The meaning of farmland eligible for a management direct subsidy for three-year special provisions concerning direct cultivation that meets the requirements for reduction or exemption of capital gains tax;

It is reasonable to view that the phrase “farmland” eligible for direct payments for business transfer is farmland as a law related to the requirements for transferred land. Since the transferor’s personal requirements are separately prescribed in the phrase “resident prescribed by the Presidential Decree residing at the seat of farmland”, deeming that the personal requirements are also prescribed as well as the personal requirements is inconsistent with the systematic interpretation of the law.

2015Gudan71 Revocation of Disposition of Imposing capital gains tax

IsaA

Head of the Pakistan Tax Office

November 18, 2015

January 20, 2016

1. The Defendant’s disposition of imposition of capital gains tax of KRW 69,479,640 (including additional tax) for the year 2012 against the Plaintiff on November 5, 2013 shall be revoked.

2. The costs of the lawsuit are assessed against the defendant.

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. On March 7, 2002, the Plaintiff acquired the same OOOO-si OOOOO-si OOOO-si OOO-type OO-type OO-type oO-type m2, the same OOO-type m2, the same OO-type m2, the same OO-type m2, and the same OO-type m2 (hereinafter “each of the instant farmland”) on December 14, 2012, but transferred (sale) it to the Korea Rural Community Corporation at KRW 435,00,000.

B. After December 26, 2012, the Plaintiff filed an application for reduction of or exemption from capital gains tax on the premise that each of the instant farmland constitutes self-arable farmland (self-owned farmland for a period of three years or eight years or less) upon filing a report on the tax base of capital gains tax on the said transfer to the Defendant.

C. From around 2009, the Defendant denied the Plaintiff’s satisfaction of the requirements for self-sufficiency in each of the instant farmland, and denied the Plaintiff’s satisfaction of the requirements for self-sufficiency in eight years. Moreover, on the ground that each of the instant farmland does not constitute a recipient of management benefits, the Defendant denied the requirements for self-sufficiency in three years, thereby excluding capital gains tax reduction and exemption, and on November 5, 2013, notified the Plaintiff of KRW 69,479,640 for capital gains tax reverted to the year 2012 (hereinafter “instant disposition”).

D. On May 22, 2014, the Plaintiff, who was dissatisfied therewith, filed a request for a trial with the Tax Tribunal on May 22, 2014, but was dismissed on November 20, 2014.

[Ground of recognition] Unsatisfy, Gap evidence 1, 13, 14, Eul evidence 1 (including each number; hereinafter the same shall apply), each statement, the whole purport of the pleading

2. Determination on the legitimacy of the disposition

A. Summary of the plaintiff's assertion

1) Regarding the provision on the special exception for self-defense in eight years

The Plaintiff was a farmer who did not engage in any other work except for life-long farming company. The rice paddy field cultivated for 60 years was expropriated as an O housing site district in around 2001, and has been engaged in agricultural business continuously by acquiring farmland equivalent to 19,403 square meters including each of the instant farmland around that time. However, as the Plaintiff’s spouse’s health has disappeared and around 209 and around 2010, the Plaintiff had cultivated the work force of KimO, a nearby farmer in around 2009 and around 2010, but the health has been recovered since 2011, other parts of the Plaintiff’s health have been restored. Meanwhile, the Plaintiff sold the farmland to each of the instant Korea Rural Community Corporation on December 14, 2012.

As such, the Plaintiff is a farmer who has been engaged in cultivating crops in approximately 11 years of farmland owned without any other occupation until December 14, 2012 until the transfer on March 7, 2002. Thus, even if there exists a temporary gap period for not less than 1/2 of farming work with his own labor due to disease and high age during the above period, the Plaintiff constitutes a person who has directly cultivated each of the instant farmland for not less than eight years. However, the instant disposition made by the Defendant on a different premise is unlawful.

