[Case Number] Trial 2013 0079 (Law No. 29, 2013)

[Items] Correction of Property [Form of Decision]

[Summary of the Decision] In the case of recommendation, it shall be deemed that the entertainment tavern business place was actually closed due to the reasons such as surrender execution before the property tax assessment basis date (6.1.) and, in the case where the reconstruction procedure is in progress due to suspension of business, it shall be deemed that there was a de facto situation of business closure, not temporary closure. Therefore, it is erroneous

[Related Acts] Article 28 of the Enforcement Decree of the Local Tax Act

[Reference Decision] Trial Decision 2010Na0777/ Trial Decision 2012Na072

The imposition of property tax (land portion), OOO, OO, OO, OO, OO, and OO on the same day as the imposition of property tax (land portion), OO, OO, OO on September 14, 2012 by Gyeonggi-do OOO on which the tax rate is 2/100 of the tax base, respectively, shall be corrected by correcting the tax amount.

1. Summary of disposition;

(a) ApplicantO and ApplicantOOO (hereinafter referred to as “Appellants”) shall jointly own 291 square meters of land (hereinafter referred to as “ disputing land”) corresponding to Gyeonggi-doOO as of the tax base date for property tax (6.1.) in 2012 in common.

B. On September 14, 2012, the disposition agency imposed an assessment and notice on the claimant on the property tax (land portion), OOO, OO, OO, OO, OOO, OOO (OO, OO, OO, OO, OOO (OO), calculated by applying a heavy tax rate (40/1,00) to the controversial land as land for a high-class recreation center.

C. The appellant appealed and filed an appeal on December 10, 2012.

2. Opinions of the claimant and disposition agency;

A. The claimant's assertion

(1) On April 30, 2012, the claimant, who is the lessee of the OOO in Gyeonggi-do, discontinued this real estate after the execution of surrenderation on this real estate, as the OOO was in arrears.

In addition, it decided not to use this real estate as an entertainment business, and to completely alter the use of the building through reconstruction, and to this end, a series of procedures such as preparing a reconstruction design drawing and undergoing a deliberation on the construction plan in Bupyeong-si.

Therefore, this real estate is not temporarily suspended, but is in a state in which there is no intention to start an entertainment drinking house business any more by actually closing the entertainment drinking house business after April 30, 2012, and thus, it cannot be deemed that it constitutes an entertainment drinking house subject to property tax.

(ii)The Administration has a position that the claimant does not complete and remove the internal facilities while executing the order of surrender for this real estate, and therefore has the substance as an entertainment drinking house, so this real estate constitutes an entertainment drinking house; or

The reason why the petitioners maintain the existing office or other facilities on the real estate is that the lessee has filed a lawsuit against the claimant for the facilities such as the house, etc., which eventually leads to the possibility that if the claimant has made a wrong disposition, the other transmission company may put the house on the spot and load it on the site.

(iii)The Tax Tribunal's decisionO also held that even if a license for an entertainment tavern is granted, if the business is suspended for a long time, it is not subject to heavy taxation if the situation is equivalent in fact to the closure of business, taking into account the overall facts such as the internal reasons, the intention to resume the business and the present status of the place of business.

(b) Opinions of disposition agencies;

According to the fact-finding survey on the entertainment drinking house conducted on May 31, 2012 by a person in charge of property tax disposition for the imposition of property tax in 2012 on a local business trip, this case entertainment drinking club attached a notice of “in-house repair” at the entrance and seems not to have run a business for a long time, and it was complete and complete, etc. In addition, the claimant’s assertion that he/she did not run an entertainment drinking house business on this case until he/she reported the closure of business on December 13, 2012 is also acknowledged as a fact.

However, the criteria for determining entertainment taverns subject to heavy taxation of property tax are sufficient if they have the substance as an entertainment tavern regardless of whether they are a business, and the appellant appears to have succeeded to the status of business operator on May 22, 2012 without completely removing internal facilities, when executing the order with respect to the entertainment taverns on April 30, 2012. Thus, it is deemed that they continuously maintain business permission and have the substance as an entertainment tavern, and therefore, the real estate is subject to property tax as an entertainment tavern.

Therefore, it is a legitimate disposition that the disposition agency imposed and imposed property tax in 2012 by applying the heavy taxation rate to the land in question as land to be used in the entertainment tavern.

