[1] The case affirming the judgment of the court below which held that in case where a corporation transfers its main office to an area outside the Seoul Metropolitan area to relocate its main office, "area used directly by the corporation for its business", which is the basis for calculating the exempted tax amount under Article 36-2 (1) of the former Enforcement Decree of the Regulation of Tax Reduction and Exemption Act, the calculation of the area used directly by the corporation and lessee for its business purpose is legitimate, in proportion to the ratio of the exclusive use area of the corporation and lessee to the part

[2] Legislative intent of Article 42-2 of the former Regulation of Tax Reduction and Exemption Act concerning the exemption of corporate tax on the transfer margin of the corporate head office located in the Seoul Metropolitan area, and whether the provision of Article 36-2 (2) of the Enforcement Decree

[1] The case affirming the judgment of the court below that in case where a corporation transfers its main office to an area outside the Seoul Metropolitan area to relocate its main office, "area used directly by the corporation for its business" under Article 36-2 (1) of the former Enforcement Decree of the Regulation of Tax Reduction and Exemption Act, which is the basis for calculating the exempted tax amount, it is reasonable to determine that the corporation's calculation of the area directly used for its business is lawful in proportion to the ratio of the exclusive use area of the corporation and lessee to the part used jointly

[2] The legislative intent of Article 42-2 of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4666 of Dec. 31, 1993) is to promote balanced regional development by promoting the relocation of the headquarters, etc. to an area other than the Seoul Metropolitan area. Meanwhile, in order to transfer the headquarters, etc. to a corporation transferring the site and building of the headquarters, etc., to support the corporation that transfers the headquarters, etc. so that it can continue to operate the business even after the relocation of the headquarters. Considering the aforementioned legislative intent and equity in taxation, it is reasonable to exempt the relevant corporation from only the amount of tax equivalent to the area directly used for the business if there are parts not, and it is reasonable to limit the area directly used for the business to the area continuously used for the business for a certain period. Thus, in applying Article 36-2 (1) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 14084 of Dec. 31, 1993), the legislative purport and the provision of Article 36-2 (2) of the same Act should not be applied for the excessive taxation.

[1] Article 42-2 (1) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4666 of Dec. 31, 1993) (see current Article 61 (1) of the Restriction of Special Taxation Act), Article 36-2 of the former Enforcement Decree of the Restriction of Tax Reduction and Exemption Act (amended by Presidential Decree No. 14084 of Dec. 31, 1993) (see current Article 57 of the Enforcement Decree of the Restriction of Special Taxation Act) / [2] Article 42-2 (see current Article 61 of the Restriction of Special Taxation Act) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4666 of Dec. 31, 1993), Article 36-2 (1) (see current Article 57 (4) of the Enforcement Decree of the Restriction of Special Taxation Act), Article 57 (2) (2) (2) (see current Article 57 (3) of the Restriction of Special Taxation Act), Article 537 (2 (2) of the Constitution)

[Judgment of the court below]

The Director of the National Tax Service

Daejeon High Court Decision 96Gu1168 delivered on December 23, 1997

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

The grounds of appeal are examined.

1. Article 42-2 (1) of the former Regulation of Tax Reduction and Exemption Act (amended by Act No. 4666 of Dec. 31, 1993; hereinafter referred to as "the former Regulation of Tax Reduction and Exemption Act") provides that a corporation shall be exempted from corporate tax and special surtax as prescribed by the Presidential Decree on income accrued from the transfer of the site and buildings of the headquarters or principal office in the Seoul Metropolitan area to relocate its head office or principal office to an area other than the Seoul Metropolitan area. Article 36-2 (1) of the former Enforcement Decree of the former Regulation of Tax Reduction and Exemption Act (amended by the Presidential Decree No. 14084 of Dec. 31, 1993; hereinafter referred to as the "Enforcement Decree") provides that the calculation of the above exempted tax amount shall be retroactive to the area that the corporation directly uses for business purposes from the date of the transfer of the site and building that the corporation directly uses for business purposes.

2. As to the grounds of appeal Nos. 1, 2, 3, and 4

The court below, on November 23, 1992, transferred to the non-party company the site and the building of the headquarters located in the Seoul Metropolitan Area to move its head office to an area other than the Seoul Metropolitan Area. The plaintiff applied for tax exemption by the rate of 47.94% of the total floor area of the building of this case, excluding the leased area, and reported and paid corporate tax and special surtax. However, the defendant, on the ground that the use of the building of this case is a separate parking lot of 1, 2, 3, and 4 (hereinafter referred to as "the parking lot part of this case") among the buildings of this case, the plaintiff and the lessee are jointly used and calculated in proportion to their respective exclusive use areas of the building of this case and the ratio of the area directly used by the plaintiff to the non-party company as 3.38% of the total floor area of the building of this case, and the plaintiff was subject to imposition of corporate tax and special surtax by the Administrator of the Gangnam-gu District Office 1, which is the parking lot for non-business purposes.

In light of the records, the above fact-finding and decision of the court below is just, and there is no error of law such as misunderstanding of facts, incomplete deliberation, inconsistency with the reasoning, and omission of judgment as to the area directly used for business purposes under Article 36-2 (1) of the Enforcement Decree, as alleged in the grounds of appeal.

The allegation in the grounds of appeal other than this, is that if the Plaintiff uses the building portion of the instant parking lot for illegal use as a warehouse other than the parking lot, it should be corrected at any time, and thus, it is difficult to regard it as a direct use for business purposes even in such a case, the judgment of the court below is in violation of the principle of substantial taxation under the Framework Act on National Taxes and the principles of interpretation of tax law, but it is merely a criticism of the

3. As to the fifth ground for appeal

The legislative purport of Article 42-2 of the Early Reduction and Exemption Act is to promote balanced regional development by promoting the relocation of the head office, etc. in the Seoul Metropolitan area to an area outside the Seoul Metropolitan area, while providing tax exemption benefits to a corporation that transfers the site and buildings of the head office, etc. in order to relocate the head office, etc., so that the relevant corporation can continue its business even after the relocation of the head office, etc. In view of the legislative purport as well as equity in taxation, it is reasonable to exempt only the amount equivalent to the amount of tax directly used for business if there are parts of the real estate subject to transfer, and it is reasonable to limit the area directly used for business to the area continuously used for business for a certain period of time. Therefore, in applying Article 36-2 (2) of the Enforcement Decree of the same Act, the provision that the area directly used for business shall be the lowest of the area directly used by the relevant corporation for business for two years retroactively from the date of transfer is in harmony with the legislative purport as above and tax equity, and thus, cannot be said to violate the principle of excessive prohibition, property rights protection and the Constitution.

The judgment of the court below to the same purport is just, and there is no error in the misapprehension of legal principles as to whether Article 36-2(2) is unconstitutional.

4. Therefore, the appeal is dismissed and all costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices on the bench.

Justices Park Jae-sik (Presiding Justice)