[1] Whether the "acquisition of ownership without compensation" under Article 131 (1) 2 of the former Local Tax Act is applicable where a title truster has completed a registration of ownership under the name of the trustee pursuant to the title trust agreement but completed a registration of ownership transfer based on sale in the future after cancelling the title trust (affirmative)

[2] The tax base for the registration tax following the new construction of a building

[3] The case holding that construction expenses incurred in the construction of a new building may not be included in the tax base for the registration tax of the building

[1] Article 131 (1) of the former Local Tax Act (amended by Act No. 4995 of Dec. 6, 1995) provides that "when a registration of real estate is made, registration tax shall be paid according to the standard tax rates set forth in the following subparagraphs." In the case of "acquisition of ownership without compensation, other than those under subparagraphs 2 through 1 (the acquisition of ownership by inheritance), 15/1,000 of real estate prices, and 30/1,00 of real estate values in the case of acquisition of real estate other than farmland due to reasons other than those under subparagraphs 3 through 2 (i) and 2. Article 131 (1) 2 of the same Act provides that "acquisition of ownership without compensation due to a requirement to apply 15/1,000 above the registered tax rate," and it does not limit the method of evidence to "acquisition of ownership without compensation due to a title truster's title trust agreement or the registration of title transfer under the name of the title truster, notwithstanding the principle of substantial title trust or termination of ownership."

[2] Under the former Local Tax Act before the amendment of December 6, 1995, the tax base of the registration tax for real estate registration is "the value at the time of acquisition" (see Article 130 (1) of the same Act) and is basically the same as the method of determining the tax base of the acquisition tax, and under Articles 130 (3) and 111 (5) 3 of the same Act and Article 82-3 (2) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 14878 of December 30, 195), the tax base of the registration tax for the acquisition of which the acquisition price is proved by the corporate book shall be the actual acquisition price. The actual acquisition price here refers to all expenses paid or to be paid directly or indirectly by the other party or a third party for the acquisition of the taxable property. Thus, the tax base for new construction of a building shall be the aggregate of the construction cost and incidental expenses, and if the construction cost is based on a contract or construction work, the amount to be excluded from the tax base.

[3] The case holding that construction cost cannot be included in the tax base for registration tax as to the building because it is difficult to view it as a construction consisting of an unnecessary and unreasonable preparation act for the construction of a new building, and the result is an object of land as a part of the building, and it cannot be included in the acquisition cost for the building

[1] Articles 65 (see current Article 82) and 131 (1) of the former Local Tax Act (amended by Act No. 4995, Dec. 6, 1995) / [2] Articles 111 (5) 3 and 130 (1) and (3) of the former Local Tax Act (amended by Act No. 4995, Dec. 6, 1995); Article 82-3 (2) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 14878, Dec. 30, 1995); Article 111 (5) 3 and 130 (1) and (3) of the former Local Tax Act (amended by Act No. 4995, Dec. 6, 1995); Article 82-3 (2) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 14998, Dec. 38, 1995) / [3]

Busan Petroleum Co., Ltd. (Attorney Lee Young-soo, Counsel for the plaintiff-appellant)

The head of Gyeyang-si (Attorney Kim Tae-tae, Counsel for the defendant-appellant)

Seoul High Court Decision 97Gu13605 delivered on February 26, 1998

The judgment below is reversed. The case is remanded to Seoul High Court.

The grounds of appeal are examined.

1. On the first ground for appeal

Article 131 (1) of the former Local Tax Act (amended by Act No. 4995 of Dec. 6, 1995; hereinafter referred to as the "Act") provides that "when a registration of real estate is made, registration tax shall be paid according to the following standard tax rates." In the case of "acquisition of ownership without compensation, other than that under subparagraphs 2 through 1 (acquisition of ownership due to inheritance), 15/1,000 of real estate prices; and in the case of acquisition of real estate other than farmland for reasons other than those under subparagraphs 3 and 2, 30/1,00 of real estate values, 131 (1) 2 of the Act provides that "an application for registration of transfer of ownership is made free of charge under the name of a title truster for the registration of title trust," and it does not provide that "an application for registration of transfer of ownership due to a title trustee shall be made free of charge under the name of the title truster or the title trust agreement, and it does not limit the method of evidence thereof."

Therefore, if the court below found that the plaintiff constructed the building of this case under the name of the non-party through its representative director and completed the registration of ownership transfer in the future, but the registration of ownership transfer was made on the ground of sale and purchase, it does not constitute "acquisition of ownership without compensation" under Article 131 (1) 2 of the former Local Tax Act, but it does not constitute "acquisition of ownership without compensation" under Article 131 (1) 3 of the former Local Tax Act, and it does not constitute an unlawful act that affected the conclusion of the judgment. The part of the grounds of appeal assigning this error is with merit.

2. On the second ground for appeal

The tax base of registration tax on the registration of real estate under the former Local Tax Act before the amendment of December 6, 1995 is "the value at the time of acquisition" (see Article 130 (1) of the Act) and is basically the same as the method of determining the tax base of acquisition tax, and Articles 130 (3) and 111 (5) 3 of the Act and Article 82-3 (2) of the Enforcement Decree of the Act (amended by Presidential Decree No. 14878 of Dec. 30, 1995; hereinafter the same shall apply). The tax base of registration tax on the acquisition of which the acquisition price is proved by the corporate book shall be the actual acquisition price. The actual acquisition price here means all expenses paid or to be paid by the other party or a third party before the acquisition date of the taxable object. Thus, the tax base for new construction of a building shall be the sum of the construction cost and incidental expenses, namely, the construction cost, and if the construction cost is a contract for construction work, the amount to be excluded from the tax base.

Therefore, the court below deemed the file work and soil removal work as part of the site development work, and deemed that the construction cost is included in the acquisition value of the building of this case as it was required and unnecessary for the new construction of the building of this case. It is reasonable in accordance with the legal principles as seen earlier. However, it is difficult to conclude that the construction work of this case is a construction work composed of unnecessary and unnecessary preparation acts for the new construction of the building of this case. Unless there are other special circumstances, the result of the above two construction works can not be included in the acquisition cost of the building of this case because it is a part of land as a fixtures, and thus, it cannot be included in the registration tax base for the building of this case. Accordingly, the judgment of the court below as to the floor packing work of this case and well-known destruction work of this case is erroneous in the misapprehension of legal principles as to the tax base for registration tax or in the incomplete deliberation and thereby affected the conclusion of the judgment. The part pointing this out in the grounds of appeal

3. Therefore, the judgment of the court below shall be reversed, and the case shall be remanded to the court below for a new trial and determination. It is so decided as per Disposition with the assent of all participating Justices.

Justices Lee Yong-woo (Presiding Justice)