Whether the special taxation of capital gains tax on real estate for public works in the designated area may be applied.

For special taxation, real estate shall be acquired prior to the three days prior to the designation of the distribution complex, such as "the date of designation and public announcement of the distribution complex," "the second anniversary if the date of designation and public announcement falls within two years retroactively from the date of public announcement," and "the date of designation of the designated area if the date of designation and public announcement arrives after

Article 85 of the Restriction of Special Taxation Act on real estate for public works in the designated area.

Special Taxation for Capital Gains Tax

1. The plaintiff's claim is dismissed.

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

The defendant's rejection of a request for correction as to capital gains tax of 117,979,550 won belonging to the year 2005 against the plaintiff on February 17, 2006 shall be revoked.

1. Details of the disposition;

A. On June 23, 2003, the Plaintiff acquired and owned shares of 621.49/2638 square meters among 2,638 square meters in ○○-dong, Seoul, ○○○-dong 282,638 square meters (hereinafter “instant land”). The Seoul Special Metropolitan City Mayor, including the instant land, designated ○○○○-dong 280 square meters and 515,116 square meters as the Seoul East-dong Distribution Complex Development Promotion Act on November 15, 2004, and publicly notified the relevant designation on November 25, 2004, the instant land was expropriated by ○○-dong, Seoul, ○○-dong 282 square meters in accordance with the Act on Acquisition of and Compensation for Land, etc. for Public Works (hereinafter “Land Compensation Act”).

B. The Minister of Finance and Economy, on February 26, 2004, designated ○○-gu Seoul Special Metropolitan City where the land of this case is located as a sub-designated area under Article 96 (1) 6-2 and the proviso of Article 97 (1) 1 (a) of the former Income Tax Act (amended by Act No. 7837, Dec. 31, 2005; hereinafter the same) where the transfer value and acquisition value are calculated based on the actual transaction value, pursuant to the proviso of Article 96 (1) 6-2 of the former Income Tax Act (hereinafter referred to as the "designated area").

C. On July 31, 2005, the Plaintiff calculated the transfer value and acquisition value of the instant land as the actual transaction value, calculated gains from transfer based on such calculation, made a preliminary return on the tax base of transfer, and paid KRW 114,979,550.

D. On June 23, 2003, the date on which the Plaintiff acquired the instant land was designated by the Minister of Finance and Economy as the designated area. As such, the instant land constitutes a special taxation for transfer income tax on real estate for public works within the designated area under Article 85 of the former Restriction of Special Taxation Act (amended by Act No. 7839, Dec. 31, 2005; hereinafter the same) and thus, the transfer value and acquisition value of the instant land must be calculated based on the standard market price, and the reasonable amount of transfer income tax calculated accordingly is KRW 30,462,748. On January 9, 2006, the Plaintiff filed a claim for correction of KRW 84,516,800 among the transfer income tax accrued in the year of 205 paid to the Defendant as above.

E. The defendant should acquire real estate within the designated area prior to the date of designation of the designated area in order to be subject to the special taxation of capital gains tax under Article 85 of the former Restriction of Special Taxation Act, and when the date of designation and announcement of the distribution complex arrives after the designated area, and if the date of designation and announcement of the distribution complex falls within two years retroactively from the date of public announcement of the approval of the project, it should be acquired before the date of designation of the designated area. The plaintiff acquired the land of this case after the date of designation and announcement of the distribution complex was designated and notified before the date of public announcement of the approval of the project (the designation and announcement of the distribution complex in this case is deemed to be the date of public announcement of project approval under Article 15 (2) of the Distribution Complex Development Promotion Act). The plaintiff acquired the land of this case within two years retroactively from November 25, 2004 to the date of public announcement of the approval of the project approval (the date of the designation and announcement of the distribution complex after November 26, 200).

[Ground of recognition] Unsatisfy, Statement No. 1

2. Whether the disposition is lawful;

A. The plaintiff's assertion

Article 85 of the former Restriction of Special Taxation Act provides that where a resident acquires real estate within a designated area from the date prescribed in any of the following subparagraphs (referring to the date publicly announced by the head of the relevant administrative agency in the Official Gazette or the Official Gazette; where the date of public notification falls within two years retroactively from the date of public notification of the approval of the project; where the date of notification arrives after the designation of the designated area, referring to the date of designation of the designated area) before December 31, 2006, and transfers such real estate to the relevant business operator (including cases of expropriation) under the Land Compensation Act or other Acts before the date of designation of the designated area (including cases of expropriation), notwithstanding the provisions of Articles 96 (1) 6-2 and 97 (1) 1 (a) (proviso) of the former Income Tax Act, the transfer value and acquisition value of the real estate within the designated area can be determined at the standard market price. Thus, in light of the above provisions, where the resident acquires the real estate within the designated area before the date of public notification of the approval of the project;

