Early High Court Decision 2013 Jeon 1728 (No. 18, 2014)

In fact, corporate tax reduction or exemption for relocating the head office shall not be made in light of the purpose of legislation, etc. under Article 63-2 of the Restriction of Special Taxation Act.

Before the plaintiff moves to a local area, the acquisition of a customer who is engaged in a business in the local area is practically subject to the acquisition of the business, and the legislative intent of Article 63-2 of the Restriction of Special Taxation Act is to restrain the overpopulated of the Seoul Metropolitan area, and it is reasonable to exclude the reduction and exemption since the acceptance of a customer of a special relationship corporation who is engaged in a business in the local area

Daejeon District Court 2014Guhap104642 Revocation of Disposition of Imposing Corporate Tax

000 Pharmaceutical drugs

00. Head of tax office

December 09, 2015

oly 2016.13

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

Cheong-gu Office

The Defendant’s imposition disposition of KRW 000 of corporate tax for the business year 2010 against the Plaintiff on January 2, 2013 in excess of KRW 000 and the imposition disposition of KRW 000 of corporate tax for the business year 201 shall be revoked in entirety.

1. Details of the disposition;

A. Current status of the Plaintiff’s establishment and special relation corporation

1) 원고는 1991. 3. 7. 의약품도매업을 주목적으로 설립된 법인으로, 2010. 2. 10.본점소재지를 '서울 000구 00로 000 (00동)'에서 '천안시 00구 00로 000(00동, 000 1층)'으로 이전하면서 상호를 '주식회사 00000'에서 현재 상호인'주식회사 #####'으로 변경하였다.

2) The current status of drug wholesale and retail corporations in a special relationship with the Plaintiff is as follows.

· omitted-

(b) Relocation of the head office of △△△△; and

1) On January 3, 2004, △△△△△△ (hereinafter “△△△△△△”) transferred its head office from Seoul 00 Dong, 00 Dong 00-0 to Daejeon 00 Dong, 00 Dong, 00 Dong 00.

2) At the time of the relocation of the headquarters, △△△△△△△△ shall transfer to the Plaintiff the headquarters located in Seoul, and received a reduction of corporate tax of KRW 00 billion from 204 to 2010 under Article 63-2 of the former Restriction of Special Taxation Act (amended by Act No. 7322 of Dec. 31, 2004) while maintaining a large and high-level transaction office, including 00 university hospitals (Seoul 00-Gu Office), 00 medical corporations (Seoul 00-Gu Office), 000 pharmacies (Seoul 00-Gu Office), 000-Gu Office (Seoul 00-Gu Office 00), and 00 billion from 2004 to 2010.

3) On March 2010, 2010, △△△△△△△ concluded an agreement with the school juristic person 00 educational institutes located in 00 and the hospital operated by 00 won to supply drugs, but the said agreement was reversed, and the present location of △△△△△△△△△△△△ was 00,000, Daejeon 00,000.

C. The Plaintiff’s relocation of the headquarters, the acquisition of business partners and tax reduction and exemption from △△△△

1) 원고는 2009. 5. 21. 주식회사 000네트웍스에게 매출의 대부분을 차지하는 약국영업부문(2009. 5. 31. 기준 원고의 약국영업에 관련된 매출채권, 거래처와의 계약관계 및 근로관계)을 000억여 원에 매각하였고, 2010. 2. 10. 본점을 서울 00구에서 천안시로 이전하면서 수도권 소재 약국 등의 거래처 일부는 주식회사 ■■약품(이하 '■■약품'이라 한다)에게 인계하고, △△△△으로부터 쟁점 거래처를 인수 하였다. 위와 같은 거래처 인수과정에서 원고, ■■약품, △△△△ 사이에 대가가 지급된 적은 없다.

2) 원고의 본사 이전으로 원고 직원 21명이 2010. 1.경, 같은 5명이 2010. 2.경 각 원고를 퇴사하고 특수관계법인인 ■■약품에 재입사하였으며, 특수관계법인인 △△△△에 근무하던 직원 7명은 △△△△을 퇴사한 후 원고에 재입사하였다.

