2. The plaintiff's remaining claims are dismissed.

3. 1/10 of the costs of lawsuit shall be borne by the Plaintiff, and the remainder by the Defendant, respectively.

Cheong-gu Office

The defendant's refusal to correct the corporate tax for the year 2015, which belongs to the plaintiff on December 9, 2015, shall be revoked.

A. On January 7, 2015, the Plaintiff entered into a contract with CCC Co., Ltd. (hereinafter “CCC”), a domestic corporation, under the law of the United States of America, to grant CCC the right to use a patent for eMC-related technology (hereinafter “instant patent”), and to receive royalties from CCC (hereinafter “instant contract”).

B. In the patent use contract (hereinafter referred to as the "contract of this case") drafted at the time of entering into the contract of this case, the patent of this case refers to the patent owned by the plaintiff or has the right to grant licenses within the scope specified in this contract. The patent of this case includes, but is not limited to, the patents specified in Appendix 1. The patent of this case stated in Appendix 1 is 197; the patent registered in each of the world countries such as the United States is 97; the patent of this case is 97; the patent registered in each of the world countries such as the United States of America is 7 among the registered patents.

(C) On January 22, 2015, under the instant contract, the CCC paid USD 5 (hereinafter “the royalty of this case”) to the Plaintiff as the royalty of the patent of this case, and applied the Convention between the Republic of Korea and the United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income and the Encouragement of International Trade and Investment (hereinafter “the Convention on the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income between the Republic of Korea and the United States of America,” hereinafter “the United States of America”), 15% of the limited tax rate under Article 14(1) of the “Convention between the Republic of Korea and the United States of America,” and paid as the corporate tax to the Defendant on January 22, 2015. The Plaintiff: (a) on October 8, 2015, the Defendant: (b) on October 8, 2015, the amount of the royalty of this case is not the consideration for the use of patent rights not registered in Korea; (hereinafter “instant claim for correction”).

E. From November 30, 2015 to July 18, 2016, the Defendant requested the Plaintiff to submit revised documents pertaining to the instant request for correction several times, and received materials from the Plaintiff, but did not notify the Plaintiff that there is no reason to determine or correct the tax base and the amount of tax or to make any decision or correction within two months (where a person who made the request for correction fails to receive any notice within two months, then the Defendant shall be deemed to have rejected the request for examination, etc. pursuant to the proviso of Article 45-2(3) of the Framework Act on National Taxes, which provides that even before receiving the notice, the Defendant may request for examination from the day following the date on which two months elapse, which is the date on which the instant request for correction was filed, and on December 9, 2015, which is the date on which two months elapse from October 8, 2015, which is the date on which the instant request for correction was filed by the Defendant

F. On August 30, 2016, the Plaintiff dissatisfied with the instant disposition, filed an appeal with the Tax Tribunal on August 30, 2016, but the Tax Tribunal dismissed the Plaintiff’s appeal on November 16, 2016.

[Reasons for Recognition] Unsatisfy, each entry in Gap evidence 1 through 6 (including each number in the case of additional number), and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The parties' assertion

1) Plaintiff

According to Article 6(3) of the Korea-U.S. Tax Convention applicable to the royalty income of this case, the payment received by a U.S. resident from a domestic resident for the use of a patent right not registered in the Republic of Korea does not constitute income subject to withholding. Therefore, the instant disposition rejecting the Plaintiff’s request for correction on the ground that the instant royalty, which is the price for the use of the patent right not registered in the Republic of Korea, falls under the income subject to withholding, is unlawful and revoked.

2) Defendant

In the Korea-U.S. Tax Convention, while taking the so-called "use-based principle" that determines the place of use as the source of royalty income, the meaning of "use-based" should be determined in accordance with the domestic law. However, the latter part of Article 93 subparagraph 8 of the former Corporate Tax Act (amended by Act No. 16008, Dec. 24, 2018; hereinafter referred to as the "former Corporate Tax Act") stipulates that "use-based income of a patent right that is not registered in the Republic of Korea shall be deemed domestic source income if the relevant income falls under the price that is used for manufacturing, selling, etc. in the Republic of Korea." Accordingly, the income of this case, the consideration for the use of the patent right in the Republic of Korea, should be deemed as income subject to withholding tax. Therefore, the disposition in this premise is legitimate).

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Article 2(1)2 of the former Corporate Tax Act provides that a foreign corporation is liable to pay corporate tax only when there is any domestic source income. Articles 2(5) and 98(1) provide that a person who pays a foreign corporation the amount of certain domestic source income, such as Article 93 subparag. 8, shall withhold the relevant corporate tax.

