The meaning of registration of rental business operator under the Housing Lease Act in the special case of non-taxation for one household

Long-term rental houses shall be excluded from the objects of determination of the number of houses owned by one household, which shall be registered as a rental business operator under the Housing Lease Act before transferring them.

Article 155 (19) of the Enforcement Decree of the Income Tax Act

Seoul Administrative Court-2017-Gu Partnership-60185

AA

AA Head of the Tax Office

September 28, 2017

November 9, 2017

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

Defendant’s transfer income tax amounting to KRW 494,934,170 for the Plaintiff on August 1, 2016 (Additional Tax) of the year 2015.

71,433,588 won (including won) shall be revoked.

1. Details of the disposition;

A. On October 8, 2014, the Plaintiff newly built an urban residential housing bond of 39 (hereinafter referred to as “instant rental housing”) on the ground of the Seoul AB Dong, Seoul. In this regard, on August 1, 2012, the head of a tax office filed a report on business registration as a new construction and sales business of a building, and on July 25, 2013, a report on business registration as a business registration adding real estate rental business.

B. Meanwhile, on March 13, 1992, the Plaintiff acquired and resided in a house AB Dong (hereinafter “instant transferred house”) and transferred it to CCC and DD for KRW 2.9 billion on October 20, 2015, and applied Article 89(1)3 of the Income Tax Act and Article 155(19) of the Enforcement Decree of the same Act, and reported and paid KRW 31,640,733 of the capital gains tax for the excess amount of KRW 90 million on December 10, 2015, by applying the special provision on one house for one household under Article 89(1)3 of the Income Tax Act and Article 155(19) of the Enforcement Decree of the same Act.

C. On February 11, 2016, the Plaintiff registered the instant rental housing as a rental business operator pursuant to Article 6 of the former Rental Housing Act (wholly amended by Act No. 13499, Aug. 28, 2015; hereinafter the same) with respect to the instant rental housing with respect to the Plaintiff.

D. On August 1, 2016, the Defendant excluded the application of the foregoing special provisions on the ground that the Plaintiff did not have a rental business operator registration under Article 6 of the former Rental Housing Act, which is a requirement for application of Article 155(19) of the Enforcement Decree of the Income Tax Act, with respect to the instant rental housing as of October 20, 2015, which is the transfer date of the instant transferred house, and issued a notice of correction and notification of KRW 494,934,170 for capital gains tax belonging to the Plaintiff in 2015 (hereinafter “instant disposition”).

E. The Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on October 5, 2016, but was dismissed on December 30, 2016.

[Reasons for Recognition] Facts without dispute, Gap's 5, 10 to 14, Eul's 1 to 3 (including additional numbers), the purport of the whole pleadings

2. Whether the disposition is lawful;

(a) Relevant statutes;

Article 155(19) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 26763, Dec. 28, 2015; hereinafter the same) provides that where a household which owns a residential house and a house for long-term lease have owned and resided in a residential house for at least two years, a house for long-term lease shall not be deemed a house, and a house for long-term lease shall be deemed a house for long-term lease and shall be subject to non-taxation of capital gains tax as of the date of transfer under subparagraph 2 of Article 168 of the former Income Tax Act (amended by Act No. 14389, Dec. 20, 2016; hereinafter the same shall apply) as of the date of transfer as of the requirements for a house for long-term lease under subparagraph 2

In this case, the Plaintiff had registered business under Article 168 of the former Income Tax Act at the time of October 20, 2015, which was the transfer date of the transferred house of this case, but the registration of rental business operator under Article 6 of the former Rental Housing Act was not made as seen earlier.

B. The plaintiff's assertion

In applying special cases to one house for one household under the former Enforcement Decree of the Income Tax Act, the reason why the registration of a rental business operator is required is to verify whether the leased house was commenced at the time of the transfer through the lease commencement date indicated in the rental business operator registration certificate, and thus, if the lease commencement date is confirmed through other objective data, it does not mean to prevent the extension date of lease through other methods than the rental business operator registration certificate. The purport of the provision on special cases to one house for one household and the economic substance that the Plaintiff started the rental business from October 2014 to the present time and started the rental business, and should have had the Plaintiff supplemented the registration requirements of the rental business operator if the Plaintiff failed to meet the registration requirements at the time of the application (if the Plaintiff applied for reduction of or exemption from the acquisition tax of the house of this case on the ground that it is a rental business operator, it would result in the transfer of this case by taking advantage of the legislative intent of the special cases to one house for one household, the principle of substantial taxation, and the feasibility of substantial taxation.

C. Determination

The instant disposition, which deemed that the instant rental house does not constitute a long-term rental house under Article 155(19)2 of the former Enforcement Decree of the Income Tax Act, cannot be deemed illegal for the following reasons. Therefore, the Plaintiff’s assertion is without merit.

1) Under the principle of no taxation without law, or the requirements for tax exemption or tax exemption, and the interpretation of tax laws and regulations shall be interpreted in accordance with the law, barring any special circumstance, and shall not be extensively interpreted or analogically interpreted without reasonable grounds (see, e.g., Supreme Court Decision 2003Du7200, Mar. 12, 2014). Article 155(19)2 of the former Enforcement Decree of the Income Tax Act explicitly provides that "business registration under Article 168 of the Income Tax Act" and "rental business registration under Article 6 of the Rental Housing Act" shall be applied as the requirements for "long-term rental house to which special cases concerning one house for one household apply" under Article 155(19)2 of the former Enforcement Decree of the Income Tax Act. In light of the form and text of the

2) The main purpose of the principle of substantial taxation is to realize the principle of fair taxation by imposing tax at a place where a tax-bearing force exists, irrespective of its form or appearance (see, e.g., Supreme Court en banc Decision 2008Du8499, Jan. 19, 2012). Even under the principle of substantial taxation, the Plaintiff may be deemed to have leased a long-term rental house at the time of the transfer date of the instant transferred house in order to be subject to the special provision on one house for one household, and to have all the requirements under the public law, such as registration of a rental business operator under Article 6 of the former Rental Housing Act, to the extent that the Plaintiff

However, there is no assertion or evidence to acknowledge that the Plaintiff committed an act to meet the requirements of public law, such as the fact that the Plaintiff merely asserted and prove that it satisfies the substantive requirements for the lease of long-term rental houses, and that it did not have been registered as a legitimate application for registration of rental houses.

3) In registering a rental business under the former Rental Housing Act, not only the sale of a rental house within the mandatory rental period, but also the person subject to punishment for a violation (Articles 16 and 41 of the former Rental Housing Act), and the person subject to specific restrictions based on the registration of a rental business entity, such as compulsory subscription to a guarantee for rental deposit (Article 17 of the former Rental Housing Act). However, if a rental business entity is not registered, it would not be subject to such restrictions, and there is no compulsory provision on the registration of a rental business entity, so whether to register a rental business entity under the former Rental Housing Act is a matter of individual choice. Therefore, the instant rental house cannot be deemed to constitute a long-term rental house under Article 155(19) of the former Enforcement Decree of the Income Tax Act solely on the ground that the actual requirements for the registration

3. Conclusion

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