2) Regarding the provision on special exception for self-defense for three years

Even if the Plaintiff failed to meet the requirements for self-sufficiency for 8 years, each of the instant farmland subject to management transfer subsidies was transferred to the Korea Rural Community Corporation after the Plaintiff cultivated the farmland directly for 3 years or longer, so the capital gains tax reduction or exemption should be made pursuant to the special provisions on self-sufficiency for 3 years. However, the instant disposition made by the Defendant on a different premise is unlawful

(b) Related statutes;

Attached Form is as shown in the attached Form.

C. Determination

1) Determination as to whether the provision on special exception for self-defense for 8 years is met

We examine whether the Plaintiff directly cultivated the farmland of this case for at least eight years during the period of possession of each farmland of this case.

According to Article 69(1) of the former Restriction of Special Taxation Act (wholly amended by Act No. 11614, Jan. 1, 2013; hereinafter referred to as the "former Act") and Article 66(13) of the Enforcement Decree of the same Act (wholly amended by Presidential Decree No. 24271, Dec. 28, 2012; hereinafter referred to as the "former Enforcement Decree"), "direct farming, which is the requirement for reduction or exemption of capital gains tax, means that a resident engages in cultivating or cultivating agricultural products or perennial plants on his own land at least half of his own work or cultivating or cultivating them with his own work, taking into account the purpose of preventing speculation in external land and reducing the tax burden of self-employed farmers on farming and fishing villages for at least eight years, it is difficult to recognize "direct farming, which is the requirement for reduction or exemption of capital gains tax," and it is also difficult to recognize that the resident did not work exclusively for a period of one-half or more of his own work for the purpose of his own work.

On the other hand, there is no dispute over whether the plaintiff has failed to perform at least 1/2 of the farming work of the farmland as his own labor for at least eight years due to health problems.

Therefore, in light of the following circumstances, as to whether the plaintiff has been engaged in farming for more than eight years in the period of farmland possession, it is difficult to view that the plaintiff was engaged in farming for more than eight years by entirely inserting his own labor force for more than eight years, and there is no other evidence to acknowledge it. However, although the plaintiff did not have any other occupation than farming, it is deemed that the plaintiff did not have any other occupation, but "on the commercial work" is not recognized just because there was no other occupation. Thus, the plaintiff appears to have worked for more than six years after the date of acquisition of farmland from 2008 to the date of transfer, due to health and house development, etc., and therefore, the plaintiff is deemed to have worked for more than six years (6 years from the date of acquisition of farmland) since 208, since it was recognized as the period of the plaintiff, the plaintiff's use of his labor force was suspended for health recovery, etc.

① On January 11, 2006, Plaintiff 1 was treated with the propagation of the pre-user line from around April 2006, and was performed around October 2007. Meanwhile, the Plaintiff appears to have received a total of 93 medical care benefits from around October 2007 to the time of farmland transfer.

② The Plaintiff’s wife was hospitalized in a pulmonary cancer around February 2008.

③ The Plaintiff was holding spawn, anti-gras, compacters, etc., and until 2007, the duty-free oil allocated for the said agricultural machinery was used, but no duty-free oil recorded after 2008 was used.

④ Since 2009, Nonparty KimO received subsidies for each of the instant farmland.

⑤ In order to resolve the occurrence of an excessive occurrence by the Plaintiff, the Plaintiff sold each of the instant farmland.

Therefore, this part of the plaintiff's assertion is rejected.

2) Determination as to whether a person satisfies the provision of a special exception for self-defense for three years

(1) Relevant legal principles

Under the principle of no taxation without law, the interpretation of tax laws and regulations shall be interpreted in accordance with the text of the law, barring special circumstances, and it shall not be permitted to expand or analogically interpret it without reasonable grounds. In particular, it accords with the principle of fair taxation to strictly interpret that it is clearly considered as a preferential provision among the requirements of tax reduction and exemption.

