Designation of the secondary taxpayer, the actual representative

National housing exempt from value-added tax under Article 106 (1) 4 of the Restriction of Special Taxation Act shall be limited to a building constructed for at least the purpose of the housing with a construction permit lawfully obtained in light of its purpose, etc.

Article 106 of the Restriction of Special Taxation Act, Article 51-2 of the Enforcement Decree of the Restriction of Special Taxation Act

Incheon District Court 2018Guhap51502 Revocation of Disposition of Imposition of Value-Added Tax

1. KoreaO 2.O 3. △△△△△

The director of the North Incheon National Tax Office

November 30, 2018

December 14, 2018

1. All of the plaintiffs' claims are dismissed.

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

Cheong-gu Office

The Defendant’s value-added tax of KRW 345,461,730, which was assessed against the Plaintiffs on July 10, 2017, 2013.

The imposition disposition shall be revoked.

1. Details of the disposition;

A. On June 11, 2012, the Plaintiffs registered joint business operators (33.33% of their respective equity ratio) with the new construction and sale business of buildings.

The 14 households and officetels 19 units (hereinafter referred to as "the instant officetels") were newly built and sold on the OO-dong OO-dong OOO-dong O-dong O-dong Otels.

B. The Plaintiffs deemed the sales of the instant officetel as housing units and sold the instant officetel.

The Head of Central District Tax Office did not report the value-added tax on the amount of income subject to exemption of value-added tax. However, the Deputy Director of Central Tax Office conducted a tax investigation on the Plaintiffs, and notified the Defendant of the taxation data by deeming that the sales revenue of the instant officetel is not subject to exemption of value-added tax under Article 106(1)4 of the Restriction of Special Taxation Act. Accordingly, on July 10, 2017, the Defendant issued a correction and notification to the Plaintiffs of KRW 345,461,730 for the first quarter of year 2013 (hereinafter “instant disposition”).

C. The Plaintiffs appealed and filed an appeal with the Tax Tribunal on September 29, 2017, and the Tax Tribunal dismissed the said appeal on December 28, 2017.

[Ground of recognition] Unsatisfy, Gap evidence No. 1, Eul evidence No. 1

(2) Each entry and the purport of the whole pleading;

2. Whether the instant disposition is lawful

A. The plaintiffs' assertion

Since the instant officetel was newly constructed for residential purpose and actually used as a house of national housing scale under Article 106(1)4 of the Restriction of Special Taxation Act includes officetels used for residential purpose, the sales revenue of the instant officetel is subject to value-added tax exemption under the principle of substantial taxation, and thus, the instant disposition was unlawful on a different premise.

In addition, the tax authority issued a public opinion order to determine whether an officetel is a house according to its actual use condition through the case of the established rules or the tax judgment, and issued a public opinion order to the effect that the Plaintiffs trusted it and did not report and pay the value-added tax after newly building and selling the instant officetel for residential use. On the contrary, the disposition of this case violates the principle of good faith and the principle of prohibition of retroactive taxation.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Contents of the relevant provisions

Article 106 (1) 4 of the Restriction of Special Taxation Act, Articles 51-2 (3) and 106 (4) 1 of the Enforcement Decree of the same Act, and Article 106 (4) 3 of the former Housing Act (amended by Act No. 11871, Jun. 4, 2013; hereinafter the same shall apply): ① Value-added tax shall be exempted on the supply of national housing and its housing construction services (including remodeling services prescribed by Presidential Decree) prescribed by Presidential Decree; ② The term “national housing and its housing construction services prescribed by Presidential Decree” means housing smaller than the scale of national housing (referring to the area based on the exclusive area per household in cases of multi-family houses prescribed by Ordinance of the Ministry of Strategy and Finance) under the Housing Act; ③ The term “scale of the national housing” means housing the area of which used exclusively for residential purposes is 85 square meters or less per house (referring to housing the exclusive residential area or per household in the area of Eup/Myeon other than the urban area under Article 2 (1) of the Seoul Metropolitan Area Readjustment Planning Act).

Meanwhile, pursuant to subparagraphs 1, 1-2, and 2 of Article 2 of the former Housing Act and Articles 2 and 2-2 of the former Enforcement Decree of the Housing Act (amended by Presidential Decree No. 25273, Mar. 24, 2014; hereinafter the same shall apply), "house" means all or part of a building with a structure wherein constituent members of a household can carry on an independent residential life for a long time, and land annexed thereto; "house" means a detached house and an apartment house; and "quasi-housing" means a building other than a house and land annexed thereto, and land annexed thereto; and "quasi-housing" means a dormitory under subparagraph 2 (d) of the former Enforcement Decree of the Building Act (amended by Presidential Decree No. 25273, Mar. 24, 2014; hereinafter the same shall apply) among dormitories under subparagraph 2 (d) of subparagraph 4, (m) and 15 (c) of the former Enforcement Decree of the Housing Act, and multi-household housing or multi-household housing under subparagraph 14 (b) of the former Enforcement Decree of the Housing Act.

In addition, according to subparagraph 14(b) of attached Table 1 of the former Enforcement Decree of the Building Act and Article 2 of the former Officetel construction standards (No. 2013-789, Dec. 13, 2013; hereinafter “former Officetel construction standards”), officetels refers to the standards publicly notified by the Minister of Land, Infrastructure and Transport as a building that allows board and lodging in a part of a division among the sections sold in units or leased; ② officetels shall not be installed in each office section; ② an office building shall not be installed in combination with other purposes; in principle, an office building shall be installed separately; and in cases of construction in combination with other purposes, an office section shall be installed separately; and in cases where the exclusive area of each office section exceeds 85С, a floor heating unit using hot-water, hot-water and electric heat, etc. shall not be installed.

