a household have left Korea due to such conditions as study or work needing continuous overseas residence under the Emigration Act at the time this Decree enters into force, and transfer of a house not later than December 31, 2007, notwithstanding the amended provisions of Article 154 (1) 2 (b) and (c), the previous provisions shall govern.

(1) Enforcement Rule of the Income Tax Act (amended by Ordinance of the Ministry of Finance and Economy No. 554 of April 17, 2007)

Article 71 Scope of “one house for one household”

(2) The term “overseas emigration and other cases prescribed by the Ordinance of the Ministry of Finance and Economy” in Article 154 (1) 2 (c) of the Decree means the case where the relevant house falls short of the retention period and residence period on the grounds falling under any of the following subparagraphs:

1. Where all members of a household depart the country for emigration under the Emigration Act;

2. Where all members of a household depart from the Republic of Korea due to such conditions as study or work needing continuous overseas residence for not less than one year;