[1] In order for a rental business operator to enjoy benefits from acquisition of rental housing pursuant to the latter part of Article 31(1) of the former Restriction of Special Local Taxation Act, whether the rental business operator shall first purchase and acquire rental housing from the person who constructed the building for the first time (affirmative)

[2] In a case where Gap corporation acquired five floors among the newly built buildings and changed the use of neighborhood living facilities into multi-family housing (multi-family housing), and purchased two households among the changed use part of Byung and applied for exemption from acquisition tax pursuant to Article 31(1) of the former Restriction of Special Local Taxation Act while filing a registration of rental business operator, and imposed acquisition tax on Eul on the ground that it does not correspond to this, the case holding that Byung's purchase of part of the building from Eul corporation does not constitute "the first purchase from a building owner" under the latter part of Article 31(1) of the former Restriction of Special Local Taxation Act

[1] Under Article 31(1) of the former Restriction of Special Local Taxation Act (amended by Act No. 11618, Jan. 1, 2013; hereinafter “Article 2 subparag. 4 of the Rental Housing Act”), the term “rental business operator under the former part of Article 2 subparag. 4 of the Rental Housing Act” means “construction” according to the former part of the said Act for the purpose of lease in order for a rental business operator to be exempted from acquisition tax on the acquisition of rental housing, or “the first sale of multi-family housing or officetels from the owner” under the latter part of the said Act. As can be seen, this provision provides the rental business operator with the benefits of acquisition tax reduction and exemption for the rental housing acquired by the rental business operator to promote the stability of long-term residential life of ordinary people by facilitating the construction and sale of rental housing, while limiting the scope of reduction and exemption by taking into account the tax equity, etc. In other words, the former part of the said provision provides that acquisition tax shall be reduced and exempted only where the rental business operator first purchased rental housing from the owner.

In light of the contents, structure, purpose, etc. of this provision, “the first purchase from a building owner” as stipulated in the latter part of this Article is premised on the sale of a building through a construction act. Therefore, in order for a rental business operator to enjoy benefits from acquisition tax reduction under the latter part of this Article, he/she should first purchase and acquire rental housing from a person who constructed a building for the first time in accordance with a sales contract.

[2] The case holding that the court below erred by misapprehending the legal principle on the ground that, in a case where Company A purchased two households among the parts whose use was changed, and sought an exemption from acquisition tax pursuant to Article 31(1) of the former Restriction of Special Local Taxation Act (amended by Act No. 11618, Jan. 1, 2013) but imposed acquisition tax on the ground that the use of the newly constructed building was not a multi-family housing, since Company B did not construct a new building only after purchasing the new building, and it did not constitute “the first purchase from an owner of a building” as provided in the latter part of the above Article, since Company B’s purchase of part of the building from Company B cannot be deemed as falling under “the first purchase from an owner of a building” as provided in the latter part of the above Article, it constitutes an exemption from acquisition tax under the latter part of the said Article, and thereby, it constitutes an acquisition tax under the latter part of the said Article.

[1] Article 31(1) of the former Restriction of Special Local Taxation Act (Amended by Act No. 11618, Jan. 1, 2013) / [2] Article 31(1) of the former Restriction of Special Local Taxation Act (Amended by Act No. 11618, Jan. 1, 2013)

Plaintiff

2. Head of Dong-si branch office

Seoul High Court Decision 2016Nu55461 decided December 14, 2016

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

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. Under Article 31(1) of the former Restriction of Special Local Taxation Act (amended by Act No. 11618, Jan. 1, 2013; hereinafter “instant provision”), the term “rental business operator under Article 2 subparag. 4 of the Rental Housing Act” means “construction” in accordance with the former part of the said Act for the purpose of leasing a rental house to be reduced or exempted from acquisition tax on the acquisition of a rental house, or “the first sale of a apartment house or officetel from a owner” under the latter part of the said Act. As can be seen, the instant provision provides a rental business operator with the benefits of reduction or exemption of acquisition tax on the rental house acquired by the rental business operator in order to promote the stability of long-term residential life of ordinary people by facilitating the construction and sale of rental housing, but limits the scope of reduction or exemption in accordance with the specific acquisition method, etc. of rental housing in consideration of the level of taxation. In other words, the former part of the instant provision is limited to the reduction or exemption of acquisition tax on rental housing constructed by a rental business operator for rent.

In light of the contents, structure, purpose, etc. of the instant provision, “the first purchase of a building from a building owner” as stipulated in the latter part of the instant provision is premised on the sale of a building through a construction act. Therefore, in order for a rental business operator to enjoy benefits from the reduction of acquisition tax under the latter part of the instant provision, he/she should first purchase and acquire rental housing from a building owner in accordance with a sales contract.

2. According to the reasoning of the lower judgment and the record, ① C&W development, Co., Ltd., newly constructed a 4th underground floor and 10th above ground, and obtained approval for use on July 24, 2007. On July 13, 2011, the Plaintiff reported the alteration of the use of the 4,5,6,7, and9th among the above buildings, into a multi-unit housing (multi-unit housing). ② E&W Co., Ltd, on August 11, 2011, acquired the above building 4,5,6,7,9th and carried out artificial and light construction, including water supply and drainage facilities, electricity, etc., ③ the alteration of the use of the pertinent part as a multi-unit housing (multi-unit housing) around March 7, 201, and the Plaintiff purchased and completed the registration of the alteration of the use of the said part as above.

3. Examining these facts in light of the legal principles as seen earlier, Es.S. Co., Ltd. purchased a newly constructed building and changed its purpose into a multi-family housing from a neighborhood living facility, and did not construct it. Thus, even if the Plaintiff purchased part of them from the above company, it does not constitute “the first purchase from the owner” as provided in the latter part of the provision of this case.

Nevertheless, the lower court determined otherwise that the Plaintiff is included in the reduction and exemption of acquisition tax pursuant to the latter part of the instant provision. In so doing, the lower court erred by misapprehending the legal doctrine on the interpretation of the latter part of the instant provision, thereby adversely affecting the conclusion of the judgment. The allegation contained in the grounds

4. Therefore, 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 Jo Hee-de (Presiding Justice)