2) Determination on the instant case

A) Relevant legal principles

In light of the principle of no taxation without law, or the requirements for tax exemption or tax exemption, the interpretation of tax laws shall be interpreted as the text of the law, barring any special circumstances, and it shall not be allowed to expand or analogically interpret with the benefit of taxpayers without reasonable grounds. In particular, it accords with the principle of equity in tax (see, e.g., Supreme Court Decision 2003Du7392, May 28, 2004).

In addition, a national housing exempt from value-added tax under Article 106 (1) 4 of the Restriction of Special Taxation Act is a national housing exempt from value-added tax under the above provision even if its area constitutes national housing scale, in light of its purpose, etc., if it falls under at least a building constructed for a housing purpose by obtaining a building permit lawfully, and the building is altered into a housing without obtaining a permit for alteration of use after obtaining the building permit and obtaining the approval for use. (See Supreme Court Decision 96Nu8758 delivered on October 11, 196).

B) Whether the instant officetel supply is subject to value-added tax exemption

Taking into account the following circumstances, comprehensively taking into account the details and legal principles of the relevant provisions, the instant officetel is a national share as prescribed by Article 106(1)4 of the Restriction of Special Taxation Act.

Since it can not be seen as a "house", it is not subject to value-added tax exemption.

① Article 2 of the former Housing Act defines quasi-housing that includes a house and a detached house, an apartment house, or an officetel, which is its subordinate concept, differently and strictly distinguish it. The former Enforcement Decree of the Building Act (attached Table 1) defines housing and an officetel which is its business facilities, and the term “house” and “quasi-housing” differs from the relevant laws and regulations that set the building requirements and standards (house: Article 35 of the former Housing Act, Article 35 of the former Enforcement Decree of the Building Act, and construction standards for officetels).

Therefore, as long as the Enforcement Decree of the Restriction of Special Taxation is clearly defined as "housing below the scale of national housing under the Housing Act" as the object of value-added tax exemption, it is not allowed to expand or analogically interpret it as "quasi-housing" in violation of the principle of no taxation without the law and the principle of no taxation without the law of the law of the law of the law of the law of the law of the law of the law of the law of the law of the law.

In addition, according to Article 2 of the construction standards of officetels, officetels is prohibited from being installed by each office partition, so it cannot be said that officetels is installed in the same structure as multi-family housing.

③ Meanwhile, the value-added tax is subject to the “supply of goods” (Article 4 of the Value-Added Tax Act). Therefore, whether the supply of goods is subject to tax exemption or not shall be determined based on the objective type or use of the building at the time of the supply, and, in particular, the entry in the public record.

Although the occupants of the instant officetel make a move-in report on resident registration and use it for the purpose of residence, and paid property tax on housing or received electricity and gas for residential purposes, it is merely a situation that occurred after the instant officetel is supplied. Rather, the owners and occupants of the instant officetel may use it as general business facilities at any time according to its original purpose.

Therefore, it is unreasonable to interpret that the taxation of value-added tax, which is subject to the supply of goods, differs from each other depending on the circumstances after the supply, would seriously undermine the legal stability of the tax law relationship.

④ The introduction of the concept of quasi-housing into the Housing Act amended by Act No. 10237, Apr. 5, 2010 only aims to activate the supply of facilities that can be utilized for residential purposes without being classified as a house in response to the changed demand conditions for housing, and officetels as a concept of housing.

In response, it is not intended to support the residential stability and tax benefits of ordinary people.

In particular, quasi-housing stipulated in Article 4 of the former Enforcement Decree of the Housing Act includes dormitories and Gosiwons, and such buildings are related to housing supply for residential stability of ordinary people, which is the legislative purpose of Article 106(1)4 of the Restriction of Special Taxation Act.

⑤ Ultimately, the issue of whether the supply of a house below the scale of national housing under the Housing Act, which is a tax-exempt requirement under the Restriction of Special Taxation Act, ought to be objectively determined according to the public record, such as a building permit, approval for use, building management ledger, and real estate register, unless there are other special circumstances. Therefore, the term “house below the scale of national housing under the Housing Act” constitutes a building constructed by obtaining a building permit lawfully for the use of a

Unlike this, even though a building permit and approval for use for business facilities, such as officetels, are stated to the same purport in the building management ledger and the real estate register, the mere fact that the current situation is suitable for the purpose of residence and is actually used by many occupants for the purpose of residence does not constitute “house” (see Supreme Court Decision 2007Du21242, Feb. 14, 2008).

C) Whether the principle of good faith and the principle of prohibition of retroactive taxation is violated

In addition, there is no established rule for the supply of residential officetels subject to value-added tax exemption under Article 106 (1) 4 of the Restriction of Special Taxation Act, and there was a partial decision of the Tax Tribunal that revoked the disposition of value-added tax addition for this reason, the Defendant issued an official opinion to the Plaintiffs that the supply of the instant officetels constitutes the subject of value-added tax exemption, or that the interpretation of tax law or the practice of national tax administration is not established. Thus, the instant disposition is not in violation of the principle of good faith and the principle of prohibition of retroactive taxation.

D) Sub-committee

Therefore, the instant disposition is lawful since the supply of the instant officetel does not fall under the scope of VAT exemption and does not violate the principle of good faith and the principle of prohibition of retroactive taxation.

(c)

3. Conclusion

Therefore, the plaintiffs' claims are dismissed in entirety as it is without merit. It is so decided as per Disposition.