The rental period shall not be added up even by the comprehensive transferee of the rental business;

The lease period of a rental business operator under the provisions of Article 97 (1) of the Restriction of Special Taxation Act is only the lease period that the rental business operator concerned rents, and it cannot be added up the lease period of the former business operator or recognized retroactively as the starting point

Article 97 (Capital Gains Tax Reduction or Exemption for Long-Term Rental Houses)

Changwon District Court 2018Gudan12542 Revocation of Disposition of Imposing capital gains tax

Kim 00

00. Head of tax office

July 3, 2019

August 21, 2019

1. The plaintiff's claim is dismissed.

2. Litigation costs shall be borne by the Plaintiff

Cheong-gu Office

Each disposition taken by the Defendant against the Plaintiff on November 2, 2016 by KRW 261,396,720 for transfer in 2015 and KRW 156,135,570 for transfer in 2016 shall be revoked.

1. Details of the disposition;

A. On June 15, 1996, Non-Party A Co., Ltd. newly constructed a 834-household building in the first place of 00, Changwon-si, 000, and concluded a lease contract with BBE Co., Ltd. (hereinafter referred to as "the instant rental housing") on a double 90 households around July 1996 and entered into a lease contract for employee housing with BBE Co., Ltd. (hereinafter referred to as "Lessee"). The above AAE was decided to authorize a compromise on February 3, 200, and accordingly, the ownership of the instant rental housing was transferred to dd construction (a) corporation and d (hereinafter referred to as "the preceding business operator" in the above AA and the aboved construction (hereinafter referred to as "the preceding d) for the housing rental business operator on November 20, 200, the Plaintiff acquired the above 20-year lease housing and the above 2-year lease housing (hereinafter referred to as "the above d) and the above 2-year lease.

B. On November 2, 2016, the Defendant notified the Plaintiff of each transfer income tax (including additional tax) in 2015 to KRW 261,396,720 and KRW 156,135,570 in 2016 (hereinafter collectively referred to as “instant disposition”).

C. On February 6, 2017, the Plaintiff filed an appeal with the Tax Tribunal on February 6, 2017, but on August 2018.

27. The decision to dismiss the plaintiff's request was made.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1, 2, 3 (including virtual number), Eul evidence No. 1, the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

(1) Although the Plaintiff, on March 28, 2001, commenced the lease of the instant rental house after acquiring it, the Plaintiff acquired the instant rental house with the Plaintiff’s succession to all the status as a rental business operator under Article 9(3) of the Enforcement Decree of the Rental Housing Act (amended by Presidential Decree No. 17737 of Jun. 27, 2003), under the circumstance that the said A company’s default on payment on June 15, 1996, under the circumstances that the Plaintiff is forced to inevitably sell the instant rental house due to the said A company’s default, and the Plaintiff also succeeded to the lease period from the former business operator. Accordingly, the Plaintiff’s succession to the lease period from June 15, 1996, which began the lease due to new construction of a A company, should be deemed to be the date of commencement of the lease, and as a result, the transfer of the instant house should be deemed to be subject to the “transfer income tax reduction or exemption on the long

(2) The instant transferred house constitutes a case of transferring a leased house (undeveloped house at the time of acquisition) that began to acquire and lease after August 20, 199, among purchased rental houses that had not been occupied as of August 20, 199, for five or more years. The instant transferred house is subject to the “Special Cases of Reduction and Exemption of Transfer Income Tax on Newly-Built Rental Houses” under Article 97-2 of the Restriction on Special Cases concerning Taxation.

B. Relevant statutes

It is as shown in the attached Table related statutes.

