The beginning year of housing construction and sales business shall not be reduced or exempted at the time of commencement of sale, direct construction, etc.

The commencement year of the Housing Construction and Sales Business Act is the time of commencing the sale of a house, although it was directly engaged in construction activities or subcontracted by field, it did not carry on the construction business subject to reduction and exemption due to the lack of overall responsibility and overall management of construction works, even though it was difficult to see that there was a sales of high-end and 400,000 won or more before new construction of a house.

Special tax reduction or exemption for small or medium enterprises under Article 7 (1) 1 of the Restriction of Special Taxation Act on the estimated decision and revised decision of Article 143 (4) of the Enforcement Decree of the

Disposition to revoke the imposition of global income tax, etc. by the Seoul Administrative Court-2018-Gu 87484

Maap○

The director of the tax office.

on October 15, 2019

on October 31, 2019

1. The plaintiff's claim is dismissed.

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

The imposition of 5,687,270 won (including additional tax) and 88,514,412 won (including additional tax) and global income tax for the year 2015 shall be revoked on August 4, 2017, among the imposition of 77,619,920 won (including additional tax) and global income tax for the year 2015.

1. Details of the disposition;

A. On April 12, 2012, the Plaintiff: (a) registered as a construction business operator; (b) newly built a multi-family housing unit (hereinafter referred to as “multi-family housing 1”) in 2013; (c) sold it in lots in 2013; and (d) closed on November 20, 2013; (c) applied Article 7(1)1 (g) of the former Restriction of Special Taxation Act (Amended by Act No. 12853, Dec. 23, 2014); and (d) filed a comprehensive income tax for 2013, by applying the special tax reduction or exemption for small and medium enterprises engaged in “construction business” under Article 7(1)1 (g) of the same Act.

B. On November 13, 2014, the Plaintiff: (a) newly constructed a 12 household unit of multi-family housing (hereinafter “multi-family housing 2”) on the land outside 1, 2015; (b) sold it in 2015; and (c) closed down on November 5, 2015. The Plaintiff reported the comprehensive income tax for the year 2015, on December 10, 2014; (c) sold KRW 402,60, and KRW 260 (hereinafter “multi-family housing sales in this case”); (d) commenced a business of multi-family housing in 2014; (e) pursuant to Article 26(1) of the Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 2634, Feb. 17, 2016; (e) pursuant to Article 26(1)36(g) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 27314, Mar. 27, 2014; hereinafter the same).

C. After conducting a tax investigation from April 26, 2017 to June 24, 2017, the director of the Seoul Regional Tax Office: (a) did not regard all apartment 1 and 2 as having engaged in the construction business; (b) did not apply the provisions on special tax reduction and exemption for small and medium enterprises, such as the former Restriction of Special Taxation Act, because all apartment 1 and 2 were not deemed to have engaged in the construction business; and (c) in relation to apartment 2, the period of 2015, in which the revenue from the sale was generated, shall be deemed to have commenced the business and the amount exceeding the amount stipulated in Articles 143(4)1 and 208(5)2(b) of the former Enforcement Decree of the Income Tax Act was obtained; and (d) notified

D. On August 4, 2017, the Defendant imposed and notified each of the instant dispositions (hereinafter referred to as “each of the instant dispositions”) on the Plaintiff on global income tax of KRW 77,619,920 (including additional taxes; hereinafter the same shall apply), and the amount of KRW 88,514,412 (including additional taxes) for the year 2015.

E. The Plaintiff appealed and filed a tax appeal on April 6, 2018 after filing an objection on November 2, 2017, but was dismissed on September 4, 2018.

[Ground of recognition] Facts without dispute, Gap 1 through 3 evidence (including branch numbers if there are additional numbers; hereinafter the same shall apply), Eul evidence 1, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) Although the Plaintiff was to obtain a construction business license, it directly constructed a multi-family housing 1 and 2, the Plaintiff constitutes a small-medium enterprise that conducts a construction business under the former Restriction of Special Taxation Act, and thus is subject to special tax reduction.

2) Since the Plaintiff started the business related to multi-family housing 2 in 2014, the Plaintiff is subject to the application of simple expense rate under Article 143(4)2(b) of the former Enforcement Decree of the Income Tax Act.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Articles 2(3) and 7(1)1(g) of the former Restriction of Special Taxation Act, where the Plaintiff engaged in a construction business subject to the reduction and exemption of the former Restriction of Special Taxation Act, etc., applies special tax reduction and exemption to a construction business among small and medium enterprises, and the classification of the types of business used in the above Act is prescribed in the Korean Standard Industrial Classification publicly announced by the Commissioner of

However, according to the 9th Korean Standard Industrial Classification (amended by the Statistics Korea Notice No. 2017-13, Jan. 13, 2017), "building construction business (Classification No. 411)" means industrial activities that build, extend, rebuild, or rebuild a building including prefabricated-type buildings by a contractor or a self-employed comprehensive constructor. It is classified as "general construction business (Deficial No. 41)" if a contractor takes the overall responsibility for construction works even if a subcontract is made for each construction area without performing direct construction activities and takes the overall management of construction works. However, it is classified as "housing Development and Supply Business (Classification No. 68121)" if a whole building is constructed by entering into a contract for construction works without performing direct construction activities.

The Plaintiff did not submit any materials to prove that the Plaintiff directly performed construction activities, or provided subcontracting for each field, but was responsible for construction works, as a whole, and that the entire construction works were managed. Accordingly, the Plaintiff’s assertion cannot be accepted.

2) Whether the Plaintiff is subject to the simple expense rate application

A) According to the proviso of Article 80(3) of the Income Tax Act and Article 143(3) of the former Enforcement Decree of the Income Tax Act, when the amount of income is estimated or revised, the amount of income shall be determined or revised by deducting the purchase cost, rent, labor cost, and income from the amount of income from the amount of income by the standard expense rate. However, with respect to a person subject to the application of simple expense rate, the amount of income is determined or corrected by deducting the amount of income from the amount of income from the amount of income by the method of deducting the amount of income by the simple expense rate. The term "person subject to the application of simple expense expense provision" refers to a business operator newly commencing a business in the pertinent taxable period, and the amount of income in the pertinent taxable period is below KRW 150 million (including the business of developing and supplying residential buildings; hereinafter the same shall apply) or a constructor whose amount of income in the immediately preceding taxable period falls short of KRW 36 million (including the business of developing and supplying residential buildings; hereinafter the same shall apply).

B) According to the following circumstances revealed by comprehensively taking account of the contents of the relevant statutes and the evidence and the purport of the entire pleadings, it is reasonable to view that the taxable period in which a multi-family housing 2 business commenced was not 2014 years but 2015 years from the commencement of the sale of multi-family housing 2.

(1) A business of multi-family housing 2 is included in real estate sales business due to its nature (see, e.g., Supreme Court Decision 2008Du21768, Jul. 22, 2010). A business commencement of a new construction-sale business of a building should be determined based on the time the preparation for the business is completed and the business is performed or is able to perform its original business purpose (see, e.g., Supreme Court Decision 94Nu15905, Dec. 8, 1995). Meanwhile, the issue of whether a business income under the Income Tax Act is a business income under the Income Tax Act shall be determined based on social norms, taking into account the existence of the business profit purpose, the size and frequency of the business, and the degree of continuity and repetition of the business (see, e.g., Supreme Court Decision 91Nu659, Nov. 26, 191). 201; however, it is difficult to view that the Plaintiff’s new construction-sale business was conducted for more than 205 years.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.