3. Hearing and determination

(a) Points in dispute;

Whether the land at issue may be deemed as the land annexed to a high-class recreation center subject to the property tax in cases where the business is virtually discontinued and reconstruction procedures are conducted due to the closure before one month before the property tax base date.

(b) Relevant Acts and subordinate statutes (in attached Form);

C. Facts and determination

(1) On April 30, 2012, the petitioners delayed the lease of this real estate to the lessee and the OOOO on April 30, 2012, submitted the store lease agreement (OO), and submitted the OO on March 20, 201;

This real estate is no longer used as entertainment business, and the purpose of the building is to be completely changed through reconstruction. Accordingly, the OOO, etc. was submitted while the reconstruction design drawings were prepared and the OO building plan deliberation was conducted.

(ii)In addition, the claimant has submitted the "OOOOOOOOOOOOOOOOO", the "application for alteration of claims and cause of claims" while the lessee has filed a lawsuit against the claimant for the establishment such as the house, etc. of the house. In addition, the claimant has submitted the "OOOOOOOOOOO", the "application for alteration of claims and cause of claims" while the tenant has neglected and loaded the house at the site because there is a concern that the house might be displayed in another invoice if it is wrong;

After the tenant's entertainment bar license for the real estate was succeeded to the tenant's EOO by the tenant's EOO and EOOO which is an employee of the claimant's employee, the tenant's report on the closure of the business was filed on December 13, 2012. As the tenant's OO's transfer of the business license name to KimOOO for the purpose of maintaining the business license, the tenant's transfer of the business license name to KimOOO's temporary transfer of the business license name to prevent damages caused by the change of the business license name to KimOOO, the tenant's temporary transfer of the business license name.

(3) On April 30, 2012, the disposition agency submitted an inspection table on the actual condition of entertainment taverns (No. 31, 2012.5.31.), “a delivery of entertainment bars and new changes (No. 1, 2012.6.1.),” “a delivery of entertainment bars and new changes” (No. 201.24.24.20), etc., while the applicant succeeded to his/her status as a business operator on May 22, 2012 without completely removing his/her internal facilities when executing the order.”

(4) According to the OO submitted by the claimant, the claimant submitted the Gyeonggi-do OOO's "Plan for New Living Facilities and Urban Residential Housing" to the agency, which is the location of this real estate, and the procedures for deliberation by the OOO building committee are underway.

(5) The "Investigation Table on the Actual Conditions of Amusement taverns (E. 31, 2012.5.31.) submitted by the agency refers to the following: (a) the content of the investigation is written: (b) “The suspension of business is not actually carried on by the order of delivery on April 30, 2012; (c) the person is in excess of the permission, but is living.” (d) The attached photograph of the said survey appears to be attached with the sign “in the inner repair process

(6) We examine the above facts, evidence, and relevant laws and regulations comprehensively.

(A) Generally, even if a business is in suspension, if a business shuts down with intent to continue the business without maintaining a basic facility, the actual situation is deemed to have the substance as the place of business, and thus, it can be deemed that the entertainment tavern subject to heavy taxation. However, even if a business license of an entertainment tavern was granted, if a business license was granted for a long period of time, it is difficult to regard the business as subject to heavy taxation if a situation corresponding to the closure of business is in fact equivalent to the closure of business, taking into account the overall facts, such as the internal reason, the intention to resume the business, and the current status of the place of business (see, e.g., Supreme Court Decision

(B) In this case, on April 30, 2012, the petitioners appeared to have succeeded to the status of a business operator on May 22, 2012 without removing internal facilities after executing an order of surrender on this real estate on April 30, 2012. Accordingly, since the disposition agency has the substance of this real estate as an entertainment drinking house, it is the position of being subject to property tax as an entertainment drinking house.

(C) However, according to the psychological data, this case’s real estate is closed from April 30, 2012 to December 13, 2012 after the execution of the order of surrender on April 30, 2012, and during the same period, the claimant appears not to have engaged in entertainment tavern business at all in this case’s real estate (this disposition is also recognized without dispute).

