The purport of Article 15(1)6 of the former Local Tax Act and whether the above provision applies to the acquisition through division of property when de facto marriage is terminated (affirmative)

Article 15(1)6 of the former Local Tax Act (amended by Act No. 13427, Jul. 24, 2015) (hereinafter “legal provision”) provides that with respect to the acquisition through division of property pursuant to Articles 834 and 839-2 of the Civil Act, the tax rate calculated by subtracting 20/100 of the base rate for heavy taxation from the standard tax rate under Article 11, etc. of the same Act shall be applied. This purport is to reflect the nature of the liquidation of real marital joint property by applying acquisition tax rate lower than that for the division of the property built by the couple’s joint effort in the course of marriage according to the resolution of marital relations.

In addition, Articles 834 and 839-2 of the Civil Act of the legal provision provide for the division of property at the time of divorce by agreement. However, Article 839-2 of the Civil Act applies mutatis mutandis to the time of judicial divorce pursuant to Article 843 of the Civil Act, and Article 839-2 of the Civil Act applies mutatis mutandis not only to the revocation of marriage but also to the revocation of de facto marriage. This is based on the fact that the division of property with the meaning of liquidation of joint property of the

In addition to the contents and structure of each of the above legal provisions, legislative purport, and the provision on the division of property under the Civil Act applies mutatis mutandis to the resolution of de facto marriage; where legal divorce and de facto marriage are mixed, the division of property is subject to the liquidation of all the property achieved through mutual cooperation during the entire period, barring any special circumstances; where it is substantially recognized as a community of the married couple, it is difficult to see that it is reasonable to levy different taxes depending on the existence of a marital report when applying a single legal principle as to the division of property when applying the tax law regardless of the existence of a marital report; and even if it is difficult for the tax authority to easily understand it, for the person who proves it by objective data even if it is difficult for it to easily understand it, the legal provision also applies to the acquisition through division of property at the

Article 15(1)6 of the former Local Tax Act (Amended by Act No. 13427, Jul. 24, 2015); Articles 834, 839-2, and 843 of the Civil Act

Supreme Court Decision 94Meu1379, 1386 Decided March 10, 1995 (Gong1995Sang, 1612) Supreme Court Decision 9Meu1855 Decided August 18, 200 (Gong200Ha, 2016)

Plaintiff (Law Firm Woo, Attorneys Lee Sun-soo et al., Counsel for the plaintiff-appellant)

Market for Lighting

Seoul High Court Decision 2015Nu56993 decided April 1, 2016

The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

1. Article 15(1)6 of the former Local Tax Act (amended by Act No. 13427, Jul. 24, 2015) (hereinafter “instant legal provision”) provides that with respect to the acquisition through division of property pursuant to Articles 834 and 839-2 of the Civil Act, the tax rate calculated by subtracting 20/100 of the base rate for heavy taxation from the standard tax rate under Article 11, etc. of the same Act shall apply. This purport is to apply the acquisition tax rate lower than that for the division of the property achieved by the joint efforts of the couple during marriage following the resolution of marital relations, thereby reflecting the character as the liquidation of real marital joint property.

In addition, Articles 834 and 839-2 of the Civil Act in the legal provision of this case provide for the division of property at the time of divorce by agreement, but Article 839-2 of the Civil Act applies mutatis mutandis at the time of judicial divorce pursuant to Article 843 of the Civil Act, and Article 839-2 of the Civil Act applies mutatis mutandis not only to the revocation of marriage but also to the revocation of de facto marriage. This is based on the fact that the division of property, which has the meaning of liquidation of joint property of the married couple, is recognized in light of the substance of the married couple's living community (see Supreme Court Decision 94Meu1379, 1386, Mar

In addition to the above legal provisions, the provisions on division of property under the Civil Act shall apply mutatis mutandis to the resolution of de facto marriage, the provisions on division of property under the Civil Act shall apply mutatis mutandis to the resolution of de facto marriage; where legal divorce and de facto marriage are mixed, the division of property is subject to the liquidation of all the property achieved through mutual cooperation during the entire period unless there are special circumstances (see Supreme Court Decision 9Meu1855, Aug. 18, 200). Where a couple’s living community is substantially recognized as a marital community, it is difficult to see that it is reasonable to impose property division differently depending on whether a marital report is filed or not in the application of tax law, notwithstanding the application of a single legal principle as to division of property regardless of whether a marital report is filed or not; even if it is difficult for the tax authority to easily understand whether a de facto marriage is de facto marriage to grant the legal effect accordingly to the person who proves it by objective data. In addition, the legal provisions in the

2. A. According to the reasoning of the judgment of the court of first instance cited by the court below, the plaintiff married with the non-party on September 12, 1984, but confirmed and divorced on December 8, 2002 in the divorce lawsuit filed against the plaintiff by the non-party. ② The plaintiff and the non-party maintained a de facto marital relationship without settlement of property relations even after the divorce; but the plaintiff maintained a de facto de facto marital relationship after the divorce; but on October 22, 201, the plaintiff filed a lawsuit claiming consolation money and division of property against the non-party to order the non-party to pay money as division of property on October 22, 2013; ③ the plaintiff and the non-party agreed to transfer the ownership of each real estate of this case to the plaintiff after consultation on the re-division of property division; ④ the plaintiff completed the registration of ownership transfer pursuant to the agreement of this case on December 24, 2013; and ④ the plaintiff refused to report and pay acquisition tax under Article 11(1)2 of the former Local Tax Act.

Examining these facts in light of the legal principles as seen earlier, the Plaintiff’s legal relationship with the Nonparty was terminated for about 27 years in total, and thus, the property relationship was liquidated through joint efforts. As such, the Plaintiff’s acquisition of each real estate of this case ought to be subject to special tax rates under the legal provisions of this case.

B. Nevertheless, the lower court determined otherwise by deeming the acquisition through division of property at the time of de facto marriage as not subject to the special tax rate under the legal provisions of this case, on the grounds stated in its reasoning, with respect to the primary claim. In so determining, the lower court erred by misapprehending the legal doctrine on the application of the legal provisions of this case. The allegation contained in the grounds of appeal on this point is with merit.

3. Therefore, without further proceeding to decide on the remainder of the grounds of appeal and the conjunctive claim, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kwon Soon-il (Presiding Justice)