September 15, 2017

2. The corporate tax of 8,027,59,530 won for the business year 207 to the plaintiff on March 2, 201, 207, of 4,67,728,45 won, corporate tax of 2,687,616,016,231 won for the business year 2008, and 631,374,374,674 won for the business year 940, 6369, 2063, 207, 207, 309, 207, 309, 207, 207, 309, 207, 309, 207, 309, 204, 305, 207, 309, 207, 309, 207, 309, 205, 294, 207, 30948, 207, 209

3. The total cost of the litigation, including the cost of participation, shall be borne by the Plaintiff and the Intervenor, and the remainder by the Defendant, respectively.

1. Purport of claim

First, the defendant's imposition of corporate tax for the business year 207 8,027,59,530 (including additional tax), corporate tax for the business year 2008 2,687,616,840 (including additional tax for 1,018,60,609), 948,374,540 (including additional tax for 316,461,866) for the business year 206, 305, 207, 207, 309, 207, 207, 309, 207, 209, 309, 207, 306, 461, 207, 209, 306, 207, 309, 207, 205, 207, 208, 309, 306, 207, 2094

Preliminaryly, the Defendant imposed corporate tax of 8,027,59,530 (including additional tax of 3,359,831,075) on the Plaintiff on March 2, 201; corporate tax of 207; of 2,687,616,840 (including additional tax of 1,018,600; 609); of 94,374,540 (including additional tax of 316,461,8666); of 207, 208, 369, 207, 369, 207, 207, 207, 309, 369, 207, 209, 306, 207, 309, 207, 207, 205, 205, 207, 306, 307, 394, 20638, 2794

2. Purport of appeal

It is as set forth in paragraphs 1 and 2 of this Decree.

According to the records of this case, the court of first instance dismissed the plaintiff's main claim and dismissed the remainder of each disposition of this case among the conjunctive claims, and the defendant did not appeal against this, and only the plaintiff filed an appeal against the losing part. The court of first instance prior to remand dismissed the plaintiff's appeal against the main claim of the plaintiff, and accepted the plaintiff's claim against this part of the conjunctive claim of the first instance judgment, and the plaintiff did not appeal against this part, and only the defendant did filed an appeal against this part against it. The Supreme Court reversed the judgment of the party prior to remand and remanded. Accordingly, the main claim is excluded from the object of the judgment of this court, and only the remainder (excluding the main claim of this case from each disposition of this case) is subject to the judgment of this court (see Supreme Court Decision 2001Da62213, Dec. 24, 2001).

2. Details of the disposition;

This Court’s explanation concerning this part is identical to the corresponding part of the reasoning of the judgment of the court of first instance, except for the dismissal of some contents as follows. Thus, this Court’s explanation is accepted in accordance with Article 8(2) of the Administrative Litigation Act, Article 420 of the Civil Procedure Act, and Article 420 of the Civil Procedure Act.

○○ Decision No. 5 of the first instance court Decision No. 4, 5, “Plaintiffs Obae Lbaey Lbaey Lbaey (hereinafter “Plaintiffs Alba”)” and thereafter, “Plaintiffs Albaey” are all considered as “Plaintiffs”.

○○ Decision 6 of the first instance court's 6th sentence "Plaintiff's Magaz Group" shall be considered as "Smerz Group".

○ The 8th part of the 4th decision of the first instance court is that the “Plaintiff’s Intervenor” is “Plaintiff’s Intervenor.”

○ The term “rawlsing fee” in Part 13 of the 4th judgment of the first instance court is advanced into “rawlsing.”

○ In Part 3 of Part 5 of the fifth Do Judgment of the first instance court, the phrase “if the laws and regulations of the Republic of Korea are amended,” shall be read as “if the laws and regulations of the Republic of Korea are amended.”

