Examination-2014-0210 ( October 16, 2015)

Transfer after the lapse of 3 years from the date of incorporation into a residential area and is not subject to reduction or exemption for 8 years.

Since the claimant transferred the disputed land after the lapse of three years from the date of incorporation into a residential area, and the project operator delayed compensation due to unavoidable reasons, it is legitimate to deny the application for reduction or exemption for the period of eight years.

Article 69 of the Restriction of Special Taxation Act (Reduction or Exemption of Transfer Income Tax for Self-Cultivating Farmland)

Suwon District Court 2015Gudan31446 Revocation of Disposition of Imposing Capital Gains Tax

O KimO

O Head of tax office

201.01.20

2016.02.03

1. All of the plaintiff's claims are dismissed.

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

Cheong-gu Office

The primary purport of the claim is revoked on November 17, 2014 by the Defendant’s imposition of capital gains tax of KRW 88,532,300 for the Plaintiff on November 17, 2012.

Preliminary claim: The Defendant’s imposition disposition of KRW 88,532,300, which was rendered against the Plaintiff on November 17, 2014, is revoked. The imposition disposition of KRW 59,060,676, which was imposed by the Plaintiff on November 17, 2012, is revoked.

(No. 2, 2014, which is the date of disposition in accordance with the purport of the claim, seems to be a clerical error in November 17, 2014).

1. Details of the disposition;

A. On June 12, 2002, the Plaintiff acquired 496 square meters (hereinafter “instant land”) from 00:0,000 o,00 o,00,000, but transferred o, on December 27, 2012, 396.69 square meters out of the instant land.

B. The Plaintiff filed an application for reduction or exemption under Article 69(1) of the former Restriction of Special Taxation Act (amended by Act No. 11614, Jan. 1, 2013; hereinafter “Special Taxation Restriction Act”) upon filing a capital gains tax return. However, the Defendant determined that the instant land was transferred after three years from December 17, 2007, which was the date of incorporation into a residential area, and whether the Plaintiff was self-employed for at least eight years was unclear, and then, on November 17, 2014, notified the Plaintiff of correction and notification of KRW 88,532,300 for capital gains tax belonging to the Plaintiff in 2012 (hereinafter “instant disposition”).

[Reasons for Recognition] Evidence Nos. 1, 2, 3-1, 2, 4-1, 1, 2-1, 1, and 2, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The instant disposition is unlawful for the following reasons.

1) In the first place, the Plaintiff is responsible for delaying the payment of capital gains tax (land expropriation compensation) due to financial conditions and the order of priority in the project with respect to the development of 000,000 district including the instant land, which is a person who meets the self-regulation provision for at least eight years, and accordingly, the Plaintiff is liable for the transfer of the instant land after three years from the date of incorporation into the residential area due to unavoidable reasons. Accordingly, the capital gains tax reduction provision under the self-regulation requirement should be applied pursuant to the main sentence of Article 69(1) of the Restriction

2) Preliminaryly, even if there is no inevitable reason, the provisions on capital gains tax reduction and exemption shall apply to the income accrued until the date of incorporation of the instant land into a residential area pursuant to the proviso of Article 69(1) of the former Restriction of Special Taxation Act, at least by

(b) Related statutes;

It is as shown in the attached Form.

C. Determination

1) Determination as to the primary claim (whether the main sentence of Article 69(1) of the former Restriction of Special Taxation Act is applied)

A) The main sentence of Article 69(1) of the former Restriction of Special Taxation Act provides that "the tax amount equivalent to 100/100 of capital gains tax shall be reduced or exempted for the income accruing from the transfer of land prescribed by the Presidential Decree, among land directly cultivated by a person who resides in the seat of farmland for not less than eight years." Article 66(4) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 24368, Feb. 15, 2013) provides that "the farmland cultivated by him for not less than eight years" under the main sentence of subparagraph 1 of Article 66(4) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 24368, Feb. 15, 2013) among the farmland located in the Special Metropolitan City, Metropolitan City or Si (hereinafter "National Land Planning Act") shall be excluded from capital gains tax if it falls under "the farmland for which three years have passed since its incorporation into such area" under the proviso of subparagraph 1(b).

B) As to the instant case, comprehensively taking account of the evidence and the overall purport of the pleadings, including evidence as mentioned above, including evidence No. 11-1 through 3, No. 11-3, and No. 3 and No. 4, it is reasonable to view that the instant land does not constitute an exemption from capital gains tax to which Article 69(1) main sentence of Article 69(1) of the former Restriction of Special Taxation Act, Article 66(4)1(b) of the former Enforcement Decree of the Restriction of Special Taxation Act, and Article 27(5)

○ The instant land was incorporated into a Class-I general residential area under the National Land Planning Act on December 17, 2007; and the Plaintiff transferred part of the instant land on December 27, 2012, which was three years thereafter.

○ On the other hand, according to the Gyeonggi-do Notice No. 0000-000, the land in this case was released from the development restriction zone on December 17, 2007 and the district unit plan was established, and the special-purpose area was changed to Class 1 general-purpose area from the natural green area. The S market was confirmed that the land in this case, including the land in this case, was planned to form an association with landowners at the time of 2007 with respect to the development of the small river d and theff d and theff d, including the land in this case, and it was less than the lack of business feasibility but it was found that the project implementer was not designated as of December 27, 2012.

Therefore, it is reasonable to view the instant land as farmland excluded from the reduction or exemption of capital gains tax under Article 66(4)1 of the former Enforcement Decree of the Restriction of Special Taxation Act, since it was only transferred three years after it was already incorporated into a residential area before the execution of the development project, and it does not constitute farmland incorporated into a residential area due to the execution of the development project. Therefore, it does not constitute capital gains tax reduction or exemption under the main sentence of Article 69(1) of

2) Determination on the conjunctive claim (whether the proviso of Article 69(1) of the former Restriction of Special Taxation Act is applied)

A) The main sentence of Article 69(1) of the former Restriction of Special Taxation Act provides that "an amount of tax equivalent to 100/100 of capital gains tax shall be reduced or exempted for income accruing from the transfer of land prescribed by Presidential Decree among land directly cultivated by a person who resides in a farmland for not less than eight years," and the proviso provides that "in cases where the relevant land is incorporated into a residential area, commercial area or industrial area under the National Land Planning and Utilization Act, only the income accrued until the date of incorporation into a residential area, etc. and prescribed by Presidential Decree shall be reduced or exempted."

B) We examine the instant case, i.e., the following circumstances acknowledged by the evidence mentioned above and the purport of the entire pleadings, i.e., (i) the proviso of Article 69(1) of the former Restriction of Special Taxation Act to reduce or exempt capital gains accruing from land price increase after the date of incorporation into a residential area, deeming that it does not conform to the legislative intent of the regulations on self-employed farmland reduction and exemption; and (ii) therefore, the proviso of Article 69(1) of the former Restriction of Special Taxation Act as to the scope of reduction and exemption in cases where the farmland incorporated into a residential area meets the requirements for reduction and exemption under the main sentence of Article 69(1) of the former Restriction of Special Taxation Act, it is reasonable to deem that the said proviso is not applicable to the instant land since it did not meet the requirements under the main sentence of Article 69(1) of the former Restriction of Special Taxation Act

3. Conclusion

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