3) The Plaintiff reported and paid corporate tax for each business year in accordance with the provisions on reduction and exemption for the headquarters to relocate the headquarters to a local area under Article 63-2 of the former Restriction of Special Taxation Act (amended by Act No. 10406, Dec. 20, 2010; hereinafter “former Restriction of Special Taxation Act”), using 000 won in the business year 2010, and 000 won in the business year 201 as the reduced and exempted tax amount (hereinafter “transfer to a local area”).

D. Determination of the defendant's exemption from local areas

1) On November 2012, 2012, a regional tax office conducted an integrated investigation of corporate tax against the Plaintiff, and determined that the Plaintiff’s transfer of key transaction partners and employees from the △△△△△△△△, a special-purpose corporation, constitutes a business takeover. Accordingly, in the event that the head office of a corporation succeeds to or acquires an existing business through a merger or a transfer of business after relocation to a local area, the income accrued from the part of the business that succeeded to or taken over shall not be subject to a tax reduction or exemption, but the number of persons and benefits succeeded to a merger or a transfer of the business should be excluded at the time of calculating the reduction or exemption rate (=00 won-00 won) out of the reduced or exempted tax amount for the business year 2010 relocation to a local area (=000 won -000 won) under the following table 0.

· omitted;

2) The Defendant, reflecting the decision to exclude the abated or exempted tax amount of 00 regional tax offices from relocating to local areas, corrected and notified the Plaintiff on January 2, 2013 of corporate tax of 2010 (including additional tax of 000 won) and corporate tax of 000 won (including additional tax of 00 won) for the business year 2011.

3) Since then, the Defendant calculated the calculated tax amount by additionally recognizing the deductible expenses for KRW 000,00,000 for the business year 201 as the value of the stocks, and then re-calculated the reduced or exempted tax amount for the business year 201 to 000, and re- corrected and notified the corporate tax amount of KRW 000 for the business year 201 (hereinafter “instant disposition”).

(e) Procedures of the previous trial;

On April 1, 2013, the Plaintiff dissatisfied with the instant disposition and filed a petition with the Tax Tribunal for a trial seeking revocation of the instant disposition, but the Tax Tribunal dismissed the petition on August 18, 2014.

SECTION 1, 2, 4-2, 3 and 4, 6-1, 2, 7-1, 8-1, and 13, and No. 1,

Each description of 3-1, 2, and 3, and the purport of the whole pleadings.

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) Legal principles concerning the scope of reduction or exemption income

A) The exclusion of the abated or exempted tax amount to local areas can be limited to cases falling under the grounds prescribed in each subparagraph of Article 63-2(7) of the former Restriction of Special Taxation Act, and the Enforcement Decree of the same Act does not stipulate “acquisition of business” as grounds for exclusion from the tax reduction or exemption. Therefore, the Defendant, despite the fact that it cannot be excluded from the tax reduction or exemption for the headquarters moving to local areas on the grounds of business acquisition, rendered the instant disposition on the grounds of “business acquisition” by arbitrarily interpreting Article 63-2 of the former Restriction of Special Taxation Act without any legal basis. Ultimately, the instant disposition

B) The business transferee is also a comprehensive transfer of all rights and duties to a business transferee. It cannot be said that the business transferee transfers part of the rights and duties to a business transferee. The Plaintiff did not take over sales claims, etc. held by the △△△△△△△△△△△△ branch against the pertinent business partner. Moreover, △△△△△△△△△△ branch did not comprehensively transfer its position related to the relevant business partner when it is running the drug wholesale business as it is. Therefore, the Plaintiff cannot be deemed to have comprehensively taken over all rights to the transaction partner from the △△△△△△△△△ branch, and thus, the instant disposition taken on the premise that the Plaintiff

(ii)a error in application of the reduction or exemption rate;

