[1] In a case where the statute does not contain any transitional provision while partially amending the statute, whether the transitional provision of the Addenda to the previous statute becomes invalid (negative in principle)

[2] Whether Article 36(2) of the Addenda of the Restriction of Special Taxation Act (amended by Act No. 9272 of Dec. 26, 2008) Article 36(2) applies even after the effect of the Restriction of Special Taxation Act (affirmative)

[1] The whole amendment of statutes is the same as the repeal of existing statutes and the enactment of new statutes, barring any special circumstance, it is no longer applicable to acts after the new statutes become effective as well as the transitional provisions of the Addenda. However, in the case of partial amendment, the transitional provisions of the Addenda to the existing Acts and subordinate statutes are not effective as a matter of course unless there are special measures, such as the amendment or deletion of the transitional provisions of the previous Acts and subordinate statutes or the establishment of a separate provision replacing them.

[2] The form and purport of the amendment of the Restriction of Special Taxation Act (amended by Act No. 9272, Dec. 26, 2008; hereinafter “the amended Act”); the amendment did not amend or delete Article 36(2) of the Addenda of the Restriction of Special Taxation Act (amended by Act No. 7839, Dec. 31, 2005; hereinafter “former Addenda provision”); and Article 133(2) of the former Act provides the transfer of Article 133(2) of the former Act to “Article 133(1)2” does not purport to fundamentally change the method of calculating the limit of reduction and exemption; Article 29 of the Addenda of the amended Act provides matters concerning the application of Article 133 of the former Act; and Article 29 of the Addenda of the amended Act does not clearly change the application of the former Addenda provision even after the amendment becomes effective.

[1] Article 133(2) of the former Restriction of Special Taxation Act (amended by Act No. 7845 of Jan. 2, 2006) (see current Article 133(1)2 of the Restriction of Special Taxation Act), Article 133(1)2(a) and (b) of the former Restriction of Special Taxation Act (amended by Act No. 9276 of Dec. 29, 2008), Article 36(2) of the Addenda of the Restriction of Special Taxation Act (amended by Act No. 7845 of Dec. 26, 2008), Article 29 of the Addenda of the Restriction of Special Taxation Act (amended by Act No. 7845 of Jan. 2, 2006), Article 133(2) (see current Article 133(1)2 of the Restriction of Special Taxation Act, Article 133(2)2 of the former Addenda of the Restriction of Special Taxation Act (amended by Act No. 9276 of Dec. 29, 2008)

[1] Supreme Court Decision 2001Du11168 decided Jul. 26, 2002 (Gong2002Ha, 2091)

Plaintiff (Law Firm Completion, Attorneys Choi Sung-sung et al., Counsel for plaintiff-appellant)

Head of Seocho Tax Office

Seoul High Court Decision 2010Nu38020 decided July 12, 2011

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

Unless there are special circumstances, since the whole amendment of statutes is the same as the repeal of existing statutes and the enactment of new statutes, it is no longer applicable to acts after the new statutes become effective as well as the transitional provisions of the Addenda. However, in the case of a partial amendment of statutes, there is no transitional provisions in the amended statutes unless there are special measures, such as the amendment, deletion, or establishment of a separate provision replacing the transitional provisions of the Addenda of the existing statutes, the transitional provisions of the previous statutes do not automatically become effective (see, e.g., Supreme Court Decision 2001Du1168, Jul. 26, 2002).

Article 133(2) of the Restriction of Special Taxation Act (amended by Act No. 7839, Dec. 31, 2005; hereinafter “the former Act”) newly established the provision on “limit of reduction or exemption of capital gains tax calculated by adding five taxable periods to five taxable periods,” and Article 69 (Reduction or Exemption of Capital Gains Tax for Self-Cultivating Land) and Article 70 (Reduction or Exemption of Capital Gains Tax for five taxable periods, the amount of capital gains tax shall be reduced or exempted only within 100 million won in total during five taxable periods,” and the latter part of Article 36(2) of the former Act provides that “The upper limit of reduction or exemption shall be calculated by adding up the amount of capital gains tax to the amount of tax to be reduced or exempted in the preceding four taxable periods and the amount of capital gains tax to be reduced or exempted in the preceding four taxable periods” (Article 133(2) of the latter part of the Act provides that “The upper limit of reduction or exemption of capital gains tax pursuant to Article 69 of the former Act shall not be added up (hereinafter “the foregoing provision”).”

However, the Restriction of Special Taxation Act (amended by Act No. 9272, Dec. 26, 2008; hereinafter “the amended Act”) stipulates that Article 133(2) of the former Act shall be transferred to “Article 133(1)2.” From January 1, 2007, Article 133(2) of the former Act intends to extend the scope of capital gains tax reduction and exemption in consideration of the increase of taxpayers’ tax burden by calculating gains from transfer on the basis of the actual transaction price as a matter of principle, and imposing capital gains tax as a result of imposing capital gains tax on the basis of the actual transaction price. (a) newly sets forth in subparagraph (b) of Article 70 as “one hundred million won for the aggregate of five taxable periods for capital gains tax reduction and exemption under the provisions of Articles 69 and 70”, while Article 29 of the Addenda provides that “The provisions of this case’s amended Act (amended by Presidential Decree No. 20350, Feb. 26, 2008).

In full view of the above form and purport of the amendment, the amendment does not amend or delete the supplementary provisions of the former Act, and the provision of Article 133(2) of the former Act to “Article 133(1)2” is merely the structure of the relevant provisions, and it appears not to be the purpose of fundamentally changing the method of calculating the limit of reduction and exemption, and the supplementary provisions of the amended Act clearly stipulate matters concerning the application of Article 133 of the amended Act, and it cannot be seen as a substitute provision of the supplementary provisions of the former Act, it is reasonable to deem that the supplementary provisions of the former Act does not become null and void after the enforcement of the amended Act.

Nevertheless, the lower court determined that the instant disposition is lawful, on the ground that, in calculating transfer income tax on each of the instant land that the Plaintiff transferred to September 9, 2008 and October 28, 2008, on the ground that, insofar as there is no separate provision corresponding to the supplementary provision of the former Act in the amended Act, it would not apply the supplementary provision of the former Act after the amendment took effect, the Defendant’s disposition of this case, which calculated the maximum amount of reduction and exemption stipulated in Article 133(1)2(b) of the former Act without applying the supplementary provision of the former Act, was lawful. In so determining, the lower court erred by misapprehending the legal doctrine on the validity of the transitional provision of the previous supplementary provision following the partial amendment of the Act, which affected the conclusion of the judgment, and the allegation in the grounds of appeal assigning this error is with merit.

Therefore, the judgment of the court below is reversed, and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Jo Hee-de (Presiding Justice)