[1] Where a corporation, for which five years have passed since it was established in a metropolitan area, acquires real estate located in an area other than Seoul Metropolitan area within five years from the date it was transferred to Seoul Metropolitan area other than Seoul Metropolitan area, whether it is subject to heavy registration tax (negative)

[2] The case reversing the judgment of the court below which held that where a corporation established five years after its establishment in Seoul Special Metropolitan City moved its head office in Goyang-si, and again acquired real estate located in Goyang-si in Seoul Special Metropolitan City within five years after its relocation, and completed its relocation registration, it constitutes a subject of heavy registration tax

[1] In principle, even if cities belonging to overconcentration control region under Article 6 of the Seoul Metropolitan Area Readjustment Planning Act are included in one large city and located in one large city to another city, they are merely moving within one large city and they do not belong to the relocation into the large city. However, in exceptional cases, where real estate is moved from an overconcentration control region outside the Seoul Metropolitan City to Seoul Metropolitan City, it shall be regarded as a relocation into the large city under Article 102 (2) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 17052 of Dec. 29, 2000). In cases where real estate registration after the relocation of a corporation into the Seoul Metropolitan City from the overconcentration control region outside the Seoul Metropolitan City is subject to registration tax, Article 102 (4) of the Enforcement Decree of the same Act limits the scope of such real estate registration to the registration following relocation into the large city, so it shall be interpreted that such real estate is subject to heavy registration tax only in the case of a new large city located in the Seoul Metropolitan City.

[2] The case reversing the judgment of the court below which held that where a corporation established five years after its establishment in Seoul Special Metropolitan City had moved its head office in Goyang-si and again acquired real estate located in Goyang-si in Seoul Special Metropolitan City within five years after its relocation and completed the registration of relocation, it constitutes subject to heavy registration tax

[1] Article 138 (1) 3 of the former Local Tax Act (amended by Act No. 6312 of Dec. 29, 200), Article 102 (2) and (4) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 17052 of Dec. 29, 200), Article 6 of the Seoul Metropolitan Area Readjustment Planning Act, Article 9 [Attachment 1] of the Enforcement Decree of the Seoul Metropolitan Area Readjustment Planning Act (amended by Presidential Decree No. 17683 of Jul. 24, 2002) / [2] Article 138 (1) 3 of the former Local Tax Act (amended by Act No. 6312 of Dec. 29, 200), Article 102 (2) and (4) of the former Enforcement Decree of the Local Tax Act (amended by Presidential Decree No. 17052 of Dec. 29, 200), Article 27 (1) of the former Enforcement Decree of the Seoul Metropolitan Area Readjustment Planning Act / [3]

Esua Co., Ltd. (Law Firm Shin & Kim, Attorneys Choi Jong-soo et al., Counsel for the plaintiff-appellant)

The head of Sinyang-si in Masan-si

Seoul High Court Decision 2001Nu6137 delivered on November 15, 2001

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

We examine the grounds of appeal.

1. According to the reasoning of the judgment below, the court below found that the plaintiff company acquired its head office on January 29, 1991 at the Seocho-gu Seoul Metropolitan Government 1031-7 on November 3, 1998 and transferred its head office to 779 Dong-dong, Seocho-gu, Seoul Metropolitan City on November 2, 1998, and thereafter, transferred its head office to 53-8 Dong-dong, Gangnam-gu, Gangnam-gu on October 2, 1999. After the plaintiff moved its head office from Goyang-si to Seoul on June 9, 200 and completed the registration of ownership transfer under the name of 1329 large city 6,937.7 square meters (hereinafter referred to as "real property in this case"), and determined that the defendant acquired the real property in this case within the scope of 130 years prior to the transfer to 205 of the former Local Tax Act (amended by Presidential Decree No. 2190, Feb. 17, 2002) and completed the registration of ownership transfer within the name.

2. However, we cannot accept the judgment of the court below.

Article 138 (1) of the former Local Tax Act (amended by Act No. 6312 of Dec. 29, 200; hereinafter referred to as the "Act") provides that when a corporation registers falling under any of the following subparagraphs, the registration tax rate of such corporation shall be three times the general tax rates. The Real Estate Registration Act provides that the establishment of a corporation within a large city and the relocation of its head office, main office, or branch office into a large city and the relocation of a corporation into a new establishment, establishment, or branch office within a large city shall be subject to heavy taxation of registration tax. Article 102 (1) of the former Enforcement Decree of the Local Tax Act (referring to the former Enforcement Decree of the Local Tax Act which was amended by Presidential Decree No. 17052 of Dec. 29, 200; hereinafter referred to as the "former Enforcement Decree") provides that the corporation's relocation into a large city or its branch office within a nonbusiness area under Article 6 (1) 1 of the Seoul Metropolitan City Readjustment Planning Act shall be excluded from the establishment or relocation into an industrial complex:

In full view of the above provisions, even if cities belonging to the overconcentration control region under Article 6 of the Seoul Metropolitan Area Readjustment Planning Act are included in one large city and move their headquarters from one of them to another city, they are merely moving into one large city and they do not, in principle, move from an overconcentration control region other than Seoul Special Metropolitan City to Seoul Special Metropolitan City. However, if they move from an overconcentration control region to the Seoul Special Metropolitan City, they shall be regarded as moving into the large city under Article 102 (2) of the Enforcement Decree. This purpose is to specially add the registration tax if they move from the large city to the Seoul Special Metropolitan City or the Gyeonggi-do Special Metropolitan City due to the tax policy reason to prevent population concentration or economic concentration. Thus, even if the real estate registration of the juristic person transferred from the overconcentration control region other than Seoul Special Metropolitan City to the Seoul Special Metropolitan City becomes the object of registration tax, the scope of such real estate registration is limited to the registration pursuant to Article 102 (4) of the Enforcement Decree, and thus, it shall be interpreted that the real estate is subject to the taxation of registration tax only where the real estate newly acquired real estate is located within the large City.

Therefore, even if the Plaintiff Company’s relocation of its head office to Goyang-si after the lapse of five years after its establishment in Seoul, and the relocation of its head office to Goyang-si is considered to be within the large city area as prescribed by Article 102(2) of the Enforcement Decree, the registration of real estate subject to heavy registration tax shall be limited to the case of acquisition registration of real estate located in Seoul, which is a newly transferred large city. However, the lower court determined that the heavy tax rate shall apply to the registration of acquisition of the real estate of this case located in Goyang-si on different premise. The lower court erred by misapprehending the legal doctrine on heavy registration tax on the registration of real estate of corporation due to the relocation into the large city, thereby adversely affecting the conclusion of the judgment. The allegation in the grounds of appeal assigning this error is with merit.

3. Therefore, without examining the remaining grounds of appeal, the judgment of the court below is reversed, and the case is 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 on the bench.

Justices Zwon (Presiding Justice)