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

Article 85 of the former Restriction of Special Taxation Act provides that the resident may apply the transfer value and acquisition value of real estate within the designated area to the standard market price under each of the following subparagraphs (referring to the date on which the head of the relevant administrative agency publicly announces it in the Official Gazette or the official bulletin; where the date of public announcement falls within two years retroactively from the date of public announcement of project approval, referring to the date on which two years retroactively from the date of public announcement of project approval; where the date of public announcement arrives after the designation of the designated area under Article 96 (1) 6-2 of the Income Tax Act or other Acts before December 31, 2006, the date on which the designation of the designated area is made under Article 96 (1) 6-2 of the former Income Tax Act and the proviso of Article 97 (1) 1 (a) of the former Enforcement Decree of the Restriction of Special Taxation Act shall be deemed to be the date on which the approval of the project is publicly announced; where the date of public announcement falls within the designated area under subparagraph 1 through 4, the standard market price of the former Act shall be prescribed by Presidential Decree.

Therefore, in cases where Article 85 of the former Restriction of Special Taxation Act (amended by Act No. 85 of the same Act) provides that if the date of the public notice is within two years retroactively from the date of the public notice of the approval of the project, "the second anniversary retroactively from the date of the public notice of the approval of the project," and "the date of designation of the designated area if the date of the designation and public notice of the designated area arrives later than the date of the designation of the designated area" as alleged by the plaintiff, "if the resident acquires the real estate within the designated area before the second anniversary retroactively from the date of the public notice of the approval of the project, or when the date of designation and public notice of the designated area arrives later than the date of the designation and public notice of the designated area, all cases where the resident acquires the real estate before the date of the designation and public notice of the designated area

However, considering that the legislative intent of Article 85 of the former Tax Special Taxation Restriction Act is to block speculative possession by imposing taxes on the taxpayer at the standard market price instead of the actual transaction price when the ownership is transferred or expropriated for the purpose of the public interest regardless of the owner's intention, at the same time the taxpayer's tax burden is mitigated, and at the same time the smooth implementation of public-interest projects is promoted, if the project is implemented at the same time two years prior to the date of the announcement of the ordinary project approval, there is a high possibility of speculative demand for considerable development gains when the project is implemented through on-site investigations, etc., and in such a case, it is necessary to prevent speculative possession by imposing taxes at the actual transaction price as prescribed by Article 85 of the former Special Taxation Restriction Act, considering the fact that the acquisition of real estate after the designation of the designated area is substantially high, the above "the date of designation and announcement of the distribution complex" shall not be included in the above 20th anniversary of the date of the announcement of the project approval and the above 20th anniversary of the date of the designation and announcement.

Therefore, the disposition of this case that held that the land of this case does not fall under the special taxation of capital gains tax under Article 85 of the former Restriction of Special Taxation Act on the ground that the plaintiff acquired the land of this case only before the designated date of the designated area, and that the land of this case was acquired on November 25, 2002 after November 23, 2002, which was deemed as the public announcement date of the project approval, retroactively from November 25, 2004.

3. Conclusion

Thus, the plaintiff's claim is without merit.

Related statutes

○ Transfer Income Tax Act (amended by Act No. 7837 of Dec. 31, 2005) Article 94

(1) Capital gains shall be the following income generated in the relevant year:

1. Income accruing from transfer of land (referring to a lot of land subject to registration of land category in the cadastral record under the Cadastral Act) or buildings (including the facilities and structures annexed to such buildings);

○ Article 96 of the Income Tax Act

(1) The transfer value of assets referred to in Article 94 (1) 1 and 2 shall be the standard market value at the time of transfer of the relevant assets: Provided, That where the relevant assets fall under any of the following subparagraphs, it shall be the actual transaction value between the transferor and transferee (hereinafter referred to as the "actual transaction value"):

6-2. Where the rate of increase of real estate prices in the relevant area is higher than the national consumer price inflation rate, and falls under the real estate determined by the Presidential Decree from among the real estate located in the area designated by the Minister of Finance and Economy according to the standards and methods as determined by the Presidential Decree, because the

○ Article 97 of the Income Tax Act as necessary expenses

(1) In calculating gains on transfer of a resident, necessary expenses to be deducted from the transfer value shall be as follows:

