[1] The meaning of "use of the relevant real estate for business" under Article 41 (1) of the former Restriction of Special Local Taxation Act and the standard for determining the scope of "use of the relevant business" / Where a nonprofit entrepreneur provides a private house or a lodging place to its members, the requirements for deeming that the private house or a lodging place is used directly for the purpose of business of a nonprofit entrepreneur

[2] The case holding that the court below erred in the misapprehension of legal principles in holding that, in case where Eul’s educational foundation which established Gap’s educational foundation and conducts university education and filed a request for correction of acquisition tax, etc., which was reported and paid on the ground that the above officetel was acquired to use directly for the business of Eul’s educational foundation, but the pertinent administrative agency rejected the request, on the grounds that it constitutes the object of exemption from acquisition tax, the foreign teaching staff at Gap’s educational foundation’s educational foundation’s establishment of Gap’s educational foundation and filed a request for correction of acquisition tax, etc., which was reported and paid on the ground that the above officetel constitutes the object of exemption from acquisition tax, the case holding that since the foreign teaching staff at Gap’s educational foundation’s educational foundation

[1] Article 41(1) of the former Restriction of Special Local Taxation Act (Amended by Act No. 11618, Jan. 1, 2013) / [2] Article 41(1) of the former Restriction of Special Local Taxation Act (Amended by Act No. 11618, Jan. 1, 2013)

[1] Supreme Court Decision 2009Du4708 Decided May 28, 2009

A Institute of Hansung (Law Firm International, Attorneys Han-gu et al., Counsel for the defendant-appellant)

Head of the Busan Metropolitan Government Shipping Authority (Attorney Park Jong-ok, Counsel for the defendant-appellant)

Busan High Court Decision 2013Nu1775 decided September 27, 2013

The judgment below is reversed, and the case is remanded to Busan High Court.

The grounds of appeal are examined.

1. Article 41(1) of the former Restriction of Special Local Taxation Act (amended by Act No. 11618, Jan. 1, 2013; hereinafter the same) provides that “The real estate acquired by a person operating a school under the Higher Education Act to use for the pertinent business shall be exempted from acquisition tax until December 31, 2012.”

2. Comprehensively taking account of the adopted evidence, the lower court acknowledged the following facts: (a) on February 7, 2012, the Plaintiff, which established ○ University and provided university education, purchased 20 rooms of △△△△△△△ Factory located in Busan (hereinafter “each of the instant officetels”) and completed the registration of transfer of ownership in the name of the Plaintiff on April 13, 201; (b) on April 12, 2012, the Plaintiff reported and paid acquisition tax of 74,169,440 won in relation to the acquisition of each of the instant officetels to the Defendant on April 12, 2012; and (c) thereafter, the Plaintiff acquired each of the instant officetels for the purpose of providing it to the Defendant as a full-time foreign teaching staff member working at ○○ University; (d) on the ground that the instant officetels was a real estate acquired to use directly for the Plaintiff’s business, and thus, rejected the Plaintiff’s request for correction on May 27, 2012.

Furthermore, the lower court determined otherwise on the ground that each of the instant officetels constitutes real estate used directly for the Plaintiff’s business, in light of the fact that it is essential to secure foreign teachers in order to provide university education, the securing rate of foreign teachers, and the securing rate of foreign teachers is an important standard in the university evaluation, and the need to provide foreign teachers who do not have any relationship in Korea, and thus, determined that the instant disposition was unlawful.

3. However, we cannot agree with the judgment of the court below for the following reasons.

A. The phrase "use of the real estate for business" means that the purpose of use of the real estate is directly used for the nonprofit business, and the scope of "use for the business" should be objectively determined based on the actual use relationship of the non-profit business operator in consideration of the purpose of business and the purpose of acquisition (see Supreme Court Decision 2009Du4708, May 28, 2009, etc.). In addition, if a non-profit business operator provided a company with a company house or a lodging to its members, if the member stays in the company house or a lodging because he is in a very significant tracking position as to the non-profit business operator's business activities, his company house or lodging can be deemed directly used for the purpose of business, but if the provision of the company house or lodging is not related to the convenience of the members or staying there is no substantial relation with the performance of his duties, it cannot be deemed that the company house or lodging is directly used for the purpose of business of the non-profit business operator.

B. According to the reasoning of the judgment below, the Plaintiff recruited foreign teachers for the purpose of improving the foreign language education environment and meeting the trend of internationalization of university education. Foreign teachers employed by the Plaintiff serve as assistant professors, invited professors, etc. in the English department of ○○ University, German region department, French region department, Japanese language department, philosophical department, administrative department, international trade department, accounting department, Chinese university, music department, etc., and the Plaintiff acquired each of the instant officetels in order for ○ University to provide convenience in the residence of foreign teachers in areas other than Seoul.

Considering the above circumstances, in light of the status and status of foreign teachers working for ○ University and the location and purpose of acquisition of each officetel in this case, it cannot be deemed that foreign teachers working for ○ University are in a critical tracking position necessary for university education, which is the Plaintiff’s intended business, or that their stay in each officetel in this case is concurrently in the nature of performing their duties. Therefore, each officetel in this case cannot be deemed directly used for the Plaintiff’s intended business.

Nevertheless, the lower court determined otherwise, that the instant disposition was unlawful on the ground that each of the instant officetels used directly for the Plaintiff’s intended business and constitutes an object of exemption from acquisition tax. In so doing, it erred by misapprehending the legal doctrine on Article 41(1) of the former Restriction of Special Local Taxation Act, thereby adversely affecting the conclusion of the judgment. The allegation contained in the grounds of appeal

4. Therefore, the lower judgment is reversed, and the case is remanded to the lower court for further proceedings consistent with this Opinion. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Kim Chang-suk (Presiding Justice)