This article was published on the ChosunBiz RM Report site at 2 p.m. on May 8, 2025.
Korea Railroad Corporation (KORAIL) has reportedly won a first lawsuit against Seoul Housing and Communities Corporation (SH Corporation) over a '400 billion won tax' as of the 8th. The two companies disputed who should bear part of the 978 million won land ownership tax for four years, and the first trial court favored KORAIL. If the judgment is confirmed with the same content, SH Corporation will bear the entire 400 billion won tax.
The tax lawsuit between KORAIL and SH Corporation stems from the 'Yongsan Maintenance Depot Development Project.' This project aims to develop the former railway maintenance depot site in the Yongsan District of Seoul into an international business district.
To that end, KORAIL and SH Corporation signed a 'Joint Business Implementation Agreement' in May 2021. It contained provisions stating that the project costs would be shared according to the equity ratio of '7 (KORAIL) to 3 (SH Corporation).' Additionally, there was a clause that stipulated that the land ownership tax of Korea Railroad Corporation incurred after the date of the agreement would also be included in the project costs.
In this context, a legal dispute began in December 2022 when SH Corporation paid KORAIL only for the project costs excluding the land ownership tax. At that time, SH Corporation claimed, 'It cannot share the land ownership tax imposed before the designation of the project area by Seoul City.' The designation of the project area was not made until about two years later.
In response, KORAIL filed a lawsuit against SH Corporation in January of last year, demanding that it 'share the land ownership tax of 978 million won as promised.' KORAIL asserted that the amount SH Corporation should share from the land ownership tax imposed from 2021 to 2024 is 400 billion won, and thus filed the first lawsuit concerning part of this amount.
The civil division 36 of the Seoul Central District Court (Director General Hwang Soon-hyun), which conducted the first trial, ruled in favor of KORAIL. It stated in early February, 'SH Corporation must pay KORAIL 978 million won.'
The court presented the 'Joint Business Implementation Agreement' signed between the two companies as the basis for its judgment. The judges noted, 'The final version of the contract, which was stamped with the seals of both agencies and prepared after 19 implementation consultative meetings, included a clause stating that the land ownership tax incurred after the signing date of the agreement would also be included in the project costs,' and asserted that 'an agreement to include this clause in the implementation agreement was established between the two agencies.'
Moreover, the court ruled that the two companies held several working meetings, during which SH Corporation agreed to include the land ownership tax in the project costs. The judges stated, 'In the 12th working meeting, both institutions agreed to calculate the ownership tax based on the plaintiff (KORAIL)'s assertion that it should be calculated after the signing of the implementation agreement, and in the 13th working meeting, both sides submitted a review plan that reflected the phrase that the ownership tax for the relevant land shall be included in the project costs based on the time of the signing of the implementation agreement.'
The judges further indicated, 'While SH Corporation claims that there is a clause in the implementation agreement stating the cost estimation criteria should be determined according to city development guidelines, it is difficult to broadly interpret this as meaning the items constituting the project costs should follow the guidelines, and in fact, even following the guidelines, it includes the 'comprehensive real estate tax and other land taxes' in the project costs.'
In response, SH Corporation filed an appeal with the Seoul High Court at the end of February against the first trial ruling.
A legal expert noted, 'If the first trial ruling is confirmed as it stands, there is a high likelihood that the same conclusion will be reached regarding the remaining land ownership taxes,' adding, 'If that happens, SH Corporation will bear the full 400 billion won tax.'