Seocho 2014west 2587 (2014.07.04)

The plaintiff's disposition that excludes the non-taxation of one house for one household as non-resident is justifiable.

The evidence submitted by the Plaintiff alone is insufficient to recognize that the Plaintiff is a resident who has an address in the Republic of Korea since the date the Plaintiff was the date of departure from the Republic of Korea.

Article 2 of the Income Tax Act

2014Gudan14061 Revocation of Disposition of Imposing capital gains tax

KimA

BB Director of the Tax Office

January 14, 2016

February 16, 2016

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s disposition of imposition of capital gains tax of KRW 140,626,110 for the Plaintiff on February 3, 2014 is revoked.

1. Details of the disposition;

A. A. Around July 10, 2002, the Plaintiff acquired OOO apartment OOOOO apartment OOOOO apartment OOOOO apartment hereinafter “instant house”) but transferred it to the Z on or around February 27, 2013.

B. On March 15, 2013, the Plaintiff reported and paid KRW 1,528,330 as to the portion exceeding KRW 900 million by deeming that the transfer of the instant house constitutes one tax-free object for one household.

C. On February 3, 2014, the Defendant issued a correction and notification of KRW 140,626,110 for the transfer income tax of 2013, which was calculated by deeming that the Plaintiff transferred the instant house under the status of non-resident to be excluded from the application of the non-taxation provision on one house for one household (hereinafter “instant disposition”).

D. On April 25, 2014, the Plaintiff dissatisfied with the instant disposition and filed an appeal with the Tax Tribunal on or around April 25, 2014, but the said claim was dismissed on or around July 4, 2014.

[Reasons for Recognition] Facts without dispute, Gap 2, 17, 18, 19, 20, 25 evidence, Eul 1 and 2, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

Around October 25, 2007, the Plaintiff acquired the instant house and owned it for two or more years. Around October 25, 2007, the Plaintiff became a temporary non-resident, but around October 21, 2010, entered Korea with the intention of a permanent return country, and was converted to a resident around that time. Around August 20, 2010, the Plaintiff first brought her wife KimD and sonE, and then arranged U.S. life, and entered Korea on October 21, 2010. The Plaintiff was found to have been subject to a medical examination by the care hospital located in the U.S., and the Plaintiff was forced to evade the transfer of the instant house for the reason that the Plaintiff was subject to the 15th anniversary of the transfer of the instant house by reason of the 14th anniversary of the 2010 square meters of the Enforcement Decree of the Income Tax Act. Accordingly, the Plaintiff’s transfer of the instant house within the 15th anniversary of the Plaintiff’s family operation.

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

(c) Fact of recognition;

1) The records on the transfer and entry of a certified resident registration abstract against the Plaintiff are as follows.

householder

Relation

Transfer Date

Address

CC Kim

A.

January 16, 2001

OOOOdong OOO apartment O-OOOO

Principal

December 9, 2003

OOOOOOOOOO-OOOOOOO

CC Kim

A.

November 21, 2007

OOOOdong OOO apartment O-OOOO

Principal

July 5, 2012

OOOOdong OOO apartment O-OOOO

CC Kim

A.

February 28, 2013

OOOOdong OOO apartment O-OOOO

2) On November 14, 2005, the Plaintiff reported a marriage with KimD and had two children KimE (born on May 12, 2006) and KimF (born on July 9, 2009).

3) The status of the Plaintiff’s entry into and departure from Korea is as follows.

date of entry

Departure Date

Date of Domestic Sojourn

November 11, 2006

November 30, 2006

20

January 21, 2007

March 7, 2007

46

April 27, 2007

May 25, 2007

29

August 21, 2007

August 30, 2007

10

September 29, 2007

October 13, 2007

15

October 17, 2007

October 25, 2007

9

September 28, 2009

October 13, 2009

16

January 22, 2010

January 26, 2010

5

October 21, 2010

March 2, 2011

133

May 31, 2011

June 15, 2011

16

October 22, 2011

November 3, 2011

13

November 19, 2012

December 8, 2012

20

October 31, 2013

November 16, 2013

17

4) The entry into and departure status of KimD is as follows:

date of entry

Departure Date

Date of Domestic Sojourn

February 10, 2006

February 13, 2007

369

February 24, 2007

August 30, 2007

188

September 7, 2007

October 13, 2007

37

October 17, 2007

October 25, 2007

9

January 4, 2008

February 12, 2008

40

September 28, 2009

January 26, 2010

121

August 20, 2010

March 2, 2011

195

June 6, 2012

July 17, 2012

42

5) The entry into and departure status of KimE is as follows:

date of entry

Departure Date

Date of Domestic Sojourn

October 25, 2007

9

January 4, 2008

February 12, 2008

40

September 28, 2009

January 26, 2010

121

August 20, 2010

March 2, 2011

195

June 6, 2012

July 17, 2012

42

6) The entry into and departure status of KimF is as follows:

date of entry

Departure Date

Date of Domestic Sojourn

January 26, 2010

August 20, 2010

March 2, 2011

195

July 17, 2012

7) Since the Plaintiff entered the Republic of Korea with his family members around October 25, 2007 and operated a restaurant in California, California, and sold the management right to the above restaurant on March 19, 2010. On July 27, 2010, the Plaintiff entrusted real estate intermediaries with the sale and purchase of the housing in California, California, and the sales of the housing in California.