3. Whether each of the dispositions of this case is legitimate

A. The plaintiff's assertion

(i) the first argument;

In the instant tax notice, the trade name (name), namely, that is, the taxpayer’s entry of “Nonindicted 1 at the domestic permanent establishment of the Timei Group,” and the instant tax notice alone cannot at all identify whether each of the instant tax dispositions was imposed against the Plaintiff, and instead, the trade name (name) includes “Jimei Group,” thereby understanding that the branchal group is liable for tax payment. Nonparty 1 concurrently serves as the representative of the Plaintiff and the branchal group, and Nonparty 1 is indicated in the trade name (name) column of the instant tax notice, the taxpayer cannot identify who is the Plaintiff and the branchal group solely on the ground that Nonparty 1 was indicated in the trade name (name) column of the instant tax notice. In light of the fact that the Defendant was aware of the fact that the supplementary intervenor and the party who entered into the instant contract with the Plaintiff were the Plaintiff, and thus, the instant tax notice constitutes a case where the identity of the taxpayer could not be identified. Therefore, each of the instant tax notice is unlawful.

(ii) the second argument;

In order for a permanent establishment to exist in the Republic of Korea, there should be a fixed place of business in the Republic of Korea, and there should be an essential and important business activities through a fixed place of business. However, the office of this case is limited to an assistant participant who used the casino space to temporarily provide all players including the plaintiff with the right to dispose of the office of this case, and the plaintiff did not limit on the right to use the office of this case. ② The plaintiff recruited customers directly or through many subordinate players in Asian areas except China, Taiwan, the Philippines, Hong Kong, etc. under the contract of this case, and then sent them to the assistant participant who was allowed to visit the casino operated by the assistant participant for the above 20th anniversary of the fact that the assistant participant did not have the right to dispose of the office of this case. The office of this case from 20 years to 30 years to 20 years to 30 years to 90 to 20 to 20 to 9 to 20 to 20 to 20 to 3 to 9 to 2 to 2 to chips.

(iii) the third assertion;

A) According to Article 7 of the Convention between the Republic of Korea and the Republic of the Philippines for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income where business activities of a foreign corporation or non-resident are conducted overseas and in Korea, the Corporate Tax Act and the Income Tax Act separates domestic source income and imposes business income tax on profits belonging to the instant office. The expenses incurred for the purpose of the instant office shall be deducted regardless of the place of occurrence. However, without distinguishing the income belonging to the Plaintiff’s domestic permanent establishment, the Defendant, without distinguishing the income belonging to the Plaintiff’s domestic permanent establishment, appears to be the income amount attributed to the instant office. However, even though the Defendant, without distinguishing the Plaintiff’s income, deemed that the entire amount of the Plaintiff’s fee, excluding the value-added tax, was the income amount attributed to the instant office, it is merely the fact that the business activities conducted in the instant office were conducted overseas to the customers recruited abroad, and rather, the Plaintiff’s main business activities

B) The Plaintiff’s services provided to the Intervenor under the instant contract are the Plaintiff’s foreign head office and mainly abroad, not the Plaintiff’s permanent establishment, and thus, the part of the value-added tax in each of the instant dispositions is unlawful.

C) Inasmuch as the part of roller structure that the Plaintiff paid to the customer for the purpose of construction is reverted to the customer, it should be excluded from the Plaintiff’s revenue or deductible expenses, and so long as its nature is limited, it should be excluded from the value-added tax base.

B. Relevant statutes

This Court’s explanation is identical to the corresponding part of the judgment of the court of first instance (No. 10-15, No. 21-23 of the judgment of the court of first instance). Thus, this Court’s explanation is based on Article 8(2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act.

(c) Fact of recognition;

This Court’s explanation concerning this part is identical to the corresponding part of the judgment of the court of first instance (as stated in the corresponding part of the judgment of the court of first instance from 10 to 16, 13, and 18, hereinafter “the corresponding part of the judgment of the court of first instance”), and thus, it is cited in accordance with Article 8(2) of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act.

The ○○ Court Decision 10th 17th 10th 10th 17th 17th 201 and the 17th 17th 2th 2th 2th 2th 2nd 201.

○ The "Supplementary Proposal" in Part 25 of the Do table No. 12 of the Judgment of the first instance court shall be considered as the "Supplementary Intervenor".

Article 13 of the Judgment of the first instance court "Sururure" of the 13th 8th 13th furururure is called "Geurururure".

D. Determination

1) As to the first argument

The reasoning for this Court to be explained concerning this part is as follows: (a) the part corresponding to the judgment of the court of first instance [the corresponding part of the judgment of the court of first instance [the part concerning the first argument of the 13th to 20th to 15th, 15th to 15th, 20th to 15th to 15th, 20th to 15th to 15th, 200], and thus, it shall be cited by Article 8(2) of the Administrative Litigation Act, Article 420 of the Civil Procedure Act and Article 420 of the Civil Procedure Act.

