Where real estate is acquired due to the establishment of a corporation, the establishment of a branch or a branch office in a large city, the relocation of a head office, a main office, a branch or a branch office of a corporation, and real estate is acquired in a large city within five years after such establishment, establishment, and transfer, requirements subject

According to Article 13(2)1 of the former Local Tax Act (amended by Act No. 12118, Dec. 26, 2013) and Article 27(3) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 24425, Mar. 23, 2013), real estate is acquired through the establishment of a corporation, the establishment of a branch office or a branch office, and the relocation of a corporation’s head office, a main office, a branch office, or a branch office into a large city in a large city, and real estate is acquired within a large city within five years after its establishment, establishment, or transfer. In the case of the former, real estate is subject to acquisition tax only for the purpose of direct use for the head office, main office, a branch office, or a branch office of a corporation, and in the latter case, for five years after its establishment, establishment, or transfer, regardless of its use.

Article 13(2)1 of the former Local Tax Act (Amended by Act No. 12118, Dec. 26, 2013); Article 27(3) of the former Enforcement Decree of the Local Tax Act (Amended by Presidential Decree No. 24425, Mar. 23, 2013);

Public-Private Partnership (Law Firm Gyeongwon, Attorneys Kang Sung-won, Counsel for defendant-appellant)

The head of Gangdong-gu Seoul Metropolitan Government

Seoul High Court Decision 2011Nu39242 decided May 24, 2012

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

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

1. As to the ground of appeal on the heavy acquisition tax requirement

(1) Article 13(2)1 of the former Local Tax Act (amended by Act No. 12118, Dec. 26, 2013; hereinafter the same) provides that “Where a corporation is established in a large city or a branch office is established, or real estate of a large city is acquired (including acquisition of real estate after its establishment, establishment, or transfer) as a head office, main office, branch office, or branch office of a corporation is transferred to a large city,” acquisition tax shall be imposed heavy on the basis of the rate calculated by subtracting 30/100 of the standard tax rate from the heavy tax rate to 20/100 of the base rate for heavy taxation, and Article 27(3) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 2425, Mar. 23, 2013; hereinafter the same shall apply) provides that “Real estate shall be acquired or transferred to a corporation or a branch office for non-business purpose under Article 13(2)1 of the Act.”

According to the above provisions, real estate shall be classified into the establishment of a corporation in a large city, the establishment of a branch or a branch office, and the acquisition of real estate within a large city within five years after its establishment, establishment, and transfer, and real estate shall be classified into real estate for the purpose of direct use for the purpose of the head office, main office, branch office, or branch office of a corporation in the former case. In the latter case, real estate shall be subject to acquisition tax and acquisition tax, regardless of its purpose, if it meets the requirements that a corporation or an office has acquired real estate within five years after its establishment, establishment, or transfer.

In addition, each of the above provisions is aimed at preventing the population expansion following the entry of the population into a large city and promoting the dispersion of the population in a large city. However, once the requirement facts prescribed in each of the above provisions are met, the above provisions should be applied uniformly. In a specific case, it is not possible to determine whether to apply the above provisions in accordance with the legislative purpose (see Supreme Court Decision 2008Du18496, Jun. 10, 201).

(2) The lower court, citing the reasoning of the first instance judgment, found the following facts: (i) the Plaintiff was a corporation established with the purpose of real estate sales business, real estate rental business, etc. as its objective business on January 18, 201, and (ii) the Plaintiff acquired Gangdong-gu Seoul ( Address 2 omitted) (hereinafter “instant real estate”) located in a large city through voluntary auction on March 31, 201, through a real estate auction on March 31, 201; (iii) on May 12, 2011, on the ground that the acquisition of the instant real estate constitutes a housing transaction under Article 40-2 of the Restriction of Special Local Taxation Act; (iv) the Plaintiff reported the acquisition tax rate of KRW 8,815,00 and the acquisition tax rate of KRW 81,500 calculated by applying the general tax rate of Article 11 of the former Local Tax Act; and (v) the Plaintiff reported the acquisition tax rate of KRW 27,509,00,00,00.

Based on the above factual basis, the lower court determined that the instant disposition was lawful on the ground that the Plaintiff’s establishment of a corporation in Seongbuk-si, a large city and acquired the instant real estate in a large city within five years, and that the instant real estate constitutes subject to heavy acquisition tax pursuant to Article 13(2)1 of the former Local Tax Act and the latter part of Article 27(3) of the former Enforcement Decree of the Local Tax Act, and rejected the Plaintiff’s assertion that the instant real estate is not a real estate acquired to use directly for the purpose of the Plaintiff’s head office, main office, branch office, or branch office, or that it does not meet

(3) Examining the records in accordance with the aforementioned legal principles, the lower court’s determination is justifiable. In so doing, it did not err by misapprehending the legal doctrine on acquisition tax and requirements among acquisition tax under Article 13(2)1 of the former Local Tax Act. The precedents cited in the grounds of appeal are different from the instant case, and it is not appropriate to invoke the instant case

2. As to the ground of appeal on the unconstitutionality of Article 27(3) of the former Enforcement Decree of the Local Tax Act

For reasons indicated in its holding, the lower court determined that Article 27(3) of the former Enforcement Decree of the Local Tax Act, which is a ground provision for the instant disposition, did not violate the principle of excessive prohibition or the principle of equality under the Constitution, or infringed on freedom of business, and further, did not err by exceeding the scope of delegation by the mother law, or by exceeding the scope of delegation by the

Examining the relevant provisions and legal principles, the lower court’s aforementioned determination is justifiable. In so doing, it did not err by misapprehending the legal doctrine on the principle of excessive prohibition, the principle of equality, the limit of delegated legislation, etc. under the Constitution.

3. Conclusion

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 Lee Sang-hoon (Presiding Justice)