[Edaily Reporter Choi Jeong-hee ] Mr. Kim, a resident of Dalseo-gu, Daegu, purchased a BMW X7 in September 2025.

The BMW X7 is a large SUV that seats seven people, and for Mr. Kim, who is raising three children, a large vehicle was a necessity.

After purchasing the car, Mr. Kim paid the acquisition tax to the Dalseo District Office in Daegu, claiming the “acquisition tax reduction for parents raising multiple children.”

However, at the end of March 2026, the Dalseo District Office notified Mr. Kim that he must repay the acquisition tax he had received as a reduction. This was because he sold the car less than a year after purchasing it. Tax reductions are not applicable if ownership of the vehicle is transferred within one year of the registration date.

There was a reason Mr. Kim had to sell his BMW in less than a year. The car was severely damaged in a traffic accident, and the repair costs exceeded the insurance payout. The Dalseo District Office did not take Mr. Kim’s circumstances into consideration. Mr. Kim appealed to the Tax Tribunal—but whose side did the Tribunal take?

A car accident just six months later—what am I supposed to do?

Mr. Kim received an acquisition tax exemption when he purchased his BMW X7. According to Article 22, Paragraph 2 of the Act on Special Measures for Local Taxes, parents raising two or more children under the age of 18 are eligible for an acquisition tax exemption on one vehicle purchased by the end of 2027. However, the amount of the exemption varies depending on the number of children and the vehicle’s seating capacity.

If there are two children, half of the acquisition tax is waived; if there are three or more children, the acquisition tax is fully exempted. However, for general passenger cars with six seats or fewer, the acquisition tax is deducted up to a limit of 1.4 million won, while for cars with seven to ten seats, there is no cap on the tax reduction. Of course, this does not mean the acquisition tax is “0 won.”

Article 177, Paragraph 2 of the Act on Restrictions on Special Provisions for Local Taxes establishes a “minimum tax payment system.” Under this system, even if a vehicle qualifies for an exemption, if the calculated tax amount exceeds 2 million won, only 85% of the tax is reduced. This means that for higher-priced vehicles, owners must pay approximately 15% of the acquisition tax. However, there is a prerequisite.

If ownership of the vehicle is transferred—that is, if the vehicle is sold—within one year of the registration date, the tax reduction must be repaid.

However, in early March 2026, Mr. Kim was involved in a traffic accident while driving his BMW X7. The car was severely damaged. The cost of repairing the car exceeded the insurance payout. Instead of paying Mr. Kim the insurance money, the insurance company settled the claim by taking ownership of the damaged BMW. In other words, on March 20, ownership of the car was transferred from Mr. Kim to a car dealer. This happened just six months after he purchased the BMW.

On paper, Mr. Kim appeared to have sold the car just six months after receiving an exemption from the vehicle acquisition tax.

“There’s nothing like that in the tax law” VS “What about other reasons?”

The Dalseo District Office, paying no heed to Mr. Kim’s circumstances, argued that since ownership of the vehicle was transferred within one year, the acquisition tax exemption could not be granted.

Their basis was the Act on the Limitation of Special Provisions for Local Taxes.

They explained that while there are exceptions to the retroactive collection of vehicle acquisition tax for parents raising multiple children, these are limited to the owner’s death, marriage, emigration abroad, revocation of a driver’s license, or other similar reasons. Therefore, they stated that even in cases where a vehicle was declared a total loss due to a traffic accident (where the damage is recognized as a total loss and settled through insurance rather than repair) and insurance proceeds were paid, the acquisition tax exemption could not be granted because ownership was transferred within one year.

Dalseo District Office argued that this was because the Act on Restrictions on Special Provisions for Local Taxes does not distinguish between a transfer of ownership resulting from a voluntary sale and one resulting from a total loss claim due to a traffic accident or an insurance policy.

Mr. Kim felt aggrieved—not only had he been forced to effectively scrap his car just six months after the accident, but now he was being told to pay taxes on it as well.

Mr. Kim filed a petition for adjudication with the Tax Tribunal in May.

The Tax Tribunal (Case No. Jo-sim 2026 Bang 2586) ruled in Mr. Kim’s favor.

The Tribunal determined that Mr. Kim had not voluntarily sold the vehicle; rather, it appeared that ownership had been transferred to a car dealer out of necessity due to the traffic accident, and that the vehicle had sustained such severe damage that it could not be driven even after normal repairs.

In other words, the Board held that the grounds for retroactive assessment of acquisition tax should not be determined solely based on formal facts. The Board ruled that this situation should be considered “other similar grounds” under Article 22-2 of the Act on Special Measures Concerning Local Taxes, which lists exceptions to retroactive assessment.

※ This article reconstructs the sequence of events based on a decision by the Tax Tribunal. Since the real names of the individuals involved and some specific monetary amounts were not disclosed in the Tribunal’s decision, the content is based solely on the confirmed facts. However, certain elements—such as the individuals’ surnames and the terms used to address spouses—were arbitrarily assigned for readability, as these details were not specified in the actual decision.