8) On October 17, 2007, the Plaintiff entered into a lease agreement between thisG and the rental deposit of KRW 350,000,000, monthly rent of KRW 0,000, and the period from October 31, 2007 to October 30, 2009. On October 7, 2010, the Plaintiff entered into a lease agreement between HanH and the rental deposit of KRW 380,00,000, monthly rent of KRW 0,000, and the period from November 10, 2012.

9) On October 22, 2010, the Plaintiff visited a hospital, etc. that had been on the chests since 7 to 8 years ago, due to symptoms, such as pains, etc. that have occurred during the recent one year. On November 3, 2010 at the request of the above hospital, etc., the Plaintiff visited the OOO hospital on the part of November 3, 2010, and was diagnosed with the UO cancer and received the UO cancer surgery on November 11, 2010.

10) On April 18, 2011, the Plaintiff and KimD leased the foregoing space for 120 months or 60 months (which may be extended once consecutively) and operate a restaurant at the shopping center located in California, California, Luxembourg, and thereafter.

[Reasons for Recognition] Facts without dispute, Gap 3 through 8, 12 through 15, 21, 22, 23, 26, 27, 31 through 36, 40, 42, 43, 44 and the purport of the whole pleadings (including each number),

D. Determination

1) To be subject to non-taxation for one house for one household, a resident under the Income Tax Act should transfer a house in Korea, or at least a non-resident should transfer a house in Korea within two years from the departure date under Article 154(1)2(b) and (c) of the former Enforcement Decree of the Income Tax Act (amended by Presidential Decree No. 25193, Feb. 21, 2014).

On the other hand, a resident under the Income Tax Act refers to a person who has a domicile or a temporary domicile in the Republic of Korea for not less than one year, and an address is determined based on objective facts of living relationship, such as whether a family living together with a family living in Korea and an asset located in Korea (see, e.g., Supreme Court Decision 96Nu2927, Nov. 14, 1997). As to the facts that a family living in Korea meets the non-taxation requirements of capital gains tax as it constitutes one house for one household and land annexed thereto, a taxpayer shall be deemed to have the burden of proof (see, e.g., Supreme Court Decision 2005Du8443, Dec. 23, 2005).

2) In light of the following circumstances that are acknowledged by comprehensively taking account of the following circumstances as to this case’s facts, the evidence submitted by the Plaintiff alone is insufficient to acknowledge the fact that the Plaintiff was a resident with an address in the Republic of Korea since October 25, 2007, when the Plaintiff was a resident with an address in the Republic of Korea, and there is no other evidence to acknowledge this otherwise. Thus, the Plaintiff’s assertion is without merit without need to further examine.

① On October 22, 2010, the day following the date when the Plaintiff entered the Republic of Korea: (a) visited the hospital by reason of the increase of the number of breast spaths between the last one year and the occurrence of pains; (b) left the hospital for a period of four months after being diagnosed and administered on a 20-day basis; and (c) in light of this, it is difficult to believe the Plaintiff’s statement that the Plaintiff was forced to depart from the Republic of Korea due to an intention to return permanently and under medical treatment after having become aware of the outbreak of breast spathy cancer, etc.

② In light of the fact that the Plaintiff’s family members entered the Republic of Korea separately from the Plaintiff, and there was a long-term stay in the Republic of Korea at the time of their entry, objective data that the Plaintiff and their family members made efforts to have their residence and occupation in the Republic of Korea, or carried in, etc. were not submitted, and the Plaintiff’s family members concluded a new lease agreement on the instant housing around October 7, 2010, when they entered the Republic of Korea, etc., it is difficult to view the Plaintiff’s family members as domestic residents solely on the grounds that they first enter the Plaintiff’s family members and reside within the Republic of Korea for six months, and during that period, they were in the Republic of Korea when they worked

③ Although it is deemed that the Plaintiff sold the management right to a restaurant that the Plaintiff had already operated and entrusted the sale and purchase of the house that the Plaintiff had liveded, it appears that most of the assets owned by the Plaintiff and their families are in the United States, in light of the fact that the Plaintiff did not confirm the records that the Plaintiff carried the assets in the United States in Korea, and rather, the Plaintiff entered into a long-term rental agreement on real estate in the United States and operated a restaurant at

3. Conclusion

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

Relevant statutes

The former Income Tax Act (Amended by Act No. 12169, Jan. 1, 2014)

Article 1-2 (Definitions)

(1) The terms used in this Act shall be defined as follows:

1. The term "resident" means an individual who has his/her domicile or residence in the Republic of Korea for at least one year;

2. The term "non-resident" means an individual who is not a resident;

(2) Classification of addresses, domiciles and non-residents under paragraph (1) shall be prescribed by Presidential Decree.

