Transfer income from the date of acquisition of a newly-built house shall not be calculated pursuant to Article 40 (1) of the Enforcement Decree of the Restriction of Special Taxation Act.

Article 40 (1) of the Enforcement Decree is a provision for reduction or exemption of capital gains tax on real estate subject to restructuring, and thus, the calculation of capital gains before the acquisition of real estate subject to restructuring does not take into account at all. Thus, it is inappropriate to use it in calculating the capital gains

2014Gu 103 Dodan103 Revocation of Disposition of Imposing Capital Gains Tax

OO

Deputy Director of the Tax Office

September 23, 2014

October 14, 2014

1. The Defendant’s imposition disposition of KRW 23,384,720 against the Plaintiff on April 1, 2013 shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order of the Gu office.

1. Details of the disposition;

A. On May 17, 1997, the Plaintiff acquired 22 square meters of land XX 266-1962 (hereinafter “former house”) and acquired 100 O apartment 520 Dong 1903 (hereinafter “new house”) through the redevelopment association on September 26, 2002. B. The Plaintiff transferred the new house of this case on September 20, 207, and filed a report on November 30, 207 by calculating the amount of capital gains tax calculated as 32,848,700 won as 10% pursuant to Article 99-3(1) of the former Restriction of Special Taxation Act (amended by Act No. 9272, Dec. 26, 2008; hereinafter the same).

C. The Defendant, on April 1, 2013, deemed that the transfer income amount before the date of acquisition of the newly-built house of this case does not fall under the tax reduction or exemption under the above Acts, and imposed and notified the Plaintiff of KRW 23,384,720 (including additional tax in bad faith for payment, KRW 8,092,596) in accordance with Article 40(1) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 21307, Feb. 4, 2009; Presidential Decree No. 21307, Apr. 1, 2013) by calculating the tax reduction or exemption amount as KRW 13,73,541 in the way of converting the total transfer income amount by using the standard market price, and by subtracting the excessive special rural development tax from the transfer income tax amount (hereinafter “instant disposition”).

Amount to be reduced or exempted (A) transfer income 】 (Standard market price at the time of the transfer of a newly-built house - Standard market price at the time of the transfer of a newly-built house) = A

The tax base of the abated or exempted tax amount (applicable to the tax base including the income subject to aggregate) 】 the reduced or exempted income amount A/ Transfer income tax = 13,733,541 won

D. The Plaintiff appealed and filed an appeal with the Tax Tribunal, but was dismissed on March 24, 2014.

[Reasons for Recognition] The Evidence Nos. 1, 2, 3, and 1 of Eul

2. Whether the disposition is lawful;

A. The plaintiff's assertion

(1) "Income accruing from transfer within five years from the date of acquisition" under Article 99-3(1) of the former Restriction of Special Taxation Act means all gains from transfer realized by the transfer of a newly-built house. The tax authorities have been operating the same view from this view to the time of the enactment of the National Tax Service's regulations in 2009 after the establishment of the above provision on reduction or exemption. The Defendant's disposition of this case retroactively applies new rules and is unlawful against the principle of protecting taxpayers' trust interests.

(2) Article 40(1) of the former Enforcement Decree of the Restriction of Special Taxation Act applies to the transfer of a newly-built house after the lapse of five years from the date of its acquisition, and such provision shall not apply to the transfer within five years from the date of its acquisition, as the Plaintiff

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) In principle, in a case where a cooperative association’s member implementing a housing redevelopment project or a housing reconstruction project provides the relevant association with the old house (including land annexed thereto) and transfers the newly-built house (including land annexed thereto), the transfer income tax shall be paid not only on the transfer margin from the date of acquisition of the newly-built house from the date of transfer to the date of transfer, but also on the transfer margin from the date of acquisition of the old house until the date of acquisition of the newly-built house (Article 100 of the Income Tax Act and Article 166 of the Enforcement Decree of the Income Tax Act). Article 99-3(1) of the former Enforcement Decree of the Restriction of Special Taxation Act provides for a clear preferential provision for tax reduction and exemption, and the relevant legal text shall be strictly interpreted in accordance with the principle of strict interpretation of tax laws and regulations. The income exempted under the above provisions is "income accruing from the transfer of the newly-built house within five years from the date of acquisition of the newly-built house to the date of transfer of the newly-built house." The purport of the above provision is to be excluded from the transfer income tax amount of the newly-built house within five years.

However, there is no statutory provision concerning the method of calculating the amount of tax to be reduced as follows, and the method of calculating the defendant's choice at the time of the instant disposition cannot be deemed legitimate.

(2) Whether Article 40(1) of the former Enforcement Decree of the Restriction of Special Taxation Act applies mutatis mutandis (A) Article 99-3(1) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 2010Du3725, Jun. 28, 2012) provides that capital gains shall be deducted from income subject to taxation in cases where a transfer is made within five years from the date of acquisition of a newly-built house. Therefore, in cases where a transfer is made within five years from the date of acquisition of a newly-built house, the tax base and tax amount may not be calculated by deducting capital gains applicable to cases where a transfer is made after five years from the date of acquisition of the newly-built house (see Supreme Court Decision 2010Du3725, Jun. 28, 2012). In addition, Article 99-3(4) of the former Enforcement Decree of the Restriction of Special Taxation Act, which applies mutatis mutandis Article 40(1) of the former Enforcement Decree of the Restriction of Special Taxation Act, which provides for the tax amount of a newly-built house.

(C) In addition, the calculation formula under Article 40(1) of the former Enforcement Decree of the Restriction of Special Taxation Act applies mutatis mutandis to the transfer after five years from the date of acquisition of a newly-built house, since there is no actual transfer value from the date of acquisition to the date of acquisition, it appears to be calculated in proportion to the ratio of the increase in the standard market price from the date of acquisition to the date of acquisition to the date of transfer to the date of acquisition. However, Article 40(1) of the Enforcement Decree is a provision for reduction and exemption of capital gains tax on real estate subject to restructuring, which is a provision for reduction and exemption of capital gains tax on real estate subject to restructuring before the date of acquisition of the newly-built house acquired through redevelopment and reconstruction, which is not suitable for use in calculating capital gains on the old house before the date of acquisition of the newly-built house acquired through redevelopment and reconstruction. For this purpose, "standard market price at the time of acquisition of the newly-built house at the time of acquisition by the mother and molecule of the newly-built house," and "standard market price at the newly-built house at the date of acquisition.

(D) Therefore, in rendering the instant disposition, the Defendant committed an unlawful act by applying Article 40(1) of the former Enforcement Decree of the Restriction of Special Taxation Act without any legal basis, and there is no other ground for calculating the amount of tax differently under the law. Therefore, the instant disposition cannot be entirely revoked.

3. Conclusion

Therefore, the plaintiff's claim is reasonable, and it is decided as per Disposition by admitting it.