Whether a person liable to pay acquisition tax due to a change of land category prescribed in Article 105(5) of the former Local Tax Act on the land transferred to a trustee by a trust under the Trust Act is a trustee (affirmative)

In the case of land, Article 105(1), (2), and (5) of the former Local Tax Act (amended by Act No. 7843, Dec. 31, 2005; hereinafter “the Act”) provides that “The property subject to acquisition tax is subject to the increase in its value due to the actual change in the land category of the land being owned.” Since trust under the Trust Act requires a truster to manage and dispose of a property right for the purpose of trust by transferring a specific property right to a trustee or disposing of it. Thus, if a trustee completes the registration of ownership transfer in the future, if the ownership transfer is completed in the real estate trust, it is not subject to the trustee’s transfer.” Article 19 of the Trust Act provides that “The property acquired by the trustee due to the management, disposal, destruction, damage, or any other reason of the trust property belongs to the trust property.” In light of the fact that the taxpayer is a trustee with respect to the acquisition of real estate, etc. belonging to the trust property under the above provision, it is reasonable to deem that the truster has changed its land category by change in fact.

Article 105(1)(see current Article 7(1) and (2)(see current Article 7(2) and (5)(see current Article 7(4)) of the former Local Tax Act (Amended by Act No. 7843, Dec. 31, 2005); Article 19 of the Trust Act

Supreme Court Decision 83Nu696 Decided May 15, 1984 (Gong1984, 1133) Supreme Court Decision 2000Ma2997 Decided January 27, 2003 (Gong2003Sang, 1035) Supreme Court Decision 2010Da84246 Decided February 10, 201

Korea Land Trust Co., Ltd. (Bae & Yang LLC, Attorneys O Tae-hwan et al., Counsel for the plaintiff-appellant)

The head of Yeongdeungpo-si Office

Seoul High Court Decision 2009Nu14561 decided December 23, 2009

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

The grounds of appeal are examined.

Article 105(1) of the former Local Tax Act (amended by Act No. 7843 of Dec. 31, 2005; hereinafter “the Act”) provides that “acquisition tax shall be imposed on the acquisitor for the acquisition of real estate, etc.” The main text of Article 105(2) provides that “The acquisition tax shall be imposed on the acquisitor,” and the main text of Article 105(2) provides that “The acquisition of real estate, etc. shall be deemed acquisition if it is actually acquired even if registration, record, etc. under the provisions of relevant Acts and subordinate statutes, such as the Civil Act, is not performed, and the owner or transferee of the relevant article shall be deemed an acquisitor, respectively.”

In the case of land subject to acquisition tax under each of the above provisions, the land category of the “owned” land is substantially changed and its value increases (see, e.g., Supreme Court Decision 83Nu696, May 15, 1984). Since trust under the Trust Act provides that a truster shall manage and dispose of the property right for the purpose of trust by transferring a specific property right to a trustee or by other disposal, if the trustee completes the registration of ownership transfer in the future of the trustee in a real estate trust, the ownership is not transferred to the trustee, but the truster is not reserved in the internal relationship with the truster (see, e.g., Supreme Court Order 2000Ma297, Jan. 27, 2003; Supreme Court Decision 2010Da84246, Feb. 10, 201); Article 19 of the Trust Act provides that a truster shall not be deemed to belong to the trust property subject to acquisition tax due to the change of the land category of the trust property under Article 5 of the Trust Act.

Nevertheless, the court below held that the disposition imposing the acquisition tax of this case by the person liable for duty payment was unlawful on the ground that the truster should be the person liable for duty payment, in case where the truster has de facto changed the category of the land transferred to the trustee by taking into account the cost and effort as to the land transferred by a trust under the Trust Act. In so doing, the court below erred by misapprehending the legal principles as to the person liable for duty to pay the acquisition tax due to the change of land category, and the ground for appeal assigning

Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Lee Sang-hoon (Presiding Justice)