A series of procedures, such as preparing a design drawing for reconstruction at the location of this real estate, and undergoing the deliberation of the OO construction plan at the location of this real estate;

The reason why a lessee's OOO maintains facilities such as the existing office fixtures on this real estate is shown to be due to legal disputes, such as filing a lawsuit claiming the return of possession of this real estate with respect to the petitioner's refusal of the execution of the order and the return of possession of this case's real estate, and it is not determined that the claimant has maintained the site with the intention to re-enter the entertainment drinking house business;

In light of the fact that the claimant's succession to the permission for the amusement tavern business on this real estate from the lessee's OOO to the lessee's OOO is considered to prevent the damage of the claimant due to the lessee's succession to the business permission as the OOO was in progress, it is difficult to view that the claimant had an intention to continue to lease or use this real estate as an entertainment drinking house.

(D) If so, it is difficult to see this case’s real estate as subject to heavy taxation as a situation corresponding to the closure of business, and therefore, it is deemed that the disposition agency erred in imposing and assessing property tax in 2012 by applying the heavy taxation rate by deeming the key land as land used for entertainment taverns.

4. Conclusion

This case shall be decided as ordered in accordance with Article 123(4) of the Framework Act on Local Taxes and Articles 81 and 65(1)3 of the Framework Act on National Taxes, because the petition for a trial is well-grounded as a result of the review.

Relevant Acts and subordinate statutes

(1) Local Tax Act

(5) Acquisition tax on any of the following real estate, etc. (including where part of a villa, etc. is acquired separately) shall be the amount calculated by applying the tax rates under Articles 11 and 12 plus 400/100 of the base rate for heavy taxation: hereinafter the same shall apply):

4. High-class recreation centers: Buildings and land attached thereto prescribed by Presidential Decree among buildings used for gambling places, amusement and tavern places, special bathing rooms, or other similar purposes: Provided, That this shall not apply where a building for a high-class recreation center is used for any purpose other than a high-class recreation center or construction work for the purpose other than a high-class recreation center is commenced within 30 days from the date of its acquisition [in cases of inheritance, the last day of the month in which the date of commencing the inheritance falls, and six months from the last day of the month in which the date of adjudication of disappearance falls,

Article 106 (Classification of Objects of Taxation) (1) Objects of property tax on land shall be classified into objects of general aggregate taxation, special aggregate taxation and objects of separate taxation pursuant to the following subparagraphs:

3. Objects of separate taxation: Any of the following land owned by a person liable to pay tax as of the tax base date:

(c) Land prescribed by Presidential Decree as a site for a golf course under Article 13 (5) (the latter part other than the subparagraphs of the same paragraph shall not apply), and for a high-class recreation center under the same paragraph;

Article 111 (Tax Rates) (1) The amount of property tax shall be calculated by applying the following standard tax rates to the tax base under Article 110:

1. Land:

(c) Objects of separate taxation;

(b) Land for golf courses and high-class recreation centers: 40/1000 of the tax base;

(2) Enforcement Decree of the Local Tax Act

(5) "Buildings and land annexed thereto prescribed by Presidential Decree" in the main sentence of Article 13 (5) 4 of the Act means buildings and land annexed thereto used for any of the following purposes. In such cases, where a high-class recreation center is installed in a part of a building, land equivalent to the ratio of the total floor area of the building to the total floor area of the building among the land annexed to the building concerned shall be deemed land annexed to a high-class recreation center:

4. Places of business (limited to places of business including the area for public use, which exceed 100 square meters) excluding tourist entertainment restaurants designated pursuant to Article 6 of the Tourism Promotion Act (limited to tourist restaurant business in tourist hotels and designated by the head of a local government pursuant to Article 6 of the Tourism Promotion Act in cases of tourist hotel business) among any of the following places of business, which are subject to permission under Article 37 of the Food Sanitation Act. In such cases, where a place of business has been designated as tourist entertainment restaurants pursuant to Article 6 of the Tourism Promotion Act within 30 days from the date on which permission for an entertainment bar business under the Food Sanitation

(b) Places of business (studs-up, restaurants, etc.) where the area of guest rooms which are separately and semi-permanently partitioned is at least 50/100 of the exclusive area of a place of business, or the number of guest rooms is at least five, in cases of employing guest rooms (including temporarily employed persons);

(3) "Land prescribed by Presidential Decree" in Article 106 (1) 3 (c) of the Act means land annexed to a high-class recreation center under Article 13 (5) 4 of the Act.