Hanjin Family Loses Second Appeal in 600 Million KRW Capital Gains Tax Cancellation Lawsuit

[Image source=Yonhap News]

[Asia Economy Reporter Seongpil Cho] The Hanjin Group's founding family lost again in the appellate court over a capital gains tax dispute amounting to 600 million KRW related to real estate transactions conducted during the lifetime of the late Chairman Cho Yang-ho.

On the 29th, the Seoul High Court Administrative Division 11 (Presiding Judge Junhyun Bae) ruled against the plaintiffs?Hanjin Group Chairman Cho Won-tae, Jungseok Enterprise Advisor Lee Myung-hee, former Korean Air Vice President Cho Hyun-ah, and Hanjin Vice President Cho Hyun-min?in their lawsuit seeking to cancel the capital gains tax imposition by the Jongno Tax Office. This decision upheld the same conclusion reached in the first trial on May 1. At that time, the first trial stated, "Former Chairman Cho committed fraudulent acts by using covert methods, unlike ordinary transactions, to evade capital gains tax during the land transfer process, making imposition and collection difficult," and "Since the land transfer occurred in 2009, the imposition of capital gains tax is valid." According to the Framework Act on National Taxes, the period during which capital gains tax can be imposed is five years; however, if national taxes are evaded through fraudulent acts, this period is extended to ten years.

Previously, former Chairman Cho inherited land parcels of 1,438㎡ and 330㎡ located in Gyeonggi Province from his late father, the founder of Hanjin Group, Cho Jung-hoon, who passed away in November 2002. These lands were held under the name of a third party as a nominee. In 2005, former Chairman Cho contracted to sell the land to the nominee and received payment in eight installments in 2009. The tax authorities concluded that former Chairman Cho evaded capital gains tax by selling the land without registering the transfer of ownership and issued a capital gains tax notice of approximately 680 million KRW in 2018. After former Chairman Cho's passing, the heirs with inheritance rights filed a lawsuit in July last year, arguing that the period for imposing the capital gains tax had already expired and the tax should be canceled.

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