Even if the transferee of the disputed business from △△△△△△ constitutes a business acquisition and the relocation of local areas is excluded on this ground, the Defendant calculated the total number of the Plaintiff’s employees in January and February 2010 by mistakenly calculating the number of employees in calculating the ratio of the reduction or exemption, and calculated the wage ratio by excluding the severance benefits of the person leaving the job without any legal basis to exclude the benefits of the person leaving the job at △△△△△△△△△△△△△△△△. Accordingly, the instant disposition was erroneous in the rate of reduction

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) As to the assertion of misapprehension of legal principles as to the scope of reduction income

A) Under the principle of no taxation without law, interpreting tax laws and regulations shall not be permitted for the expansion or reduction of the corporate tax without reasonable grounds for the relocation of the head office to an area where the business was relocated to another area within the scope that does not undermine the legal stability and predictability of the relocation of the said area, and thus, it is inevitable to make a combined interpretation of the tax base under the provisions of item (a) (see, e.g., Supreme Court Decision 2007Du4438, Feb. 15, 2008) for each of the following taxable years since the relocation of the head office to an area where the business was relocated to another area within the scope of its business under the provisions of subparagraph 3 (a) (hereinafter referred to as "the provisions of this case"), and the tax base for the relocation of the said area shall be excluded from the total amount of income generated by the relocation of the new head office to an area where the new business was relocated to an area where the new business was relocated to an area where the new business was relocated to an area where the new business was relocated to an area within the Seoul Metropolitan Area.

나) 이 사건에서 보건대, 원고가 2010. 2. 10. △△△△으로부터 쟁점거래처를 이전받았고, △△△△에서 근무하던 직원 7명이 원고에 재입사한 사실은 앞서 본 바와 같고, 갑 제13호증, 을 제4, 6 내지 8호증의 각 기재에 변론 전체의 취지를 더하여 보면, ① 원고와 △△△△의 실질적인 1인 주주이던 000은 과세관청으로부터 의심을 받지 않으면서도 연간 조세감면 효과가 가장 큰 방법으로 원고와 △△△△의 거래처들을 분할하기로 하고, 먼저 ■■약품을 매수한 다음, 원고의 거래처이던 서울소재 병원들(k암센터, dd병원, 000병원, 일산0병원, 0000병원 등)과 약국들(jj약국, kj약국, mm약업, mj약국 등)을 ■■약품에게 이전하고, △△△△의 거래처이던 쟁점거래처를 원고에게 이전한 사실, ② 그와 함께 000은 거래처에게 공급자를 △△△△에서 원고로 변경하여 납품하겠으니 동의하여 달라고 요청하였고, 거래처들은 공급자가 변경되더라도 공급단가가 보험수가대로 결정되는 것이어서 별다른 상관이 없다며 이에 동의하여 준 사실, ③ 원고는 쟁점거래처를 인수하기는 하였으나 쟁점거래처 중 대전에 소재하는 00병원, hh약국, 00대학병원, dd약국등에 대한 납품은 실질적으로 △△△△의 창고에서 이루어질 수밖에 없고 이를 위해 원고의 직원들을 대전에 근무하게 하는 경우에는 법인세 감면비율이 낮아지게 되므로 이를 방지하기 위해 대전근무직원들이 천안에서 근무한 사실을 증명할 수 있는 출퇴근기록부, 당직일지, 차량운행일지 등을 준비한 사실, ④ 그와 함께 원고는 서울에서 업무용으로 사용하던 스타렉스 등의 차량을 ■■약품에 이전하고, △△△△이 업무용으로 사용하던 봉고밴 등의 차량을 이전받은 사실을 각 인정할 수 있다. 사정이 이와 같다면, 비록 △△△△의 거래처들에 대한 채권채무가 승계되지 아니하였다고 하더라도, △△△△이 쟁점거래처에 대한 영업을 위하여 조직한 인적・물적조직의 일체가 원고에게 이전되었다고 봄이 상당하므로 이는 사업양수에 해당한다고 할 것이다. 그렇다면 원고가 쟁점거래처에 대한 사업으로 얻은 소득은 사업양수한 부분에서 얻은 소득으로서 이 사건 규정 가목의 '당해 과세연도의 과세표준'에 포함되지 않는다고 할 것이므로, 같은 취지에서 피고가 이를 감면소득에서 배제한 이 사건 처분은 적법하다. 원고의 이 부분 주장은 받아들일 수 없다.