(2) The issues of the case

Article 69 of the former Act and Article 66 of the former Enforcement Decree provide for the reduction or exemption of capital gains tax on self-farmland for three years, and provide for the following requirements under the law. On the other hand, there is no particular dispute between the parties as to the fact that the transfer of each farmland in this case satisfies the human requirements, the period and cultivation requirements, and the requirements for the transferee.

However, since there is a dispute between the plaintiff and the defendant as to whether each farmland of this case constitutes farmland eligible for management transfer subsidies under Article 4 of the "Enforcement Rule of Direct Payment System for Agricultural Producers", this issue is examined as to the above issue.

(3) Details of implementation rules of direct payments system for agricultural producers

농산물의 생산자를 위한 직접지불제도 시행규정(2014. 3. 18. 대통령령 제25259호 로 일부 개정되기 전의 것, 이하 '시행규정'이라 한다) 제4조에서는 경영이양보조금이 무엇인지 정의하고 있고 '농림수산식품부장관은 고령은퇴농가의 소득 안정을 도모하고 전업농 중심의 영농 규모화 촉진을 위하여 예산의 범위에서 조기에 경영이양한 농업인에게 경영이양소득보조금(이하 '경영이양보조금'이라 한다)을 지급한다', 제5조에서는 경영이양보조금의 신청 대상자의 인적 요건을 두고 있으며 신청일 직전 10년 이상(다만, 질병이나 사고가 있는 경우 최근 10년 중 8년 이상) 계속하여 농업경영을 하고 있는 농업인으로 신청일이 속하는 연도의 12월 31일 현재 65세 이상 70세 이하 , 제6조에서는 경영이양보조금의 지급 대상 농지의 물적 요건을 두고 있고(농업진흥지역의 농지로서 경영 이양 이전 3년 이상 계속하여 소유하고 있는 논��밭��과수원), 제7조에서는 경영이양요건을 두고 있다(보조금 지급 약정 체결 전날까지 자가 소비 용도 등을 위해 보유가 허용되는 3,000㎡의 농지를 제외한 나머지 모든 농지에 대하여 농업경영을 이양하여야 하고, 임차또는 사용차 중인 농지가 없어야 할 것).

(4) The parties' assertion

The Plaintiff asserts that each of the instant farmland constitutes farmland eligible for subsidies under Article 6 of the Enforcement Rule as farmland within the agriculture promotion area, and thus, even if the Plaintiff is not actually entitled to management transfer subsidies due to the transfer of each of the instant farmland (the Plaintiff is 76 years old at the time of the transfer of each of the instant farmland, and the Plaintiff is 12,828 square meters after the transfer, and thus fails to meet the requirements for personal requirements and management transfer support among the requirements for the payment of subsidies as seen earlier).

The defendant asserts that although each of the farmland in this case is transferred to the Korea Rural Community Corporation as land within the agriculture promotion area, it does not meet the requirements for reduction or exemption of capital gains tax, since it does not meet the requirements for reduction or exemption of capital gains tax.

(5) History of the special provision

The provision of the special taxation for the second year is a newly established special provision as the special taxation for the second year was amended by Act No. 7003 on December 31, 2003.

On the other hand, with the amendment of the Restriction of Special Taxation Act of December 11, 2002, which was partially amended by Act No. 6762 on December 11, 2002, the provision of the special taxation was first established in one year. However, the legislative intent of the provision was that "if the farmland was transferred to the Korea Agricultural and Rural Infrastructure Corporation and an agricultural corporation prescribed by the Presidential Decree for more than five years after relaxing the requirements for reduction and exemption of capital gains tax on self-employed farmland, the transfer of the farmland to the Korea Agricultural and Rural Infrastructure Corporation and the agricultural corporation in the agriculture promotion area provided for in Article 32 of the Farmland Act was that "the resident in the agricultural promotion area was directly cultivated for more than five consecutive years" and "the farmland was transferred to the Korea Agricultural Infrastructure Corporation or the agricultural corporation in the agricultural promotion area provided for in Article 32 of the Farmland Act (such as electric field, paddy field, orchard, etc.)" and the provision of the special taxation was abolished on December 31, 2003 and the provision of the special taxation was abolished for more than three years.

