Succession of a carried-forward tax credit and the number of employees succeeded

1. 01Question

   Do the items of Article 81(3)(ii) of the former Enforcement Decree of the Corporate Tax Act set out only the concrete method and the limit of applying a tax credit succeeded from the absorbed company, so that the method and scope laid down in other statutes are not barred, and what does the number of regular employees succeeded or transferred in Article 23(13)(iii)(a) of the former Enforcement Decree on the Restriction of Special Taxation Cases mean?

2. 02Holding

   The items set the concrete method of applying the succeeded credit and the limit of the credit in calculating the income amount and the corporate tax of each business year; they do not add conditions restricting the succession itself, so the method and the scope of the credit laid down in the Restriction of Special Taxation Cases Act and its Decree still apply. The number of employees succeeded or transferred is the absorbed company's regular employees at each month-end throughout the previous and the current tax year, and whether the current year's figure exceeds the previous year's must be examined on the figures derived by applying the monthly formula to each of the two tax years.

   Points at issue, verbatim

   구 조세특례제한법 시행령 제23조 제13항 제3호 (가)목에서 정한 ‘승계시킨 또는 승계한 상시근로자 수’의 의미(=직전 과세연도 및 해당 과세연도 동안 피합병법인의 매월 말 현재 상시근로자 수) 및 이를 토대로 도출된 직전 과세연도 및 해당 과세연도의 각 ‘상시근로자 수’를 전제로 하여 합병법인의 해당 과세연도의 ‘상시근로자 수’가 직전 과세연도의 ‘상시근로자 수’를 초과하는지 살펴야 하는지 여부(적극)

   Unofficial English translation

   The meaning of the 'number of full-time employees succeeded to or made to succeed' as defined in Article 23 (13) 3 (a) of the former Enforcement Decree of the Restriction of Special Taxation Act (=the number of full-time employees of the merged corporation as of the end of each month during the immediately preceding taxable year and the relevant taxable year), and whether, on the premise of the respective 'number of full-time employees' for the immediately preceding taxable year and the relevant taxable year derived therefrom, it should be examined whether the 'number of full-time employees' of the surviving corporation for the relevant taxable year exceeds the 'number of full-time employees' for the immediately preceding taxable year (affirmative)

3. 03Disposition

   Partly reversed and remanded Stated in the decision

   원심판결의 원고 패소 부분을 파기하고, 이 부분 사건을 서울고등법원에 환송한다. 피고의 상고를 기각한다.

   Unofficial English translation

   The portion of the judgment of the court below in which the plaintiff lost is reversed, and the case as to that portion is remanded to the Seoul High Court. The defendant's final appeal is dismissed.

4. 04Form of the test

   Elements stated Stated in the decision

   이 사건 조항에서의 ‘승계시킨 또는 승계한 상시근로자 수’는 직전 과세연도와 해당 과세연도의 두 가지 모두 합병등기일이라는 특정한 날짜를 기준으로 실제 승계시키거나 승계한 상시근로자 수가 아니라, 구 조특법 시행령 제23조 제11항 제1호의 계산식 가운데 나타난 바와 같이, 위 각 과세연도 동안 피합병법인의 매월 말 현재 상시근로자 수 자체를 의미한다고 봄이 타당하다.

   Unofficial English translation

   It is reasonable to view that the 'number of full-time employees succeeded to or made to succeed' in the provision at issue in this case does not refer to, for both the immediately preceding taxable year and the relevant taxable year, the actual number of full-time employees succeeded to or made to succeed on the basis of a specific date such as the date of registration of the merger, but, as appears from the formula set out in Article 23 (11) 1 of the former Enforcement Decree of the Restriction of Special Taxation Act, refers to the number of full-time employees of the merged corporation as of the end of each month during each of the taxable years mentioned above itself.

5. 05Factors

   • 구체적인 감면 또는 공제의 적용 방법 및 공제의 한도 등을 정한 것인지 여부
   • 위 각 목 규정의 존재로 법인세법령 외의 다른 법령에 따라 합병법인이 피합병법인으로부터 승계받은 감면 또는 세액공제를 적용하는 구체적인 방법 및 공제 등 범위를 정하는 것이 금지되거나 원천적으로 차단되는지 여부(소극)
   • ‘승계시킨 또는 승계한 상시근로자 수’의 의미(=직전 과세연도 및 해당 과세연도 동안 피합병법인의 매월 말 현재 상시근로자 수)
   • 합병법인의 해당 과세연도의 ‘상시근로자 수’가 직전 과세연도의 ‘상시근로자 수’를 초과하는지 살펴야 하는지 여부

   Unofficial English translation

   • Whether it stipulates the specific methods of applying the tax reduction, exemption, or credit and the limits on the credit, etc.

   • Whether, by reason of the existence of the provisions of each item above, it is prohibited or inherently blocked to determine the specific methods of applying, and the scope of the credit, etc., of the tax reduction, exemption, or tax credit that the surviving corporation has succeeded to from the merged corporation pursuant to statutes and regulations other than the Corporate Tax Act and its Enforcement Decree (negative)

   • The meaning of the 'number of full-time employees succeeded to or made to succeed' (=the number of full-time employees of the merged corporation as of the end of each month during the immediately preceding taxable year and the relevant taxable year)

   • Whether it should be examined whether the 'number of full-time employees' of the surviving corporation for the relevant taxable year exceeds the 'number of full-time employees' for the immediately preceding taxable year

6. 06Relation to precedent

   Follows earlier decisions Stated in the decision

   대법원 2020. 7. 29. 선고 2019두56333 판결 등 참조

   Unofficial English translation

   See, e.g., Supreme Court Decision 2019Du56333 decided July 29, 2020

   Decisions referred to

   해당 본문 참조

7. 07Burden of proof

   Not addressed Not in the decision

8. 08Open question and revisit condition

   If the month-end regular employee figures of the transferred business division cannot be identified separately from the rest of the absorbed company's business, how is the number to be added or deducted under Article 23(13)(iii)(a) to be calculated?

   The judgment on remand in 2021Nu49927, applying the monthly figures to the carry-forward for the 2016 and 2017 business years, will show how the rule works in practice. Any amendment to Article 144(3) of the Restriction of Special Taxation Cases Act or to Article 23(13)(iii)(a) of its Enforcement Decree, or a later Supreme Court decision on the meaning of the number succeeded, calls for this entry to be read again.

Read 2026-10-24 · Cross-read 2026-10-24. All quotes matched against the official text. The Chinese-character placeholders the court used for anonymised parties are given in their Korean readings, and parenthetical Chinese-character glosses are omitted.

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