Article 89 (Non-Taxable Capital Gains)

(1) No capital gains tax (hereinafter referred to as "capital gains tax") shall be levied on the following income:

3. Income generated from the transfer of one house for one household prescribed by Presidential Decree (excluding expensive houses the value of which exceeds the standard prescribed by Presidential Decree) and land appurtenant thereto, the area of which is within the area calculated by multiplying the area of which a building is built by the multiple rates prescribed by Presidential Decree by region (hereafter referred to as "land annexed to a house" in this

The former Enforcement Decree of the Income Tax Act (Amended by Presidential Decree No. 25193, Feb. 21, 2014)

Article 2 (Determination on Domicile and Place of Residence)

(1) The address under Article 1-2 of the Income Tax Act (hereinafter referred to as the "Act") shall be determined by the objective facts of living relationship, such as the existence of a family living together in Korea and of the property located in Korea.

(2) The place of residence prescribed in Article 1-2 of the Act shall be the place where a person has resided for a long time besides his/her address, and in which no close general living relationship is formed as the address.

(3) Where an individual who resides in Korea falls under any of the following subparagraphs, he/she shall be deemed to have an address in Korea:

1. When a person has an occupation which requires him to continually dwell in Korea for 1 year or longer; and

2. When a person has a family living together in Korea, and is considered to dwell in Korea continuously for 1 year or longer judging from his occupation and property status; and

(4) Where a person residing or working overseas falls under any of the following cases, he/she shall be deemed to have no address in Korea:

1. When a person has an occupation which usually requires him to continually dwell abroad for 1 year or longer; and

2. When a person with a foreign nationality or citizenship under the foreign laws, who has no family living together with him in Korea, and is not deemed to return home again and mainly dwell in Korea in view of his occupation and property status.

Article 2-2 (Time when Person Becomes Resident or Nonresident)

(1) The time when a non-resident becomes a resident shall be as follows:

1. Date of having an address in Korea;

2. The date when any ground for deeming that he/she has an address in Korea or has an address in Korea under Article 2 (3) and (5) occurs;

3. One year period in which he has a domicile in Korea; and

(2) The time when a resident becomes a non-resident shall be as follows:

1. The next day of the date when he/she leaves Korea to move his/her domicile or temporary domicile to a foreign country;

2. The day following the day on which a cause for deeming that he/she has no domicile in Korea or has an address in a foreign country occurs under Article 2 (4) and (5);

Article 4 (Calculation of Dwelling Period)

(1) Dwelling period in Korea shall be from the day following the date of entry to the date of departure.

(2) Where an individual who has his/her residence in Korea enters Korea again, and the purpose of departure is deemed clearly temporary, in view of the domicile, location of assets, etc. of his/her family living together, the period of departure shall be deemed the period of temporary domicile in

(3) Where the period of residence in Korea is one year or more over two taxable periods, the domicile in Korea shall be deemed to have been established for one year or more.

§ 154. Scope of “One house for one household”

(1) "One house for one household prescribed by Presidential Decree" in Article 89 (1) 3 of the Act means that a household comprised by a resident and his/her spouse together with the family members who make a joint living at the same address or same place of residence (hereinafter referred to as "one household") has one house in Korea as of the date of transfer, and the holding period of the relevant house is at least two years (three years, in cases of the resident who falls under paragraph (8) 2): Provided, That where one household has one house in Korea as of the date of transfer and falls under any of the following subparagraphs, it shall not be subject to restrictions on the holding period:

2. The case falling under any of the following items. In such cases, the remaining house and its appurtenant land which are transferred within five years from the relevant transfer date or expropriation date shall be deemed to be included in the cases of item (a):

(b) Where all members of a household depart from the country due to emigration under the Emigration Act: Provided, That it is limited to the transfer made within two years from the date of departure in cases where one house was held as of the date of departure;

(c) Where all members of a household depart from Korea due to such conditions as study or work needing continuous overseas residence for not less than one year: Provided, That it is limited to the transfer made within two years from the date of departure in cases where one house is held as of the date of departure;

3. Where a house which has resided in for not less than one year is transferred due to school attendance, circumstances of service, medical treatment of a disease, or other unavoidable reasons.

Article 156 (Scope of Expensive House)

(1) " expensive house the value of which exceeds the standard prescribed by Presidential Decree" in Article 89 (1) 3 of the Act means a house and land appurtenant thereto, the sum [referring to the amount calculated by dividing the sum of the actual transaction values at the time a house and land appurtenant thereto are transferred or part of others are owned, by the ratio (including the portion owned by others) to the sum of the actual transaction values at the time of transfer of the house and

Article 160 (Calculation of Gains on Transfer, etc. of Expensive House)

(1) The gains on transfer and special deduction for long-term holding of assets falling under a expensive house under Article 95 (3) of the Act shall be calculated by the following formula. In such cases, where the relevant house or land attached thereto is different in holding period, the transfer of unregistered transfer assets fall under or only part of unregistered transfer assets, it shall be calculated by multiplying 900 million won by the ratio of the transfer value of the relevant house or land attached thereto to the total sum of the transfer value of the relevant house