Seoul Administrative Court 2013Gudan5671 (Law No. 10, 2013)

When applying Article 99-3 of the Restriction of Special Taxation Act, all the income accrued before and after the completion of the newly built house shall be reduced or exempted

Since the reasoning of the judgment in the first instance is the same as that of the written judgment, it shall be quoted in accordance with Article 8(2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act.

Article 99-3 of the Restriction of Special Taxation Act

2013Nu4599 Revocation of Disposition of Imposing capital gains tax

The AA

Head of Mapo Tax Office

Seoul Administrative Court Decision 2013Gudan5671 decided July 10, 2013

November 20, 2013

January 8, 2014

1. The defendant's appeal is dismissed.

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

1. Purport of claim

The Defendant’s disposition of imposition of capital gains tax OOOO on July 9, 2012 is revoked.

2. Purport of appeal

The judgment of the first instance is revoked. The plaintiff's claim is dismissed.

1. Quotation of judgment of the first instance;

This court's reasoning is as follows, except where the defendant added a judgment on the argument that the defendant emphasizes in particular or unsatisfyed in this court, and therefore it is identical to the entry of the reasons in the judgment of the court of first instance. Thus, this court's reasoning is cited in accordance with Article 8 (2) of the Administrative Litigation

2. Judgment on the defendant's assertion

The Defendant asserts that Article 40(1) of the Enforcement Decree of the Act shall apply mutatis mutandis to cases where a newly-built house is transferred within five years from the acquisition date of the newly-built house, taking into account the following: (a) Article 40(1) of the Enforcement Decree provides for determining the amount of tax to be reduced or exempted and the amount of tax to be divided on any basis; and (b) Article 99-3(1) of the Act provides that Article 40(1) of the Enforcement Decree shall apply mutatis mutandis to cases where a newly-built

Article 99-3(1) of the Act provides that "where a newly-built house is transferred within five years from the date of its acquisition, the transfer income amount shall be calculated by using "the method of reducing or exempting the amount of tax", while Article 99-3(2) of the Act provides that "if the newly-built house is transferred after five years from the date of its acquisition, the transfer income amount accrued for five years from the date of its acquisition" shall not be calculated as "the method of deducting the transfer income amount applicable to the transfer after five years from the date of its acquisition" (see Supreme Court Decision 2010Du3725, Jun. 28, 2012). In applying paragraph (1), Article 99-3(4) of the Act provides that "the transfer income amount accrued for five years from the date of its acquisition from the date of its acquisition shall be calculated by applying mutatis mutandis Article 99-3(1) of the Act."

Article 40(1) of the Enforcement Decree of the Income Tax Act provides for the reduction and exemption of transfer income tax on real estate subject to restructuring, and because there is no actual transfer value on the date five years have elapsed since the date of acquisition, the transfer income amount calculated under Article 95(1) of the Income Tax Act (total income amount - necessary expenses - the amount of long-term holding special deduction) shall be divided into five years from the date of acquisition to the date of transfer, and the transfer income amount until the date five years have elapsed from the date of acquisition subject to special taxation (see Supreme Court Decision 2012Du858, Jan. 31, 2013) is calculated in proportion to the increase in the standard market price from the date of acquisition to the date of acquisition, which is the same standard market price at the time of acquisition of newly-built house, as the provision for the reduction and exemption of transfer income tax on real estate subject to restructuring, and therefore, it is reasonable to view that the above calculation method is unreasonable if the Plaintiff transfers the same type of newly-built house within 5 years from the date of acquisition without any separate provision for the standard market price of the above calculation method.

Therefore, the defendant's above argument is without merit.

3. Conclusion

Thus, the defendant's appeal is dismissed as it is without merit.