[1] Whether the “spouse” under Article 8 subparag. 2 of the Act on the Registration of Real Estate under Actual Titleholder’s Name includes a spouse in a de facto marital relationship (negative), and whether the above provision is unconstitutional (negative)

[2] The person who bears the burden of proving whether the act was aimed at evading taxes or avoiding the restrictions under the Acts and subordinate statutes” under Article 5(3) of the Act on the Registration of Real Estate under Actual Titleholder’s Name and the proviso of Article 3-2 of the Enforcement Decree of the same Act (i.e., the person liable for tax payment), and whether the tax authority may impose the full amount of penalty surcharges in cases where

[3] The case holding that in a case where a taxpayer held a title trust of 1/2 shares in an apartment to his spouse in a de facto marital relationship, it is reasonable to deem that there was a purpose of evading capital gains tax amount

[1] Article 8 subparagraph 2 of the Act on the Registration of Real Estate under Actual Name provides that "where a real right to real estate has been registered in the name of his/her spouse and it is not for tax evasion, evasion of compulsory execution, or avoidance of statutory restrictions, no penalty surcharge shall be imposed pursuant to Article 5 of the Act." The "spouse" under the above provision does not include a spouse in a de facto marital relationship. And even if it is difficult to distinguish between spouses and permission for title trust, it is determined that the above provision does not go against the purport of the enactment of the Act. Thus, if a real right to real estate is registered in the name of his/her spouse, it is excluded from the application of the Act, and if such permission is granted for a de facto marital relationship, there is a concern that the legislative purport would be serious damage if it is permitted to protect a spouse in a de facto marital relationship in an economically weak status, but it is not likely that completely treating a spouse in a de facto marital relationship might undermine the legal divorce system, and it is not in violation of the above principle of equal rights or dignity of a spouse.

[2] According to Article 5(3) of the Act on the Registration of Real Estate under Actual Titleholder’s Name and the proviso of Article 3-2 of the Enforcement Decree of the same Act, where it is not for the purpose of evading taxes or avoiding restrictions pursuant to the law, a penalty surcharge may be mitigated by 50/100. However, if it is not for the purpose of evading taxes or avoiding restrictions pursuant to the law, the claimant must prove that it constitutes a case where it is not for the purpose of evading taxes or avoiding restrictions pursuant to the law. Since it is a discretionary mitigation provision, if there exists a reason for reduction, it cannot be readily concluded that the imposing authority imposed a penalty in full without

[3] The case holding that in a case where a taxpayer title trusts the 1/2 share of an apartment to his spouse in a de facto marital relationship, it is reasonable to view that there was a purpose of evading the transfer income tax equivalent to the amount to be borne by the taxpayer due to the fact that it becomes two houses for one household and becomes not subject to Article 89 (1) 3 of the Income Tax Act, which is a provision on the non-taxation of the transfer income tax of one house for one household, in the event that the taxpayer becomes two houses for one household

[1] Article 8 subparag. 2 of the Act on the Registration of Real Estate under Actual Titleholder’s Name / [2] Article 5(3) of the Act on the Registration of Real Estate under Actual Titleholder’s Name, Article 3-2 of the Enforcement Decree of the Act on the Registration of Real Estate under Actual Titleholder’s Name / [3] Article 89(

[1] Supreme Court Decision 99Du35 delivered on May 14, 199 (Gong199Sang, 1185) / [2] Supreme Court Decision 2005Du3257 delivered on September 15, 2005 (Gong2005Ha, 1634) Supreme Court Decision 2006Du4554 Delivered on July 12, 2007 (Gong2007Ha, 1274)

Plaintiff (Law Firm White, Attorney Cho Sung-sung et al., Counsel for plaintiff-appellant)

The head of Seongbuk-gu Seoul Metropolitan Government

October 15, 2009

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposing a penalty surcharge of KRW 12,80,000 against the Plaintiff on March 31, 2009 shall be revoked.

1. Details of the disposition;

A. On May 8, 1967, the Plaintiff married with Nonparty 1 and maintained a de facto marital relationship until Nonparty 1 departs from the Republic of Korea on February 19, 1980, while making a marriage by agreement on February 19, 1980.

B. On December 24, 1992, the Plaintiff entered into a sales contract with Nonparty 1 with respect to the 609-1 Handong-dong, Seongbuk-gu, Seongbuk-gu, Seoul (hereinafter “instant apartment”) as the purchaser, and completed the registration of ownership transfer under Nonparty 1 on February 24, 200.

C. However, on February 22, 2001, Nonparty 1 reversed a de facto marital relationship with the Plaintiff by filing a marriage report with Nonparty 2, and on August 11, 2001, the Plaintiff filed a lawsuit against Nonparty 1 seeking implementation of the registration of transfer of ownership on the instant apartment on the premise that the instant apartment was trusted in title with Nonparty 1. On the ground that the instant apartment was jointly owned by the Plaintiff and Nonparty 1 and was trusted in title with Nonparty 1 only with respect to the one-half share, the judgment that the Plaintiff should return the said share of unjust enrichment to the Plaintiff (Seoul High Court Decision 2002Na70312, Feb. 25, 2004) was rendered, and that the judgment became final and conclusive around that time. In addition, on November 19, 2003, the Plaintiff claimed a damages claim against Nonparty 1 due to the wrongful destruction of the apartment and the portion relating to 1/20 of the instant apartment, but was dismissed by the Government 2001.