However, Article 93 of the former Corporate Tax Act provides that "domestic source income of a foreign corporation shall be classified as follows: "If the foreign corporation uses any of the following rights, assets, or information (hereafter referred to as "rights, etc." in this subparagraph) in Korea or pays the price therefor in Korea, the price therefor and the income accrued from the transfer of such rights, etc.: Provided, That where a double taxation agreement on income provides for whether the relevant income constitutes domestic source income based on the place of use, the price for the rights, etc. used overseas shall not be deemed domestic source income, regardless of whether the patent is paid in Korea. In such cases, where the relevant patent right, etc. is registered overseas and it is used in manufacturing, selling, etc. in Korea, the patent right, etc. required to be registered (hereafter referred to as "patent right, etc." in this subparagraph) shall be deemed domestic use regardless of whether it is registered in Korea:

On the other hand, Article 14 (4) of the Korea-U.S. Tax Convention provides that "user fees" shall be "for the purposes of this Convention, the term "for the purposes of this Convention" in paragraph (3) of the same Article shall be "for the rights to use or use the property provided for in paragraph (4) of Article 14, the term "for the purposes of this Convention" and subparagraph (a) provides that "for the rights to use or use the property provided for in paragraph (4) of the same Article shall be treated as income at source in that Contracting State only if it is paid for the rights to use or use the property in that Contracting State only if it is paid for the rights to use or use that property:

section 1.

2) The latter part of the proviso of Article 93 subparag. 8 of the former Corporate Tax Act stipulates that income received as consideration for use by a foreign corporation shall be deemed domestic source income when it was used in manufacturing, selling, etc. in the Republic of Korea even though the foreign corporation registered a patent right outside of Korea. However, Article 28 of the Adjustment of International Taxes Act provides that “in regard to the classification of domestic source income of a nonresident or foreign corporation, tax treaties shall prevail notwithstanding Article 119 of the Income Tax Act and Article 93 of the Corporate Tax Act, with regard to the classification of domestic source income of the non-resident or foreign corporation,” so whether the U.S. corporation’s income received as consideration for use should be determined pursuant to the Korea-U.S. Tax Convention if the patent right, etc. of the non-resident or foreign corporation was used in manufacturing, selling, etc. in the Republic of Korea (see Articles 6(3) and 14(4) of the Korea-U.S. Tax Convention and its language and text, insofar as the patent right is not registered in the Republic of Korea, the Republic of Korea-U.

3) Therefore, only the portion corresponding to the royalty for patent rights registered in the Republic of Korea among the instant royalty constitutes domestic source income of foreign corporations under Article 93 subparag. 8 of the former Corporate Tax Act, and the remainder (the portion corresponding to the royalty for patent rights not registered in the Republic of Korea) does not constitute domestic source income, regardless of whether the patent right was actually used for manufacturing, selling, etc. in the Republic of Korea. Therefore, the part corresponding to the royalty for the remaining portion

In a lawsuit seeking revocation of taxation, the subject matter of adjudication is whether the tax base and tax amount imposed and notified by the tax authority are objectively existing. In a case where the tax base and tax amount recognized by the disposition of taxation are excessive compared to the legitimate tax base and tax amount, the disposition of imposition is unlawful only within the scope exceeding the reasonable tax base and tax amount (see, e.g., Supreme Court Decision 88Nu6504, Mar. 28, 198

On the other hand, as consideration for the use of "patents including, but not limited to, the patents listed in the table 1 of the contract of this case", "the legitimate tax base of this case does not specify the amount of the consideration for the use of the patent for the seven patents registered in Korea among the royalty of this case, and no other data to confirm it are found. However, with respect to the method of calculating the legitimate tax base, the plaintiff asserts the method of calculating the aforementioned legitimate tax base based on the ratio of the seven patents registered in Korea among the 97 patents listed in the table 1 of the contract of this case, in which the registration number among the patents listed in the table 1 of the contract of this case is indicated. Therefore, among the 197 patents listed in the table 1 of the contract of this case, the plaintiff, who is the tax amount equivalent to the ratio of the tax amount collected and paid by CCC, as seen above, shall be deemed to have its legality as the plaintiff himself/herself, and therefore, the part exceeding the above 294,108,247 won among the disposition of this case shall be revoked.

3. Conclusion

Thus, the plaintiff's claim is justified within the above scope of recognition, and the remaining claims are dismissed as they are without merit.