1. Acquisition value:

(a) In case of assets pursuant to Article 94 (1) 1 and 2, the standard market price at the time the assets are acquired: Provided, That in case where the assets concerned fall under any of subparagraphs of Article 96 (1), it shall be based on the actual transaction price required for the acquisition of such assets;

○ The standards, etc. for the designated area under Article 162-3 of the Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 18850 of May 31, 2005)

(1) The term “area designated according to the standards and methods as prescribed by the Presidential Decree” in Article 96 (1) 6-2 of the Act means an area designated by the Minister of Finance and Economy after going through a deliberation of the Deliberation Committee on Real Estate Price Stabilization under the provisions of Article 162-4 (hereinafter referred to as the “designated area”) where the Minister of Construction and Transportation makes a request for designation as he deems that there is a possibility that the increase of real estate prices in the relevant area may continue or might spread to another area in view of the real estate price trend throughout the country and the relevant regional characteristics, etc. from among the areas falling under any of the following subparagraphs. In this case, with respect to an area which falls under any of the following subparagraphs but is not requested for designation by the Minister of Construction and Transportation, the Minister of Construction and Transportation shall refer

○ Special taxation for transfer income tax on real estate for public works in the designated area under Article 85 of the Restriction of Special Taxation Act (amended by Act No. 7839 of Dec. 31, 2005)

Where a resident acquires real estate in a designated area under Article 96 (1) 6-2 of the Income Tax Act from the date prescribed in any of the following subparagraphs (referring to the date publicly announced by the head of the relevant administrative agency in the Official Gazette or the official bulletin, and where the date of public announcement is within 2 years retroactively from the date of public announcement, referring to the date when 2 years retroactively from the date of public announcement, and where the date of notification falls after the designation of the designated area under Article 96 (1) 6-2 of the Income Tax Act, referring to the date of designation of the designated area where the designated area arrives after the date of designation under Article 96 (1) 6-2 of the Income Tax Act) before December 31, 2006, and transfers such real estate to the relevant business operator (including the case of expropriation; hereafter in this Article the same shall apply), notwithstanding the provisions of Articles 96 (1) 6-2 and 97 (1) 1 (a) of the Income Tax Act,

1. The date of designating the scheduled housing site development area under Article 3 of the Housing Site Development Promotion Act;

2. The date on which the industrial complex, etc. is designated under Article 7-3 of the Industrial Sites and Development Act.

3. The date on which the multi-regional development area is designated under Article 4 of the Balanced Regional Development and Support for Local Small

4. Date of announcement of a compensation plan under Article 15 of the Act on the Acquisition of Land, etc. for Public Works and the Compensation Therefor (referring to the United States Armed Forces stationed in the Republic of Korea under the Mutual Defense Treaty between the Republic of Korea and the United States

5. In cases of the immovables transferred under other Acts than subparagraphs 1 through 4, the planned area and area, designation of the development area, public announcement of a compensation plan and other similar days as prescribed by the Presidential Decree for the project area to which the immovables belong under the relevant Acts.

○ Special Taxation for the transfer income tax on real estate for public works in the designated area under Article 79-2 of the Enforcement Decree of the Restriction of Special Taxation Act (the previous deletion by Presidential Decree No. 19888 of Feb. 28, 2007)

(1) The term "other dates similar thereto, which are prescribed by Presidential Decree" in subparagraph 5 of Article 85 of the Act means the base date for assessment of the standard market price in attached Table 7, and where no base date for assessment exists, it means the date a compensation plan is publicly announced under the Act on Acquisition of and Compensation for Land,

[Attachment VII] Standard market price assessment basis (Article 79-2 related0)

8. The date on which the distribution complex is designated under Article 6 of the Promotion of Distribution Complex Development Act.

Article 6 of the Promotion of Distribution Complex Development Act: Notification of Designation of Distribution Complex

(1) The distribution complex designator shall, when he/she designates the distribution complex or modifies the details thereof under Article 5, publish the matters prescribed by Presidential Decree in the Official Gazette or the official bulletin of City/Do, and send copies of the relevant documents to the head of the competent Si/Gun/Gu (referring to the head of autonomous Gu;

Article 15 of the Promotion of Distribution Complex Development Act

(2) In applying the provisions of paragraph (1), when the designation of a distribution complex is publicly notified pursuant to the provisions of Article 6 (1) (where the operator and the detailed items of land, etc. to be expropriated or used are included in the distribution complex development plan after the designation of a distribution complex pursuant to the provisions of the proviso of the main sentence of Article 5 (4), referring to the time such public notice is given), the approval of the project and the public notice thereof pursuant to the provisions of Articles 20 (1) and 22 of the Act on

[Supreme Court Decision 2008Du365 (No. 27, 2008)]