2) As to the second argument

A) Article 5(1) of the tax treaty of this case provides that “permanent establishment” means a fixed place of business in which the business of an enterprise is wholly or partially carried on, and Article 5(4) provides that “Notwithstanding the provisions of the preceding paragraph of this Article, a “permanent establishment” shall not include: (e) the maintenance of a fixed place of business for the sole purpose of carrying on other activities which are preparatory or auxiliary to the enterprise; and (f) the maintenance of a fixed place of business for the combined activities referred to in subparagraph (a) through (e) shall be limited to only the combined activities referred to in subparagraph (f). However, the overall activities of a fixed place of business due to such combination shall have a preparatory or auxiliary nature.”

In light of the language, purport, etc. of the above provisions, to establish a permanent establishment in the Republic of Korea, where an employee or a person under instructions of the Switzerland corporation performs essential and important business activities, not preliminary or auxiliary business activities, through a fixed place of business, such as domestic buildings, facilities, or equipment, etc., for which the Switzerland corporation has the authority to dispose of or use, it should be determined by comprehensively taking into account the nature and scale of the business activities, the importance and role of the entire business activities, etc.

B) In full view of the evidence Nos. 4 and 6-1 and 2-2 of the evidence Nos. 6-1 and 6-2, and the fact-finding results with respect to Non-Party 2’s testimony and fact-finding results to the head of Gangnam-gu Office prior to remand, the following facts can be acknowledged.

(1) According to the instant contract, the contents of the Plaintiff and the Intervenor’s main services are as follows. In other words, the Plaintiff recruited tickets (a person who visits a casino, junket and casino) in Asian areas, other than China, including China, Taiwan, Hong Kong, the Philippines, and Japan, and then sent them to Korea, and arranged the Intervenor to operate roll games at the casino business site of the auxiliary intervenor. The auxiliary intervenor performs the role of designating and guiding the customer’s casino business site VIP room and providing him/her with convenience facilities other than the game room, etc.

(2) According to the instant contract, the Plaintiff paid 70% of the casino sales (the amount lost by a customer) generated from the machines and diskettes recruited and sent by the Intervenor to the Intervenor as above. In addition, the Intervenor agreed to take 30% of the casino sales generated from the machines and diskettes sent by the Plaintiff as profits in return for providing casino business places and withstandrs, and bear 30% of the roller’s net sales (However, the Intervenor paid to the Plaintiff 30% of the roller and delivered it to the Plaintiff to the customer). On the other hand, Article 6(2) of the instant contract provides that “The Plaintiff shall achieve the amount of 1 year and 50 billion won or more at the place of the Intervenor’s business, or shall not fulfill the condition of the instant contract after consultation with one year and 16 billion won or more.”

(3) The key point of the Plaintiff’s specific activities in accordance with the instant contract was to recruit diskettes for the Asian regions other than China, including China, Taiwan, Hong Kong, the Philippines, and Japan. In addition, the Plaintiff’s activities to recruit individual tickets were conducted through various subordinate ticket business operators in each country. In addition, the Plaintiff’s recruited diskettes, prior to departure from the Republic of Korea, received the said tickets from the Plaintiff or the Plaintiff’s affiliated company, and transferred them to the Hong Kong account of the Intervenor’s Hong Kong, which is the subsidiary company, for the Plaintiff or the Plaintiff’s affiliated company, received the cards from the Plaintiff or the Plaintiff’s affiliated company so that they can play games at the casino business site of the Intervenor’s operation. In addition, the Plaintiff secured the amount of money to be provided or set up a security to provide in preparation for the case of the Plaintiff’s request for loans on credit, and conducted settlement work between customers and customers, and customer management business to attract customers in the future.

(4) In the Republic of Korea, the Plaintiff, within the assistant casino’s casino business place, had employees, provided chips to the chips recruited by the Plaintiff, or confirmed sales generated in the rolling game operated by the assistant intervenor. The Plaintiff performed the business of reservation of airline tickets and boarding instruction, the business of guiding the assistant intervenor’s casino business place at the airport, and the business of reservation and instruction of hotel and restaurant.

