8 Years 100

Since the farmland in the instant case was planted and relimlime farming shed, and the farmland in the instant case was transferred after self-defluence for not less than three years, the requirements for reduction and exemption of capital gains tax under Article 70 (1) of the former Restriction of Special Taxation Act are met.

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

Daejeon District Court-2017-Gu -10030

○ ○

Head of △ District Office

December 21, 2017

2018.01.25

1. The Defendant’s imposition of capital gains tax of KRW 213,373,532 against the Plaintiff on January 13, 2016 exceeds KRW 21,928,169 out of the imposition of capital gains tax of KRW 213,373,532, shall be revoked.

2. The plaintiff's remaining claims are dismissed.

3. 1/10 of the costs of lawsuit shall be borne by the Plaintiff, and the remainder by the Defendant, respectively.

1. Details of the disposition;

A. From January 1, 1985 to July 2, 2001, the Plaintiff acquired five parcels, other than 165 square meters of a cemetery 320-24, AAB-Eup, BB-Eup (hereinafter “instant land”). The said land was expropriated in LL and PPPPP corporation on June 27, 2014.

B. On June 30, 2014, the Plaintiff acquired Furri 116 square meters, Furri 150 square meters, 116-12, 323 square meters, and 200 square meters, prior to 116-2, from Sejong Special Self-Governing City (hereinafter “the instant substitute farmland”).

C. On September 1, 2014, the Plaintiff reported the tax amount to be paid for the transfer of the instant land as KRW 21,928,169. The Plaintiff added the tax amount to KRW 15% on the ground that the Plaintiff transferred the land to the public interest project operator with respect to KRW 320-24, a cemetery of KRW 165, and KRW 15% on the ground that the tax amount was transferred to the public interest project operator; ② on the ground that the farmland of KRW 343-3, a 343-5, a 343-5, a 516 square meters, a 344-1, a 251 square meters prior to the 349-1, a 349-1, a 169 square meters prior to the 349-1, a 169 square meters (hereinafter referred to as “the farmland of this case”), the Plaintiff applied for the reduction of tax amount to KRW 100 on the farmland of this case for at least 30 percent.

D. The Defendant: (a) reduced or exempted capital gains tax on the 165 square meters for a graveyard of BB BB CC 320-24 on the ground that it was subject to reduction or exemption for land for public works; (b) however, the Plaintiff denied the tax reduction or exemption on the ground that the Plaintiff cannot be deemed to have cultivated the instant farmland for at least eight years or cultivated the instant farmland for at least three years; and (c) on January 13, 2016, the Defendant determined and notified the Plaintiff of KRW 247,188,169 (= calculated tax amount of KRW 221,928,169 + additional tax of KRW 25,260,00) for the transfer income tax for the year 2014.

E. The Plaintiff filed an appeal with the Tax Tribunal. On December 21, 2016, the Tax Tribunal accepted part of the Plaintiff’s appeal on the ground that the Plaintiff had cultivated the farmland No. 1 for at least eight years or cultivated the farmland of this case for at least three years. However, on the ground that not only the farmland of this case, AAA City BB Eup 320-24 square meters, but also the farmland of this case should be corrected by applying the reduction and exemption of capital gains tax on the land for public works.

F. The Defendant issued an ex officio revocation of KRW 33,814,637 of the capital gains tax imposed on January 13, 2016 according to the decision of the Tax Tribunal on January 2, 2017 (as a result, the total capital gains tax on the land of this case (i.e., KRW 213,373,532 (i.e., KRW 247,188,169 - KRW 33,814,637)) of the capital gains tax imposed on January 13, 2016 (hereinafter “instant disposition”).

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 5 through 9, 29, 30, Eul evidence No. 18, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) From January 1, 2006 to September 2008, the Plaintiff cultivated general crops, such as rice and shoulder, from January 2006 to September 2008. On October 2008, the Plaintiff planted sublim tree seedlings, and thereafter cut down a sublim tree farmer. Therefore, the Plaintiff cultivated not less than 1/2 of the farmland of this case with his own labor for not less than eight years. As such, the Plaintiff met the requirements for capital gains tax reduction under Article 69(1) of the former Restriction of Special Taxation Act (Amended by Act No. 13560, Dec. 15, 2015).

2) On October 2008, the Plaintiff planted the instant farmland No. 2 and laid down sublime farmership by planting sublime seedlings. Therefore, the Plaintiff acquired the instant farmland for more than three years, and thereafter, acquired it. Accordingly, the Plaintiff met the requirements for reduction of capital gains tax under Article 70 (1) of the former Restriction of Special Taxation Act.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) According to Article 70(1) of the former Restriction of Special Taxation Act, a resident prescribed by Presidential Decree residing in the seat of farmland is entitled to the reduction of tax amount equivalent to 100/100 of capital gains tax on income accruing from the substitute land for farmland prescribed by Presidential Decree due to the necessity for cultivation by the method prescribed by Presidential Decree. According to Article 67(2) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 26070, Feb. 3, 2015), “direct cultivation” means that a resident is engaged in cultivating crops or growing perennial plants on his/her own farmland at all times or cultivating or growing them with his/her own labor.

