[취득세등부과처분취소][미간행]
The purpose of the provisions on taxation deferment of physical division under the former Corporate Tax Act and subordinate statutes which provide for the exemption of acquisition tax, etc. under the former Restriction of Special Taxation Act, and the requirements
Articles 46(1) and 47(1) of the former Corporate Tax Act (Amended by Act No. 9898, Dec. 31, 2009); Article 80(3) (see current Article 80-2(7)); Article 82(3)1 (see current Article 82-2(3) and 82-2(5) of the former Enforcement Decree of the Corporate Tax Act (Amended by Presidential Decree No. 22184, Jun. 8, 2010); Article 82(3)2 (see current Article 82-2(3) and (4) (see current Article 82-2(9)); Article 83(4) (see current Article 82-2(9) of the former Restriction of Special Taxation Act (Amended by Act No. 9921, Jan. 1, 2010); Article 119(1)0 (2) and Article 120(3)9(2) of the former Enforcement Decree of the Corporate Tax Act (see current Article 52(3) of the Restriction of Special Local Taxation Act).
D. C.C. (Attorneys Lee Dong-soo et al., Counsel for the plaintiff-appellant)
Head of Nam-gu Incheon Metropolitan City, et al. (Attorneys Go Sung-song et al., Counsel for the defendant-appellant)
The Mayor of Incheon Metropolitan City (Attorney Go Sung-hwan, Counsel for defendant-appellant)
Seoul High Court Decision 2015Nu38292 decided June 15, 2016
All appeals are dismissed. The costs of appeal are assessed against the participating administrative agency, and the remainder are assessed against the Defendants.
The grounds of appeal are examined.
1. A. The former Restriction of Special Taxation Act (amended by Act No. 9921, Jan. 1, 2010; hereinafter the same) provides that “property acquired by division meeting the requirements under each subparagraph of Article 46(1) of the Corporate Tax Act (Article 47(1) of the same Act, in cases of spin-off) shall be exempted from registration tax and acquisition tax” (Articles 119(1)10 and 120(1)9 of the same Act), and that benefits such as acquisition tax related to division shall be granted in accordance with the same criteria as special cases of corporate tax.
The provisions on deferment of taxation on spin-off were prepared in the introduction of corporate restructuring tax system, such as merger and division, by the amendment of the Corporate Tax Act on December 28, 1998. Although there was a structural change in which part of the existing business is divided into a separate subsidiary, but there was no substantial change in the interests of the company, including the equity relationship, the purpose of supporting corporate restructuring through corporate division is not to consider it as the basis of taxation. The individual requirements under the former Corporate Tax Act and subordinate statutes as seen below are the concrete criteria for substantial consistency.
Article 82(3)1 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 22184, Jun. 8, 2010; hereinafter the same) provides that “an independent business division that can operate a business by separating” means that a business division that may independently engage in the existing business activities after division from a functional point of view should be divided. It is intended to distinguish between cases where only an individual asset that cannot engage in independent business activities is transferred and realizing gains on transfer. If an independent business is possible, a part of a single business division may be divided as a single business division.
Article 82(3)2 of the former Enforcement Decree of the Corporate Tax Act provides that “The assets and liabilities of a divided business division shall be comprehensively succeeded (Article 82(3)2 of the former Enforcement Decree of the Corporate Tax Act) shall be complementary to the requirements of the aforementioned independent business division, and the assets and liabilities necessary for the relevant business activities shall be transferred at once to a corporation established through division. The assets and liabilities jointly used in another business division that cannot be divided, such as assets and liabilities, shall not be succeeded
Article 46 (1) 3 of the former Corporate Tax Act (amended by Act No. 9898, Dec. 31, 2009; hereinafter the same) provides that “a person shall continue to engage in the succeeded business” (Article 83 (4) and Article 80 (3) of the former Enforcement Decree of the Corporate Tax Act) shall maintain the substantial identity of the business before and after the division, and it shall be deemed that, if not directly used for the disposal of at least 1/2 of the value of fixed assets succeeded to before the end of the business year in which the date of the registration of the division falls or before the date of the registration of the division, it is nothing more than the discontinuance of the business (Article 83 (4) and Article 80 (
The requirement that the total cost of division should be “stocks” (Article 47(1) of the former Corporate Tax Act and Article 46(1)2 of the same Act) provides that a divided corporation should acquire only the stocks of a corporation established through division in return for transferring the assets and liabilities of the divided business division to a corporation established through division. As such, the continuity of equity relationship is determined.
B. Examining the factual relations in the decision of the court below in light of the above legal principles, it is reasonable to view the instant division only has a structural change, and the substantial identity of the company continues to be maintained, thereby satisfying all the requirements for deferment of taxation under the former Corporate Tax Act and subordinate statutes.
1) The Incheon chemical product manufacturing business division and urban development business division of Orsia Co., Ltd. (hereinafter “Osia”) are the business division capable of carrying on business activities independently from the existing other business division. The content and functional characteristics of these business division cannot be said to be a division of an independent business division on the ground that employees of the existing business division were not transferred to the Plaintiff, a corporation established by division, excluding part of the employees of the existing business division.
2) The Plaintiff succeeded to the rights and obligations related to the divided business sector, including the obligations related to the closed stone disposal work. Since the loan obligations secured by the site of Incheon factory are commonly related to the other business sector of Austria, it is difficult to view that only the remainder, excluding the part to be used in the redemption of corporate bonds and the payment of corporate bonds, etc., is succeeded to the Plaintiff, a subsidiary newly incorporated by physical division, as the requirement is not sufficient.
3) The Plaintiff’s succeeded fixed assets were actually used in the chemical product manufacturing division and urban development division, and the method of use was entrusted with the business. In addition, the establishment of trust registration in order to secure loan obligations of financial institutions while continuing the business succeeded by the Plaintiff is difficult to be deemed as a disposal of fixed assets deemed as discontinuance of succession business under the Corporate Tax Act and subordinate statutes.
4) Oralia received only the Plaintiff’s shares in return for division according to a division agreement. The circumstance that part of the borrowed loan prior to division was not succeeded to the Plaintiff is merely a matter to be examined regarding the requirements for comprehensive succession of rights and obligations as seen earlier, and there is no relation with division.
C. Therefore, the lower court did not err in its judgment by misapprehending the legal doctrine on the requirements for exemption, such as acquisition tax on acquisition due to division under the former Restriction of Special Taxation Act.
2. Therefore, all appeals are dismissed, and the costs of appeal are assessed against the participating administrative agency and the remainder is assessed against the Defendants. It is so decided as per Disposition by the assent of all participating Justices on the bench.
Justices Park Jung-hwa (Presiding Justice)