In a case where an existing corporation acquires real estate related to a location of the former head office or branch office of the extinguished corporation within five years after the establishment of the surviving corporation in the course of the merger, whether Article 102(7) of the former Enforcement Decree of the Local Tax Act applies to the real estate registration (affirmative)

In full view of the language and text of Article 138(1)3 and (3) of the former Local Tax Act (amended by Act No. 9924, Jan. 1, 2010); Article 102(7) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 21498, May 21, 2009; hereinafter “Enforcement Decree”) and the legislative purport of Article 102(7) of the former Enforcement Decree (amended by Presidential Decree) to facilitate corporate restructuring by relaxing the heavy registration tax burden on the registration ordinarily accompanied by a merger with another corporation, it is reasonable to view that Article 102(7) of the Enforcement Decree of the Local Tax Act is applicable to real estate registration in cases where the existing corporation establishes a branch office of an extinguished corporation at the former head office or branch office of the extinguished corporation in the course of corporate restructuring with another corporation and acquires and registers real estate related to the said branch within five years from that time.

Article 138(1)3 (see current Article 28(2)1) and (3) (see current Article 28(5)) of the former Local Tax Act (Amended by Act No. 9924, Jan. 1, 2010); Article 102(7) (see current Article 27(5)) of the former Enforcement Decree of the Local Tax Act (Amended by Presidential Decree No. 21498, May 21, 2009);

Copite Co., Ltd. (Law Firm Gyeongsung et al., Counsel for the defendant-appellant-appellee)

The head of Seocho-gu Seoul Metropolitan Government (Law Firm Hanmun, Attorneys Kim Jong-ho et al., Counsel for the defendant-appellant

Seoul High Court Decision 2010Nu35885 decided April 28, 2011

The appeal is dismissed. The costs of appeal are assessed against the defendant.

The grounds of appeal are examined.

Article 138(1)3 of the former Local Tax Act (amended by Act No. 9924, Jan. 1, 2010) provides that registration tax shall be imposed heavy on real estate following the establishment of a corporation in a large city and the establishment of a branch office or a branch office and the relocation of a corporation into a large city, and on real estate following the establishment, establishment, and transfer thereof. Article 102(3) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 21498, May 21, 2009; hereinafter “Enforcement Decree”) provides that “Where a corporation for which five years have elapsed since its establishment in a large city (hereinafter “existing corporation”) is merged with another existing corporation, such merger shall not be deemed subject to heavy taxation, and where five years have not elapsed since its establishment in an existing corporation in a large city, such merger shall not be deemed to fall under the pre-existing corporation’s asset ratio at the time of the merger with the existing corporation.”

In full view of the legislative purport, etc. of Article 102(7) of the Enforcement Decree, which seeks to reduce heavy registration tax imposed on registration ordinarily accompanied by a merger and the overall structure of the statutory provisions and the legislative intent of the relevant provisions, it is reasonable to view that Article 102(7) of the Enforcement Decree applies to real estate registration in cases where an existing corporation acquires and registers real estate related to the existing location within five years from the time following the establishment of a branch office or a branch office of the extinguished corporation in the course of the merger with another corporation.

In the same purport, the court below is just in holding that Article 102 (7) of the Enforcement Decree shall also apply to the real estate registration of this case, which the plaintiff, an existing corporation, also combines Coulex, a previous corporation, and acquired real estate used for the business of the above branch within five years from that time after it established the plaintiff's main office at the former main office of Coulex, Ltd., and that Article 102 (7) of the Enforcement Decree shall also be applied to the real estate registration of this case, which was completed within five years from that time. There is no

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Kim So-young (Presiding Justice)