National High Court Decision 2007J 4817 (No. 18, 2008)

Criteria for determining whether a person has been self-employed for at least eight years;

Although it is argued that the transfer date has been one of more than eight years between the acquisition date and the transfer date, it is not sufficient to recognize that the evidence and testimony presented alone were the farmland actually used for cultivation at the time of transfer and that the transferor actually resided in a foreign country, so the assertion is without merit.

The contents of the decision shall be the same as attached.

Article 69 of the Restriction of Special Taxation Act

1. The plaintiff's claim is dismissed.

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

The defendant's rejection disposition against the plaintiff on May 21, 2007 is revoked.

1. Circumstances of the disposition;

A. On July 2, 1981, the Plaintiff completed the registration of ownership transfer on the ground of sale with respect to the land of 1,66 square meters prior to ○○○○○○○○○○○○○○○ (hereinafter “instant land”).

B. The Plaintiff transferred the instant land on April 6, 2007, and reported and paid KRW 85,125,100 as transfer income tax on April 9, 2007 with the transfer value of KRW 453,60,000, acquisition value of KRW 27,985,147, transfer margin of KRW 425,331,167.

C. Around April 12, 2007, the Plaintiff filed a claim for correction with the Defendant to the effect that he acquired the land of this case on February 15, 1973, and requested the Defendant to refund the total amount of the above tax payable for the reason that he was self-employed for not less than eight years, but the Defendant rejected it on May 21, 2007 (hereinafter “instant disposition”).

(d) The plaintiff, on July 16, 2007, filed an objection on November 6, 2007 and filed an appeal with the Tax Tribunal on November 6, 2007, but was dismissed on August 18, 2008.

[Ground of recognition] Facts without dispute, Gap evidence 1, 2, Eul evidence 1 and 2 (including paper numbers), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff: (a) purchased the instant land on January 10, 1972; and (b) purchased it for not less than eight years between the date of the purchase and the date of the transfer. Therefore, the instant disposition is unlawful.

B. Determination

(1) According to Article 69(1) of the Restriction of Special Taxation Act (amended by Act No. 9276 of Dec. 29, 2008), Article 66 subparag. 1, 4, and (5) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 20620 of Feb. 22, 2008), and Article 27(1) of the Enforcement Rule of the same Act, in order to constitute an exemption from capital gains tax on self-arable farmland, a transferor shall be recognized to have performed a self-major act for at least eight years between the time of acquisition from the time of acquisition to the time of transfer from the time of acquisition while residing in a Si/Gun/Gu or Si/Gun/Gu where the farmland is located, or a Si/Gun/Gu adjacent thereto, and the relevant land must be used for the real cultivation regardless of its land category on the cadastral record as of the date of transfer, and thus, it cannot be deemed as farmland as of the date of temporary suspension or light (see, e.g., Supreme Court Decision 20019Nu324.

(2) As to the instant case, it is insufficient to recognize that the Plaintiff’s testimony on the statement of No. 3 through No. 7 and the witness Han Young-young’s testimony alone resided in the Si/Gun/Gu where the instant land is located and transferred from the time of acquisition to the time of transfer by the time of transfer from the time of acquisition by the Plaintiff while residing in the Si/Gun/Gu or the Si/Gun/Gu adjacent thereto for not less than eight years, and there is no other evidence to acknowledge that the instant land was farmland actually used for cultivation at the time of transfer on April 6, 2007 (only it can be confirmed that the Plaintiff actually resided in a foreign country after December 28, 1987 in light of the purport of the entire argument in No. 5). Accordingly, the Plaintiff’s assertion is lawful.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.