From January 1, 2006, only the provision on special cases for self-reliance has been maintained for the last three years. Meanwhile, with the revision of the enforcement regulations on January 6, 2009, farmland eligible for direct payments for business transfer has been expanded to include not only "the answer" in the agriculture promotion area, but also "electric and orchard", and the excellent farmland among the farmland outside the agriculture promotion area has also been included.

(6) Determination

The purpose of the provision on the special taxation for the five-year self-sufficiency that had been newly established immediately before the provision on the special taxation for the three-year self-sufficiency was to promote the national competitiveness of agriculture by inducing the transfer of farmland in the agricultural promotion zone, which is the good farmland, to the professional farmer in order to improve the farming structure prior to and vulnerable to the opening of agricultural products before and after 200. In addition, the provision on the special taxation for the three-year self-sufficiency is also aimed at promoting the scale of farming for the professional farmer by inducing the transfer of good farmland. In addition, the purpose of the provision on the special taxation for the three-year self-sufficiency is to support the stabilization of the life of small-scale elderly farmers who were set aside in the farming by promoting the activation of the system on the provision on the special taxation for the

In light of the above legislative intent, the relevant statutes shall be interpreted in accordance with the literature, and considering the following circumstances, it is reasonable to view that even if the transferor is not actually paid management transfer subsidies, if the transferred land falls under the land subject to management transfer subsidies as it falls under the farmland, etc. located within the agricultural promotion zone, the provision on management transfer subsidies shall be satisfied for three years. Therefore, the plaintiff's assertion to that purport is with merit, and the defendant's argument to that effect is rejected.

① Article 66(1), (4), and (13) of the former Enforcement Decree of the Act stipulate the personal requirements for self-sufficiency (resident requirements) and cultivation requirements under the special provisions of the former Enforcement Decree. Here, “a person who has resided in a location or adjoining area, etc. for at least three years shall be engaged in farming or fishing for at least three years, or shall cultivate at least 1/2 of farming or fishing for himself/herself through his/her own labor force.” It does not indicate that the person eligible for management transfer subsidies (i.e., a farmer who has been at least 65 years but less than 70 years old and has continuously engaged in farming or fishing for at least ten years) is the one with the personal requirements. If the human requirements subject to the special provisions of the former Enforcement Decree of the Act are limited to “a farmer eligible for management transfer subsidies” as alleged by the defendant, the person subject to the special provisions of the former Enforcement Decree of the Act should be subject to the application of the three-year self-sufficiency provision at least for at least three years prior to the date of transfer.

(2) The phrase “farmland eligible for direct payments for business transfer” in the structure of the former statutory provisions is reasonable to deem that it is a statutory provision related to the requirements for the transferred land. The transferor’s personal requirements are separately prescribed in the phrase “resident prescribed by Presidential Decree residing at the seat of farmland.” As such, deeming that the phrase “farmland eligible for subsidies for business transfer support as well as the personal requirements is also inconsistent with the systematic interpretation of the law.”

③ Interpretation of the phrase “farmland eligible for direct payments for business transfer” as “farmland meeting all the requirements for granting subsidies (including personal requirements and business transfer requirements)” seems to be excessively reduced without any justifiable reason beyond the strict interpretation in accordance with the no taxation without law.

3. Conclusion

Ultimately, it is reasonable to see that the Plaintiff’s transfer of each of the instant farmland satisfies the special exception provisions for self-defense for three years. Accordingly, the Defendant’s disposition of this case, which was made on a different premise, should be revoked as unlawful, and therefore, the Plaintiff’s claim of this case shall be accepted on the ground of its reasoning, and