A rental house not entered into one house for one household must be registered under the Income Tax Act.

A rental house which is not entered into one house for one household must be registered as well as business operators under the Rental Housing Act.

2017Gudan81550 Revocation of Disposition rejecting capital gains tax rectification

EAA

BB Director of the Tax Office

June 20, 2018

July 4, 2018

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The defendant's rejection disposition of reduction of KRW 72,725,429 against the plaintiff on May 22, 2017 is revoked.

1. Details of the disposition;

A. On June 28, 1994, the Plaintiff acquired xx (hereinafter “instant apartment”) in Yangcheon-gu Seoul Metropolitan Government, Yangcheon-gu, x (hereinafter “instant apartment”) but transferred the instant apartment on July 25, 2016 (hereinafter “instant transfer”).

B. At the time of the transfer of this case, the Plaintiff’s spouse CC owned and leased 2 bonds (hereinafter collectively referred to as “house owned by ChoCC”) as follows. The date of acquisition, the lessee’s commencement date, the rental business registration under the Rental Housing Act, and the business registration under the Income Tax Act are as follows.

C. On September 26, 2016, the Plaintiff filed a voluntary report and payment of capital gains tax on KRW 72,725,429 to the Defendant on April 3, 2017, and filed a claim for reduction of the total amount of tax payable on the grounds that the instant apartment falls under the “resident house” under Article 155(19) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 27471, Aug. 31, 2016; hereinafter the same shall apply), and that the ChoCC-owned house constitutes the “long-term rental house” under the above Enforcement Decree, and the instant transfer constitutes the “long-term rental house” under Article 89(1)3 (a) of the former Income Tax Act (amended by Act No. 14389, Dec. 20, 2016); Article 155(19) and Article 154(1) of the former Enforcement Decree of the Income Tax Act.

D. However, on May 22, 2017, the Defendant notified the Plaintiff of the intention to refuse to rectify the said reduction on the ground that the Plaintiff’s house owned by the ChoCC cannot be deemed to fall under the “long-term rental house” under Article 155(19) of the former Enforcement Decree of the Income Tax Act (hereinafter “instant disposition”).

E. On July 18, 2017, the Plaintiff filed an appeal with the Tax Tribunal on July 18, 2017, but the said appeal was filed.

The Court dismissed the appeal on October 16, 2017.

[Ground of recognition] Unsatisfy, Gap evidence 1 to 6 (which has a serial number)

(2) Each entry and the purport of the whole

2. Related statutes;

It is as shown in the attached Table related statutes.

3. Whether the instant disposition is lawful

The key issue of this case is whether the ChoCC’s housing constitutes “long-term rental house” as stipulated in Article 155(19) of the former Enforcement Decree of the Income Tax Act. The first issue is whether the house owned by ChoCC constitutes “long-term rental house” under Article 155(19) of the former Enforcement Decree of the Income Tax Act.

A. According to the literal interpretation, the house owned by the ChoCC cannot be deemed as a long-term rental house.

1) In order to constitute “long-term rental house” which is one of the requirements for non-taxation from one house for one household under Article 89(1)3 (a) of the former Income Tax Act, and Articles 155(19) and 154(1) of the former Enforcement Decree of the Income Tax Act (hereinafter “long-term rental house”), the language and text of relevant Acts and subordinate statutes must satisfy all the requirements of ① the household as of the date of transfer should have registered its business under Article 168 of the Income Tax Act, ② the household as of the date of transfer should have registered its house as private rental house under Article 5 of the Special Act on Private Rental Housing, ③ the household as of the date of transfer should have leased its house.

2) However, the Plaintiff also recognized that business registration has not been completed with respect to the lease of the ChoCC-owned housing at the time of the transfer of the instant case. Therefore, the Plaintiff’s housing owned by ChoCC cannot be deemed to constitute “long-term rental housing.”

B. It is not permissible to expand or interpret the requirements for long-term rental houses, as alleged by the Plaintiff.

1) As to this, the Plaintiff asserts that the above house should be deemed a long-term rental house even if its business registration has not been completed under the Income Tax Act, considering the fact that the ChoCC completed the registration of a rental business operator pursuant to the Rental Housing Act and only the lease income subject to separate taxation regarding the lease of a house owned by the ChoCC exists.

2) In light of the principle of no taxation without the law, the interpretation of tax laws and regulations shall be interpreted in accordance with the law, barring any special circumstance, and it shall not be extensively or analogically interpreted without any reasonable reason. In particular, it accords with the principle of fair taxation to strictly interpret the provisions that clearly indicate preferential provisions among the requirements for reduction and exemption (see, e.g., Supreme Court Decision 2008Du7830, Oct. 23, 2008).

3) The plaintiff's assertion is that the provisions of Article 155 (19) 2 of the former Enforcement Decree of the Income Tax Act (as of the date of transfer, registration of business under Article 168 of the Act as of the date of transfer, and registration and lease of long-term rental houses as private rental houses under Article 5 of the Special Act on Private Rental Housing as of the date of transfer) concerning the requirements for the "long-term Rental Houses" are registered and leased as private rental houses under Article 5 of the Special Act on Private Rental Housing as of the date of transfer," or that the business registration under Article 168 of the Act as of the date of transfer shall be registered and leased as private rental houses under Article 5 of the Special Act on Private Rental Housing. However, in cases of

It is not necessary to make registration." The purport of applying relaxed interpretation to expand the requirements for non-taxation, and there is no ground to expand interpretation of the above legal provisions that clearly stipulate the requirements for non-taxation preference as alleged by the plaintiff. Furthermore, business registration under the Income Tax Act is aimed at promoting the convenience of taxation administration by facilitating the understanding of the gold taxpayer and its business, such as the securing of base taxation and the securing of tax revenues, and further realizing fair taxation, and is different from the purpose of the rental business registration under the Rental Business Act.

4) In addition, in imposing capital gains tax, insofar as the transfer gains are calculated as at the time of transfer of assets, it shall be determined at the time of transfer as to whether the transfer of the assets in question satisfies the taxation requirements or tax exemption requirements (see, e.g., Supreme Court Decision 97Nu20816, Jul. 10, 1998). Thus, it does not change merely because Article 168(1) of the former Income Tax Act, which was amended by Act No. 12852, Dec. 23, 2014; and Article 168(1) of the former Income Tax Act, which was effective from January 1, 2017, after the transfer of the assets in question, excluded a rental business operator with only income subject to separate taxation from a business operator subject to business registration obligation

4. Conclusion

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