The case holding that since real estate provided as a company house of a church cannot be deemed as being used directly for the purpose business of a church, it does not constitute non-taxation under Article 107 subparagraph 1 of the Local Tax Act and Article 127 (1) 1 of the Local Tax Act.

Article 107 subparagraph 1 of the Local Tax Act and Article 127 (1) 1 of the Local Tax Act

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Han-sung, Attorneys Lee Jong-soo et al., Counsel for plaintiff-appellant)

Plaintiff church (Attorney Kim Jong-il, Counsel for the plaintiff-appellant)

Head of the City/Do in Busan

Busan High Court Decision 2008Nu2705 decided Feb. 6, 2009

The part of the judgment below against the defendant is reversed, and that part of the case is remanded to Busan High Court.

The grounds of appeal are examined.

Article 107 subparagraph 1 of the Local Tax Act and Article 127 (1) 1 of the Local Tax Act provide that no acquisition tax and registration tax shall be imposed on the acquisition and registration of real estate to be used for the business by a non-profit entrepreneur prescribed by the Presidential Decree for the purpose of memorial services, religion, charity, academic research, art, and other public services. Under each of the above provisions, the term "use of the real estate for the business" means that the real purpose of use of the real estate is to be directly used for the nonprofit business itself, and the scope of "use of the real estate for the business" shall be objectively determined based on the actual use relation in consideration of the purpose of use and acquisition by the relevant non-profit entrepreneur (see Supreme Court Decision 2004Da58901, Dec. 2

As the reasoning of the judgment of the court below is justified in light of the number of the believerss of the plaintiff church as well as the necessary circumstances. However, according to the evidence duly adopted by the court below, in order to continue to hold as temporary pastors of one year who assist the pastors of the plaintiff church, the chairperson of the church shall file a petition with the union and obtain the consent of the union every year. Thus, if the assistant pastors of the plaintiff church frequently perform a temporary work with the consent of the union council for the purpose of assisting the pastors, it shall not be deemed that they are in a critical tracking position as necessary for the religious activities of the plaintiff church. Thus, real estate provided as the assistant pastors of the plaintiff church cannot be deemed directly used for the purpose of the business of the plaintiff church, and it shall not be deemed that it is not subject to non-taxation as stipulated in each of the above provisions (see Supreme Court Decision 97Nu14644, Dec. 12, 197, etc.).

Nevertheless, the court below determined that the acquisition of real estate to be used for the purpose of the church's business shall not be directly used for the purpose, but shall not be imposed the acquisition tax and the registration tax, and even if it is required to use the real estate directly for the purpose of the business in order to be exempted from taxation as stipulated in each of the above provisions, in light of the circumstances as stated in its reasoning, such as the fact that it is impossible to carry out the essential duties of the church alone without the assistance of the father in a large church such as the plaintiff church, it is not possible for the father in a large church such as the plaintiff church to carry out the religious business of the plaintiff church, and therefore, it is reasonable to view that the father in the plaintiff church is naturally incidental to the plaintiff church's religious business and it is directly used for the purpose of the business. Therefore, the court below erred by misapprehending the legal principles on the "use for the business" as stipulated in each of the above provisions, which affected the conclusion of the judgment,

Therefore, the part of the judgment of the court below against the defendant shall be reversed, and that part of the case shall be remanded to the court below for a new trial and determination. It is so decided as per Disposition by the assent of all participating Justices.

Justices Park Ill-sook (Presiding Justice)