2) As to the assertion of error in applying reduction and exemption rates

First of all, the number of employees of the △△△△△△△△△△△ shall be 51 or more, and the number of employees of the △△△△△△△△△△△ shall be 17 or more, and the number of employees of the △△△△△△△△△△△△△△△△△△△ shall be 30 or 12, respectively. Accordingly, the number of employees of the △△△△△△△△△△△△△△△△△ shall be 69.73% of the total number of employees of the △△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△△§ 63 of the Special Taxation Act shall be excluding the average number of employees of the △△△△△△△△△△△△ whose employees were 2 or more, for the same reason.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.

[Attachment]

Relevant statutes

/ former Restriction of Special Taxation Act (amended by Act No. 10221, Mar. 31, 2010)

Article 2 (Definitions)

(3) Except as otherwise expressly provided for in this Act, the classification of types of business used in this Act shall be governed by the Korean Standard Industrial Classification publicly announced by the Commissioner of the Statistics Korea pursuant to Article 22 of the Statistics Act: Provided, That special taxation cases shall apply to the types of business not subject to special taxation under this Act due to a change in the Korean Standard Industrial Classification in the taxable year in which

Article 63-2 (Abatement or Exemption of Corporate Tax, etc. for Relocation of Corporation's Factory and Head Office to Outside of Seoul Metropolitan Area)

(1) A corporation meeting the following requirements (hereafter in this Article, referred to as "corporation relocated to a local area") may be subject to the reduction of or exemption from corporate tax under paragraphs (2) through (4): Provided, That the same shall not apply to a corporation that runs consumptive service business, real estate business or construction business prescribed

1. It shall be a corporation that has operated its business with factory facilities in the overconcentration control zone of the Seoul Metropolitan Area for at least three consecutive years or has its head office or principal office (hereafter in this Article, referred to as the "head office") for at least

2. It shall relocate its entire factory facilities or head office to an area outside the Seoul Metropolitan area and start business therein no later than December 31, 201, as prescribed by Presidential Decree (in cases of the relocation of such factory facilities to another Metropolitan City, limited to an industrial complex under the Industrial Sites and Development Act; hereafter the same shall apply in this Article) or build a new factory or head office in an area outside the Seoul Metropolitan area and start business no later than December 31, 2014 (limited to cases where it acquires a site for its factory or head office no later than December 31, 201, and submits a relocation plan when filing a tax base return for the taxable year whereto belongs December 31, 2011).

(2) A corporation relocating to a local area shall reduce or exempt the full amount of corporate tax for the taxable year to which the date of transfer belongs and for the taxable year ending within six years (four years in cases of relocation to a Metropolitan City located in an area other than the Seoul Metropolitan area and to an area prescribed by Presidential Decree) from the commencing date of the following taxable year, and for the taxable year ending within three years (two years in cases of relocation to a Metropolitan City located in an area other than the Seoul Metropolitan area and to an area prescribed by Presidential Decree) thereafter,

1. Income generated from a factory, in case where the factory is relocated;

2. In cases of relocated head office, income equivalent to the amount computed by multiplying the amount under item (a) by the smaller ratio among item (b) or (c) for each

(a) An amount obtained by subtracting gains on transfer of rights to acquire land, buildings and real estate from the tax base for the relevant taxable year;

나. 해당 과세연도의 이전(����) 본사 근무 인원이 이전 후에 받는 급여 총액이 법인 전체인원이 받는 연간 급여 총액에서 차지하는 비율

(c) Ratio occupied by the employees of the relocated head office in the relevant taxable year to the entire employees of the corporation;

3. Where a factory and head office are moved together, the income equivalent to the amount computed by adding up the income under subparagraphs 1 and 2: Provided, That it shall be limited to the income amount in the relevant taxable year.