(5) From July 2007 to the end of July 2009, the Plaintiff handled the above domestic affairs at the assistant casino business site of the second floor of the building located in Gangnam-gu Seoul ( Address omitted), and had an assistant intervenor extended the place of business from the beginning of 2010 to the third floor of the same building. At the time of 2010, the instant office had seven books, seven computers, one credit cooperative for cash storage, one credit cooperative for cash chip storage, one cash chip storage, one credit cooperative for chip storage, three glnets, one work card size, and 15 employees of the Plaintiff were working for 3 times a day.

C) According to the above legal principles and the above factual basis as follows, ① Services provided by the Plaintiff to the Intervenor to the Intervenor is not limited to the Plaintiff’s solicitation and mediation overseas, but to provide various convenience to the Intervenor’s casino business site. Accordingly, the Intervenor’s final purpose is to raise sales in a certain amount of more than a certain amount of money. The Intervenor’s sales are directly linked to the amount of the Intervenor’s recruitment fee to be allocated from the Intervenor. ② Accordingly, the Plaintiff’s employees conducted various convenience services for the Intervenor’s game without any inconvenience in the above casino business site. ③ In particular, it is directly necessary to increase the Intervenor’s sales revenue, ③ to deposit the above casino business site with the overseas account of the Plaintiff, etc. instead of directly causing large amount of gambling money in Korea, and thus, it constitutes an employee’s inherent element of the Plaintiff’s business activity to increase the Intervenor’s sales revenue, and thus, the Plaintiff’s employee’s participation in the pertinent office’s domestic business site constitutes an employee’s share of the Plaintiff’s business activity in the instant case’s chips.

3) As to the third argument

A) As to corporate tax related to the income amount accruing to the Plaintiff’s permanent establishment in Korea

As the tax authorities have the burden of proving the reasonableness of the estimation reasons and estimation method, if it is possible to investigate and determine the real income of a foreign corporation, it shall calculate the income accrued to the domestic business place among the domestic source income, and even if it is estimated to estimate the income, it shall be reasonable to follow the treaty and the Corporate Tax Act and its Enforcement Decree. However, if a foreign corporation has the source of income in Korea, but it is actually impossible to investigate and determine the actual expenses in Korea because the implementation of income activities and the realization of income is performed in Korea and abroad, it shall not be imposed by the tax authorities in the way that it makes it close to the actual expenses of income. Therefore, it is impossible to calculate the income due to the sale transaction in the special contract form of the foreign corporation (the application of the income rate or the class of partner rights) in the calculation method. Thus, the income amount to be reverted to the domestic business place among the domestic source income of a foreign corporation shall be deemed to be illegal by 92.29% of the total amount of the foreign income and the net income of the foreign corporation in Korea (see the Supreme Court Decision 9829.2.2.298%).

In light of the above legal principles and the following circumstances revealed by the above facts, the part of corporate tax of each of the dispositions of this case imposed by the Plaintiff on the premise that all of the subscription fees received by the Plaintiff from the Intervenor except the value-added tax is the revenue belonging to the Plaintiff’s domestic permanent establishment without distinguishing the amount of revenue belonging to the Plaintiff’s domestic permanent establishment (not to decide on the expenses for the Plaintiff’s assertion of the deduction from the revenue belonging to the domestic permanent establishment).

(1) Article 7(1) of the tax treaty of this case provides that "if an enterprise of a Contracting State is engaged in a business in the other Contracting State through a permanent establishment located in the other Contracting State, the profit of the enterprise shall be taxable only in that other Contracting State unless the enterprise is engaged in a business in the other Contracting State through the permanent establishment located in the other Contracting State." Article 7(2) provides that "if an enterprise of a Contracting State is engaged in a business in the other Contracting State through a permanent establishment located in the other Contracting State, the profit expected to be acquired shall belong to the said permanent establishment in each Contracting State if the enterprise is assumed to be an enterprise of the other Contracting State as an independent enterprise entirely independent of the enterprise and exclusively engaged in the same or similar activities under the same or similar conditions and is assumed to be an independent enterprise independent of the said permanent establishment."

