It is insufficient to recognize that the Plaintiff cultivated the instant land with his own labor for not less than eight years.

The evidence submitted by the Plaintiff alone is insufficient to recognize that the Plaintiff was engaged in the cultivation of crops in the instant land for not less than eight years or engaged in the cultivation of not less than half of crops with his own labor.

Article 69 of the Restriction of Special Taxation Act (Reduction or Exemption of Transfer Income Tax for Self-Cultivating Farmland)

2019Guhap263 Revocation of Disposition of Imposing capital gains tax

AA

Defendant, (P) Appellants

KK Head of the tax office

July 4, 2019

August 22, 2019

1. All of the plaintiff's claims are dismissed.

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

The Defendant’s disposition of imposition of capital gains tax of KRW 116,745,574 against the Plaintiff on June 9, 2018 is revoked.

1. Details of the disposition;

가. 원고는 2001. 1. 15. 모친 QQQ으로부터 WW시 EE면 RR리 605-10 답

2,350 square meters (hereinafter referred to as "land of this case") were donated and completed the registration of ownership transfer on January 18, 2002.

B. On February 27, 2017, the Plaintiff sold the instant land to the Z in KRW 395,00,000, and the Z completed the registration of ownership transfer on March 9, 2017.

C. On May 31, 2017, the Plaintiff reported the transfer income tax to the Defendant by applying the capital gains tax reduction and exemption provisions for self-Cultivating farmland under Article 69 of the Restriction of Special Taxation Act.

D. As a result of the investigation of capital gains tax on the Plaintiff from February 27, 2018 to March 16, 2018, the Defendant: (a) deemed that the Plaintiff did not directly cultivate the instant land; (b) excluded the application of capital gains tax reduction and exemption provisions; and (c) notified the Plaintiff of KRW 116,743,570 of capital gains tax reverted to the year 2017 (hereinafter “instant disposition”).

E. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on August 14, 2018, but the said appeal was dismissed on December 19, 2018.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The plaintiff is unable to engage in physical labor for disabled persons, and therefore, he has employed a man or woman or has a dynamic, a dynamic, and a scam cultivated in the land of this case under the plaintiff's calculation and responsibility. According to Supreme Court Decision 89Nu4567 Decided February 27, 1990, "land cultivated by himself" refers to a farmer's scam under his own account and responsibility, and it does not refer to a land directly cultivated in the land of this case for 8 years or longer. Therefore, the plaintiff shall be deemed to have cultivated directly from the land of this case. Accordingly, although the capital gains tax reduction and exemption provision under Article 69 of the Restriction of Special Taxation Act applies to the plaintiff, the defendant is deemed not directly cultivated by the plaintiff, and thus the defendant is excluded from the application of the above capital gains tax reduction and exemption provision, so the disposition of this case shall be revoked.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) Transfer Income Tax Reduction and Exemption Regulations for self-Cultivating farmland

Article 69 (1) of the Restriction of Special Taxation Act shall apply to income accruing from the transfer of land prescribed by Presidential Decree among land cultivated directly by a resident prescribed by Presidential Decree who resides at the seat of farmland for at least eight years by means prescribed by Presidential Decree.

The tax amount equivalent to 100 shall be reduced or exempted.

The legislative purpose of this regulation is to promote agriculture and rural communities by preventing extra-party farmland speculation and reducing the tax burden of self-employed farmers for not less than eight years, based on Article 121, Paragraph 1 of the Constitution, which declares the principle of anti-domination as a duty of the State, in order to liquidate the tenant farming system, which is a major legal relationship and eliminate inefficiency of farmland utilization caused by absence.

2) The meaning of "direct cultivation"

Before the amendment of the Enforcement Decree of the Restriction of Special Taxation Act by Presidential Decree No. 19329 on February 9, 2006, the Special Tax Treatment Control Act and its Enforcement Decree do not separately stipulate the concept of ‘direct cultivation' or ‘self cultivation', one of the requirements for reduction of capital gains tax, and at that time the Supreme Court interpreted that the meaning of ‘direct cultivation' or ‘self cultivation' includes not only the cases in which the transferor cultivates by hand but also the cases in which another person is employed and cultivated under his/her responsibility and account, or causes a family member living or living together with the same household to cultivate (see, e.g., Supreme Court Decisions 90Nu6064, Sept. 28, 199; 94Nu1859, Feb. 3, 199; 203Du2465, May 30, 2003).

After that, Article 66 (12) of the former Enforcement Decree of the Restriction of Special Taxation Act was newly established on February 9, 2006 by Presidential Decree No. 19329, and Article 66 (12) of the former Enforcement Decree of the Restriction of Special Taxation Act, the term "direct cultivation" means that a resident engages in the cultivation of crops or the growing of perennial plants on his own farmland at all times or the growing or growing of not less than a half of farming works with his own labor, and clearly defined its meaning. Article 66 (13) of the Enforcement Decree of the Restriction of Special Taxation Act, which applies to this case, has the same provision. According to the interpretation of the previous Supreme Court precedents, since the legislative intent of the above provision is to solve the problem of reduction and exemption of capital gains tax without actually engaging in farming, it cannot be deemed that the above provision includes cases where a resident employs another person under his responsibility and calculation, or causes a person living or a family living in the same household to cultivate, as in the previous precedents, it shall be interpreted that the above provision meets the requirements of "direct cultivation."

Therefore, as to whether "direct farming of farmland eligible for reduction or exemption from capital gains tax" is "direct farming of farmland," a person engaged in agriculture is deemed to have cultivated directly regardless of his/her own labor ratio, and a person engaged in part for reasons such as having other occupation, not engaging in agriculture at all times, shall be deemed to have cultivated directly only when the labor ratio of "self" excluding his/her family members or third parties during the entire farming work is not less than 1/2 (see, e.g., Supreme Court Decisions 2010Du8423, Sept. 30, 201; 2012Du19700, Dec. 27, 2012).

3) Whether the Plaintiff directly cultivated the instant land for at least eight years

A) The fact that the transferor of the transferred land must actively prove the fact that the transferor asserts it, and the fact that the transferred land has been used as farmland for not less than eight years is recognized, and thus, it is not presumed that the transferor is a person who claims it (see Supreme Court Decision 94Nu996, Oct. 21, 1994).

(see, e.g., Decision)

B) We examine the following circumstances: ① The land of this case was located in Kimhae-si, whereas the Plaintiff was residing in HH Metropolitan City from 1980 to 2016; ② the Plaintiff received subsidies for rice related to the land of this case from 2005 to 2016; ③ CCC and VV, the head of the Seocho Village, which were the head of the Seocho Village, do not have the right to directly grow in the land of this case; ④ the Plaintiff was registered as a disabled person of Grade 5 in 198 (Function not directly), and the Plaintiff was unable to directly perform the farming work due to a disability, and there was no evidence to acknowledge that the Plaintiff was responsible for managing the land of this case from the land of this case for more than 2 years.

C) Therefore, the Plaintiff’s assertion cannot be accepted, since Article 69 of the Restriction of Special Taxation Act cannot be applied to the Plaintiff.

3. Conclusion

Therefore, the instant disposition is lawful, and thus, the Plaintiff’s claim is dismissed as it is without merit. It is so decided as per Disposition.