1. The appeal is dismissed.

2. The costs of appeal are assessed against the Plaintiff.

All of the records of this case and the judgment of the court below and the grounds of appeal were examined, but it is clear that the appellant's grounds of appeal fall under Article 4 of the Act on Special Cases Concerning the Procedure of Appeal and therefore, the appeal is dismissed under Article 5 of the same Act. It is so decided as per Disposition by the assent

[Seoul High Court 2007Nu18248 ( December 13, 2007)]

1. The plaintiff's appeal is dismissed.

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

The decision of the first instance shall be revoked. The defendant's rejection of a request for correction regarding KRW 114,979,550 of the transfer income tax belonging to the year 2005, which belongs to the plaintiff on February 17, 2006 shall be revoked.

1. A cited part;

This court's reasoning is the same as the entry of the reasoning of the judgment of the court of first instance except for the following changes. Thus, this court's reasoning is accepted by Article 8 (2) of the Administrative Litigation Act and the main sentence of Article 420 of

(a) Change "621.49/2638" to "621.49/2,638" in 3 pages 2 of the first instance judgment;

(b) Change the 11th of the same page to the "former Income Tax Act";

(c) Change of subparagraph 6-2 of the same 13 parallel line to that of subparagraph 6-2;

(d) Change the same 20 pages to the same "(20) Special Tax Treatment Control Act";

(e) Change of the text of the first instance court No. 4, 7,8 to “the text of the law” in the context of “the content and form of the law.”

F. On the other hand, the 12th Special Taxation should be interpreted as constituting the special taxation requirement, and such interpretation is consistent with the principle of strict interpretation in accordance with the principle of no taxation without law and the principle of clarification of taxation requirements, which is the protection of people's property rights.

G. In addition, where the date on which the distribution complex was designated and publicly announced from 13th to 16th is within two years retroactively from the date of the public announcement of the public announcement of the public announcement, it should be acquired before the second anniversary retroactively from the date of the public announcement of the public announcement, and where the date on which the distribution complex was designated and publicly announced arrives after the designation of the designated area, it should be acquired only before the date on which the designation and public announcement of the distribution complex was designated and publicly announced. In addition, where the date on which the distribution complex was designated and publicly announced is within two years retroactively from the date of public announcement of the public announcement of the public announcement, it should be changed to the same one acquired before the second anniversary retroactively from the date of public announcement of the public announcement of the public announcement.

(h) Change the 17th Special Taxation on the same page to the "be subject to the special taxation" under a arbitrary interpretation that it falls under the special taxation requirement.

(i) Change the "special taxation on taxation" into the "requirements for special taxation" on six pages 6 of the judgment of the first instance;

(j) Part 7 of the judgment of the first instance court (the above interpretation is not contrary to the principle of strict interpretation of the tax law, even if the purpose of legislation of Article 85 of the former Restriction of Special Taxation is to acquire real estate within the designated speculative area without any specific purpose, and to reduce taxpayers' tax burden and to promote smooth implementation of public-interest projects by setting exceptions to the principle of taxation based on the standard market price if the real estate is transferred for the public interest even within the designated speculative area under Article 85 of the former Restriction of Special Taxation Act, because the above Article 85 of the former Restriction of Special Taxation Act does not stipulate the specific requirements for taxation of capital gains tax within the scope of 8 years after the date of the public announcement of the public announcement of the public announcement of the public announcement of the public announcement of the public announcement of the public announcement of the public announcement of the public announcement of the project, and it is clear that the public announcement of the public announcement of the public announcement of the designation of the land will be obtained within the scope of 2 years prior to the date of the public announcement of the designation.

(k) Change the "special taxation on taxation" into the "special taxation requirement" on 10 pages 7 of the judgment of the first instance;

(l) The second half of the judgment of the first instance court shall be deemed to be the former Income Tax Act, and the second half of the said Act shall be deemed to be the Enforcement Decree of the former Income Tax Act.

(m) Change the "Special Tax Treatment Control Act" of 9 pages 9 of the first instance judgment into the "former Restriction of Special Taxation Act".

(n) Change the Enforcement Decree of the Restriction of Special Taxation Act into the former Enforcement Decree of the Restriction of Special Taxation Act, 10 pages 4 of the first instance judgment.

2. Conclusion

Therefore, the judgment of the first instance court is just and it is so dismissed as the plaintiff's appeal seeking its revocation is without merit. It is so decided as per Disposition.

* Note *

1) The term “the date of notification” means the date of notification in the Official Gazette of designation or notice under each subparagraph of Article 85 of the Restriction of Special Taxation Act.