(3) In applying paragraph (2) 2, the person working at the relocated head office means the number calculated by subtracting the annual average number of full-time employees working at the relocated head office from the annual average number of full-time employees working at the head office (referring to the number of full-time employees as of the end of each month, divided by the number of relevant months, and excluding the number of employees working at the head office relocated to the relocated head office in an area other than the Seoul Metropolitan area after the taxable year whereto belongs the date on which two years retroactively from the date of relocation) to the annual average number of full-time employees working at the head office at the relocated head office in the taxable year whereto belongs the date on which three years retroactively from the date of relocation; and

(4) In applying paragraph (2) 2, where it falls under any of the following subparagraphs in the reduction or exemption period of corporate tax, the corporate tax shall not be reduced or exempted pursuant to paragraph (2) from the relevant taxable

2. Where the percentage occupied by the number of executives prescribed by Presidential Decree (hereafter referred to as "executive officers" in this Article) working at the relocated head office among the total number of executives working at the head office within the Seoul Metropolitan area and at the relocated head office falls short of 50/100.

(7) Where a corporation relocated to a local area whose corporate tax is reduced or exempted under paragraph (2) falls under any of the following subparagraphs, the amount of tax calculated, as prescribed by Presidential Decree, when filing a tax base return for the taxable year in

1. Where the business is closed or a corporation is dissolved within three years from the date on which the business commences after relocating the factory or head office: Provided, That the same shall not apply to cases of merger, division, or merger after division;

2. Where he/she fails to commence business after relocating his/her factory or head office outside the Seoul Metropolitan area, as prescribed by Presidential Decree.

3. Where the corporation sets up in the Seoul Metropolitan area its head office or a factory producing the same products as those produced at the factory relocated under paragraph (1);

5. Where the relocated head office has an office in the Seoul Metropolitan Area above the criteria prescribed by Presidential Decree.

6. Where the relocated head office falls under paragraph (4) 2.

(8) Where the amount of corporate tax reduced or exempted under paragraph (2) is paid under paragraph (7), the provisions concerning the additional amount equivalent to the interest under Article 33-2 (4) shall apply mutatis mutandis.

(10) In applying paragraphs (1) through (5) and (7), the method of calculating a period, scope of salaries, applications for tax reduction or exemption, and other necessary matters shall be prescribed by Presidential Decree.

Article 143 (Separate Accounting)

(1) Where a national concurrently operates a business subject to tax reduction or exemption under this Act (where at least two reduction rates exist, referring to each business; hereafter in this Article, referred to as "business subject to tax reduction or exemption") and other business, he/she shall keep separate accounts, as prescribed by Presidential Decree

/ former Restriction of Special Taxation Act (amended by Act No. 6297 of Dec. 29, 2000)

Article 63-2 (Temporary Special Tax Abatement or Exemption, etc. for Relocation of Corporation’s Factory and Headquarters Outside Seoul Metropolitan Life Zone)

(2) A corporation relocated to an area outside the Seoul Metropolitan life zone shall have the full amount of corporate tax on the following income for the taxable year to which the date of relocation belongs and for the taxable year to be terminated within five years from the beginning date of the following taxable year, and the tax amount equivalent to 50/100 of corporate tax for the taxable year to be terminated within five

2. In cases of the relocated head office, the income equivalent to the amount computed by multiplying the income accruing from the relevant business (excluding the gains on transfer of land and buildings) by the ratio of the total annual salary for the employees of the head office relocated to an area outside the Seoul Metropolitan life zone occupied by the total annual salary for the entire

(1) Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 22395, Sept. 20, 2010)

Article 60-2 (Abatement or Exemption of Corporate Tax, etc. for Relocation of Corporation's Factory and Head Office to Outside of Seoul Metropolitan Area)

(2) In applying Article 63-2 (1) 1 of the Act, the period shall be calculated in accordance with any of the following subparagraphs:

2. Where the head office or principal office (hereafter in this Article, referred to as the "head office") is relocated, it shall have been continuously operated for three or more years retroactively from the date of relocation registration of the head office in the overconcentration control region in the Seoul Metropolitan