C. Determination

(1) Determination on the first argument

(A) Article 97(1) of the Restriction of Special Taxation Act provides that where a resident prescribed by Presidential Decree transfers a newly constructed house during the period from January 1, 1986 to December 31, 200 after lease for not less than five years after the commencement of lease on or before December 31, 200, the tax amount equivalent to 50/100 of the transfer income tax on income accruing from the transfer of the rental house shall be reduced or exempted, but where a rental house is leased for not less than ten years, the transfer income tax shall be exempted. Article 97(1) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 29527, Feb. 12, 2019) provides that "resident prescribed by Presidential Decree" refers to a resident who leases a rental house for not less than five units of houses. In addition, the initial date of a house lease period as mentioned in Article 97(4) of the same Act and Article 97(5) of the Enforcement Decree of the same Act provides that the predecessor acquires a rental house by inheritance.

However, Article 97 (5) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 17458, Dec. 31, 2001) prior to the enforcement of the above provision (amended by Presidential Decree No. 17458, Dec. 31, 2001) stipulates that the initial date of the house lease period shall be the date on which the house lease period commences; in case of a merged corporation, the house lease period of a merged corporation shall be the date on which the house lease period commences; in case of a merged corporation, the heir shall add

(B) In light of the following circumstances, it is reasonable to view that the Plaintiff’s succession to the rights and obligations of the former business entity by means of public health, i.e., non-existence of regulations: according to the legal advice, “where a resident starts to lease before December 31, 200 and transfers the leased property for five years or more” as if the former owner were the same person on or before December 31, 200 (see, e.g., Supreme Court Decision 200Da327154, Apr. 1, 200). It seems that the former provision regarding the transfer of the leased property under the Act on the Restriction of Special Taxation provides that the period of lease by the former business entity shall be included in the period of lease of the former business entity, and that the former provision regarding the transfer of the leased property shall not be included in the period of lease of the former business entity, and that the former provision regarding the transfer of the leased property shall not be included in the period of lease of the former business entity.”

[On the other hand, the defendant asserts that Article 97 of the Restriction of Special Taxation Act specifies a beneficiary of special taxation as a resident and does not stipulate a domestic corporation. Thus, the plaintiff following the status of the former business operator of the former business operator is without corresponding matters. In this regard, Article 67 (1) of the former Regulation of Tax Reduction and Exemption Act was enacted on December 28, 1998, and Article 97 (1) of the Restriction of Special Taxation Act was moved to the Special Taxation Act, as it was amended on December 29, 2001 by Act No. 6538 of December 29, 2001. Article 14 (3) of the Addenda of the Restriction of Special Taxation Act enacted on December 28, 1998 provides that the former business operator shall be deemed to succeed to the status of the former business operator, even if the plaintiff succeeded to the status of the former business operator, the former business operator shall not be deemed to be reasonable.

(C) Therefore, it cannot be deemed that the transfer of the instant transferred house constitutes a subject of reduction or exemption of capital gains tax on the long-term rental house.

(2) Judgment on the second argument

(A) Article 97-2(1)1 (b) of the Restriction of Special Taxation Act provides that where a house that had not been occupied as of August 19, 199 as an apartment newly built on or before August 19, 199 is transferred after lease for not less than five years, capital gains tax shall be exempted.

(B) On August 20, 199, the following circumstances are revealed as to whether the transferred house in this case constitutes a house that has not been occupied as of August 20, 199, i.e., the tenant of the transferred house in this case is the company, the actual tenant is the employee of the company, and the concept of the occupancy is deemed inappropriate based on the employee of the company who is not the tenant, and ii) the tenant has leased the transferred house in this case for the purpose of residence of the employee, but the tenant is not deemed to have left the house in the official room, and the company pursuing profit-making is not deemed to have moved the house in the employee house provided only by the company with the resident registration separately, and it is difficult to deem that the house in this case has not been occupied solely on the ground that the resident registration was not made. In light of the above circumstances, the plaintiff is a taxpayer, and the burden of proof as to whether the house in this case falls under the requirements for non-taxation and reduction or exemption is difficult to be considered to have been occupied at the time of lease.

(C) Therefore, it cannot be deemed that the transfer of the instant transferred house is subject to “special cases of reduction or exemption of capital gains tax on newly-built rental houses that have not been occupied.”

3. Conclusion

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