D. On March 31, 2009, the Defendant imposed a penalty of KRW 12,800,000 on the Plaintiff pursuant to Article 5 of the Act on the Registration of Real Estate under Actual Titleholder’s Name (hereinafter “Real Estate Real Name Act”) on Nonparty 1 on the ground that the Plaintiff’s share of 1/2 of the instant apartment to Nonparty 1 (hereinafter “instant title trust”).

E. Meanwhile, at the time of the title trust in this case, the Plaintiff owned 742-14 ground houses and 729-3 Hyundai 1/12-10 shares in Seo-gu, Seo-gu, Seo-gu, Incheon, Seoghee-dong, 729-3 Hyundai 1/12-10 shares, and Nonparty 1 owned 24/46 shares in each of the above-mentioned 624-1 ground houses and the above-mentioned 345-2 ground houses, Seongdong-gu, Seoul.

[Grounds for Recognition] The facts without dispute, Gap 1-10 evidence, Eul 1-4 evidence (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) The title trust of this case was formed at the time when the Plaintiff and Nonparty 1 maintained a de facto marital relationship, and where the instant apartment is returned in the form of property division due to the termination of a de facto marital relationship, it is not subject to a penalty, and where limiting the “spouse” under Article 8 subparag. 2 of the Real Estate Real Name Act, which provides for special cases concerning clans and their spouses, to the legal spouse, it is against the dignity of human beings, the right to pursue happiness, the right to equal rights and property rights guaranteed under the Constitution by discriminating the spouse in a de facto marital relationship without any justifiable reason. In light of the above, the Special Provision between married couple under Article 8

(2) Even if the title trust of this case is subject to the penalty surcharge, the instant disposition without reduction of the penalty surcharge is unlawful as it deviates from and abused discretion, even though it did not have the purpose of tax avoidance, and thus, should reduce the penalty surcharge by 50% pursuant to the proviso of Article 3-2 of the Enforcement Decree of the Real Estate Real Name Act.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

(1) Whether the “spouse” under Article 8 subparag. 2 of the Real Estate Real Name Act includes a spouse in a de facto marital relationship, and whether the said provision is unconstitutional

Article 8 subparagraph 2 of the Real Estate Real Name Act provides that where a real right to real estate is registered under the name of his/her spouse and it is not for tax evasion, evasion of compulsory execution, or avoidance of statutory restrictions, penalty surcharges pursuant to Article 5 of the Act shall not be imposed. The "spouse" in the above provision does not include a spouse in a de facto marital relationship (see Supreme Court Decision 9Du35 delivered on May 14, 199).

In addition, the above provision is difficult to distinguish between husband and wife's property and it is judged that even if title trust is permitted, the registration of real right to real estate in the name of the spouse under the law will not be go against the legislative purport of the law, so it is unreasonable to exclude the application of the law in the case of registration of real right to real estate in the name of the spouse under the law and so it is possible to deny that the legislative purpose of the law might be considerably damaged if it is allowed even a de facto marriage relationship is allowed, but it is not possible to deny that there is a need to protect the spouse in a de facto marriage relationship, on the other hand, to treat the spouse in a de facto marital relationship equally and completely, there is a concern that the legal divorce system might be excessively weak, and that it is inevitable to protect the spouse in a de facto marital relationship with his will that the parties to a de facto marriage did not choose a legal marriage according to their intention, and that the priority protection of the legal relationship is not required for the clarity of the main provisions of the Real Estate Real Name Act.

(2) Whether grounds for reduction of penalty surcharge exist

Article 5(3) of the Real Estate Real Name Act and the proviso of Article 3-2 of the Enforcement Decree of the Real Estate Real Name Act provide that a penalty surcharge may be mitigated by 50/100 in cases where it is not for the purpose of evading taxes or avoiding restrictions pursuant to Acts and subordinate statutes with respect to the imposition standards for penalty surcharges against a title truster. However, it is not for the purpose of evading taxes or evading restrictions pursuant to Acts and subordinate statutes. Since it is a discretionary mitigation provision, it cannot be readily concluded that the imposition of the penalty surcharge is unlawful even if the imposition of the penalty surcharge was made without considering it and reducing it in cases where there are grounds for reduction exist. (See Supreme Court Decision 2005Du3257, Sept. 15, 2005).

In this case, as seen earlier, the Plaintiff is deemed to have a purpose of evading transfer income tax equivalent to the amount of transfer income tax to be borne by the Plaintiff on the ground that the Plaintiff becomes two houses for one household when the instant apartment house is additionally owned other than the housing owned at the time of the instant title trust (Article 89(1)3 of the Income Tax Act) and becomes ineligible for the application of the non-taxation clause on one house for one household (Article 89(1)3 of the Income Tax Act) (see, e.g., evidence 2-2; and even if Nonparty 1, as the Plaintiff’s assertion, owns two houses inherited at the time of the instant title trust, such circumstance alone is insufficient to readily conclude that the Plaintiff did not have the purpose of evading tax, even if there was a ground to reduce the penalty surcharge, as alleged by the Plaintiff, even if there was a reason to reduce the penalty surcharge as alleged by the Plaintiff, in light of the purport of the Real Estate Real Name Act to prevent speculation, evasion of laws, etc., and to stabilize real estate transactions and the discovery of title trust property value.

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.

[Attachment] Relevant Statutes: omitted

Judges Park Jong-dae (Presiding Judge)