2) In full view of the following circumstances acknowledged by the following circumstances, the Plaintiff, at least from October 2008, resided in the vicinity of the farmland of this case in accordance with Gap, Eul, 3, 13, 14, 16, 19, 39, 44, 45, 47, 49, 52, and 54, and the testimony and the entire purport of the testimony and pleading by the Witness, it is reasonable to deem that the Plaintiff, while residing in the vicinity of the farmland of this case, had substituteed the farmland of this case as the substitute farmland of this case for cultivation necessity after directly cultivated the farmland of this case.

According to the statements in Gap evidence Nos. 16 and 47, the plaintiff completed a move-in report on August 6, 2008 to FFFFFF-4 of Sejong Special Self-Governing City, which was about 1.8 km from the farmland in this case, and on the farming season, the plaintiff had resided together with his mother in the house in this place (hereinafter referred to as "house in this case").

○○ Witness GG operated a potter plant in the CCri 345-2, which is adjacent to the farmland in this case. The Plaintiff testified that the Plaintiff was working for the potter plant in the farmland in this case since the Plaintiff leased the leased house 344-2 (hereinafter referred to as “the leased house in this case”) from his own, which was located in the farmland in the farmland of this case, and the Plaintiff had to go through the potter plant in order for the Plaintiff to go into the farmland in this case.

It is recognized that there was no record of electric use on the leased house of this case. However, the witness GG testified testified that the electricity used in connection with the instant building without filing an application for electric use for the said building and was used as it was, and the Korea Electric Power Corporation’s factual confirmation is supporting the testimony of the witness GG. Therefore, the absence of the record of electric use on the leased house of this case would not be an obstacle to recognizing the fact that the Plaintiff resided in the said house.

According to the evidence No. 52, the Plaintiff is recognized as having received medical treatment from Sejong Special Self-Governing City and Sejong Special Self-Governing City with the instant housing and leased housing from February 2007, and from hospitals and pharmacies located in BB.

○ The Defendant submitted a record of conversationsd with the Defendant’s employees, who were the Plaintiff’s residence in the vicinity of the instant farmland, on August 6, 2008, at the JJ in this Chapter, JJ in Seoul, and the Plaintiff’s resident registration before August 6, 2008, who were the Plaintiff’s resident registration in the Seoul RR-dong 672 KK apartment, resident in front of the instant farmland, and resident in front of the instant farmland.

However, it is difficult to view that the plaintiff resided in the apartment house from June 201 to the transfer date of the farmland in this case from June 201, 3 years before the transfer date of the land in this case as a statement that the plaintiff resided in the apartment house from June 201 to the transfer date of the land in this case. In the case of the CCJ in the case of this Chapter, the plaintiff recognized the fact that the plaintiff resided in the sublime farming house from February 16, 201 in the written statement prepared on February 16, 2016.

In addition, the recording of a conversation with a resident living in front of the instant house and a resident living in front of the instant farmland does not ask the employee belonging to the Defendant to specify the time when the resident resides or cultivates the Plaintiff. Therefore, it is difficult to readily conclude that the recording of the above recording alone did not constitute the Plaintiff’s failure to reside in the vicinity of the instant farmland.

3) In addition, the Plaintiff acquired the instant substitute farmland on June 30, 2014 after transferring the instant farmland on June 27, 2014, and on June 30, 2014. Since the area of the substitute farmland is not less than 2,673 square meters and not less than 1/2 of the area of the instant farmland, the instant farmland constitutes an exemption from capital gains tax under the substitute land under Article 70(1) of the Restriction of Special Taxation Act.

D. Sub-committee

Therefore, as the Plaintiff reported to the Defendant on September 1, 2014, the tax amount equivalent to 15/100 of the capital gains tax on the income accruing from the transfer of the farmland in this case, and the tax amount equivalent to 100/100 of the capital gains tax on the income accruing from the transfer of the farmland in this case, shall be reduced or exempted. Ultimately, since the amount of capital gains tax to be paid by the Plaintiff in relation to the transfer of the land in this case is KRW 21,928,169, the portion exceeding the above amount of the disposition in this case shall be revoked illegally.

3. Conclusion

Therefore, the plaintiff's claim of this case is justified within the above scope of recognition, and the plaintiff's claim of this case is dismissed as it is without merit. It is so decided as per Disposition.