The children of a famous cockle restaurant in Gangneung are ”rejected” for paying less taxes.

It is known that the children who opened a branch near their mother’s cockle restaurant’s main branch received a tax reduction from the National Tax Service, claiming that the business was considered a ‘start-up’, but were later caught on the National Tax Service’s radar and had to cough up taxes. The children felt aggrieved and filed a request for judgment with the Tax Tribunal, but the result was the same.

Mr. A and Mr. B are the children of a famous cockle restaurant in Gangneung-si, Gangwon-do (hereinafter referred to as the ‘main branch’), and opened the first and second branches near the main branch in 2019 and 2020, respectively. The two businesses were registered as businesses under individual names and have been subject to the ‘Youth Entrepreneurship Small and Medium Business Tax Reduction’ regulations when reporting comprehensive income tax.

However, in March of this year, the competent tax office ruled that the business site did not meet the requirements for reduction on the grounds that it was merely an expansion of the existing head office, and ruled out tax reduction and corrected and notified the comprehensive income tax attributable to Mr. A and Mr. B, respectively. Dissatisfied with this, Mr. A and Mr. B (hereinafter referred to as the petitioners) filed a request for judgment with the Tax Tribunal in May.

■ National Tax Service “”Even the building is in my mother’s name and is in fact an expanded business””

However, the National Tax Service refuted, “The two businesses are merely annex buildings expanded to accommodate customers of the main store, and cannot be considered actual business ventures.”

All business buildings for stores 1 and 2 were purchased in the name of the claimants’ mother, and the mother took the lead in supporting remodeling, signboard installation, and business facilities. Additionally, the rent was significantly lower than the normal price or close to free.

The National Tax Service argued, “The three stores (the main store and the first and second stores) share a waiting list and the customers are distributed, and there is no real separation, with employees moving among themselves,” and “This can only be seen as an expansion of the main store.”

■ Referee: “It’s not a start-up… A practical extension of my mother’s business””

The Tax Tribunal ruled in favor of the Disposal Agency. Although it is acknowledged that the businesses at issue were operated in the name of the claimant on business registration, it was determined that they were actually operated as an extension or annex to the existing head office.

The tribunal ruled, “Given that the ownership of the building is in the name of the claimants’ mother, and the costs of signage, equipment, and interior were also borne by the mother, the actual investor is not the claimant, and this cannot be considered a business start-up.”

https://n.news.naver.com/article/123/0002372159