A decision was made that buildings that have received a notice of cancellation of building permits and whose issuance of building registration has been stopped, do not need to pay inheritance tax even if they have been inherited, as they have no property value.
The Tax Tribunal under the Office for Government Policy Coordination noted on the 18th that this decision was made in the major tax cases for the first quarter of 2024.
According to the Tax Tribunal, individual A reported inheritance taxes excluding the inherited building from the inherited assets, arguing that it had no property value. The building had previously received a notice of cancellation of building permits from the local government, and its issuance of building registration was halted, making the registration of ownership transfer impossible. Additionally, it was excluded from compensation for structures related to expropriation.
The disposing authority imposed inheritance tax, noting that although the building received by individual A was illegal, it had not been demolished and thus posed no issue for use.
The Tax Tribunal's judgment was different. The Tax Tribunal concluded that "if the building is demolished, costs are likely to arise," adding that the decision to impose inheritance taxes on the building viewed as an inherited asset with property value was incorrect.
The Tax Tribunal also determined that newly established corporations spun off from existing corporations can qualify for tax reductions for start-up venture small and medium-sized enterprises, viewing the spin-off as a substantial start-up. Company B was a division of a large corporation that operated independently after being separated. It stated that Company B was certified as a venture business within three years of its establishment, thus qualifying for the tax reduction for start-up venture small and medium-sized enterprises, and filed a claim for the reassessment of corporate tax. If qualified, a 50% tax reduction applies for five years.
The disposing authority judged that although it was formally a start-up, it was not a substantial start-up as it inherited the existing business. However, the Tax Tribunal determined that Company B met the legal formal requirements for start-ups and concluded that it qualified for tax reductions, noting that it had no connection to the existing company's management or major shareholders.
A decision was also made that for cases where registration as a rental business was completed after the tax base date, if the application date is before the base date, it qualifies for property tax reductions.
Individual C, a rental business owner, applied for registration before the property tax base date of June 1 to receive property tax reductions for long-term general private rental dwellings. However, the registration process was completed after the base date of June 1.
The disposing authority argued that to receive property tax reductions for long-term general private rental dwellings, the registration procedure must be completed before June 1. However, the Tax Tribunal sided with individual C, stating that "the registration was completed after the tax base date due to the internal processing period of the disposing authority," and emphasized that determining property tax reductions based on processing times would violate the predictability for taxpayers.