(2) The source of profit to be obtained by the Plaintiff and the Intervenor from the contract of this case is money that the Plaintiff recruited overseas by the Plaintiff to use in the casino business place of the Intervenor, and therefore, how much the amount of money would be paid depends on the business failure. As such, the key part of the service provided by the Plaintiff to the Intervenor pursuant to the contract of this case is to recruit overseas strawet so that the Plaintiff may engage in a rolling game in the said casino business place. However, the practical business of the Plaintiff is performed through a number of subordinate tickets overseas, and the customer management to continuously recruit strawets is also performed overseas, and the Plaintiff’s essential and core business is performed overseas, and most of the expenses are spent overseas.

(3) As seen earlier, even though the Plaintiff’s employees’ activities conducted in the instant office constituted the Plaintiff’s essential and important business activities, the amount of income accrued to the Plaintiff’s domestic permanent establishment under the instant contract is limited to the Plaintiff’s payment for the provision of chips and for the provision of services related to hotel, airport, casino business guidance, etc., and it is difficult to view that the Plaintiff’s activities are included in the Plaintiff’s payment for the provision of services related to the Plaintiff’s solicitation of tickets, the collection and delivery of chips, and the provision of services related to the above foreign country’s provision of services (the Defendant asserts to the effect that the Plaintiff’s above activities are preparation for the provision of services in Korea, but cannot be viewed as

(4) The Defendant asserts to the effect that it is practically impossible to divide the Plaintiff’s income amount attributed to the Plaintiff’s domestic permanent establishment and the Plaintiff’s income amount attributed to the Plaintiff’s foreign permanent establishment because the Plaintiff did not submit data for calculating the income amount attributed to the Plaintiff’s domestic permanent establishment, such as the corporate tax return and financial statements, etc., which the Plaintiff reported to the Republic of Korea. However, in light of the fact that the recruitment commission received from the Intervenor from the Intervenor appears to be obvious that the Plaintiff’s revenue amount ought to accrue to the Plaintiff’s foreign permanent establishment and that the amount would be reasonable, as alleged by the Defendant, even if the Plaintiff did not submit relevant data for calculating the income amount attributed to the domestic permanent establishment, the Plaintiff cannot be deemed as the revenue amount attributed to the Plaintiff’s domestic permanent establishment (the Defendant should estimate the income amount attributed to the Plaintiff’s domestic permanent establishment by the most reasonable method through additional investigations

B) As to value-added tax on the place of supply

Article 10(2)1 of the former Value-Added Tax Act (amended by Act No. 915, Jan. 1, 2010) provides that “a place where services are provided or where goods, facilities, or rights are used” shall be determined on the basis of the place where services are provided (see, e.g., Supreme Court Decision 2004Du7528, 7535, Jun. 16, 2006). Meanwhile, where services are provided by a foreign corporation having no domestic place of business, the person who received the services must collect and pay value-added tax on behalf of the supplier, and thus, the foreign corporation is not liable to collect and pay value-added tax, but where services are provided in Korea with a domestic place of business (see Supreme Court Decision 2014Du13812, Feb. 18, 2016).

First of all, the plaintiff is a foreign corporation with a domestic permanent establishment, which provides services in Korea, is liable to pay value-added tax at the location of the domestic permanent establishment.

Next, with respect to whether the Plaintiff is liable to pay value-added tax on all recruitment fees received from the Intervenor, it is difficult to view that the Plaintiff’s domestic permanent establishment is liable to pay value-added tax on the provision of services related to the recruitment, collection and delivery of the Plaintiff’s ticket, and this is the same even if the Plaintiff’s employees’ activities conducted in the instant office constitute the Plaintiff’s essential and important business activities. Accordingly, the part of value-added tax on each of the instant dispositions, based on the premise that the Plaintiff’s employees are liable to pay value-added tax on all recruitment fees received from the Intervenor, is unlawful, based on the premise that the Plaintiff is liable to pay value-added tax on the entire recruitment fees received from the Intervenor.

C) As to the corporate tax and value added tax related to roller structure

In light of the following circumstances, Gap’s evidence Nos. 18 through 21, Eul’s evidence Nos. 6, 9, 15, and 16 (including various numbers), and Nonparty 2’s testimony, it is reasonable to view that, in calculating the tax base of corporate tax and value-added tax, the part corresponding to roller is not included in the tax base, since it is not the cost for the service provided by the plaintiff to the supplementary intervenor, but the plaintiff’s 70% and the supplementary intervenor’s 30% burden on the supplementary intervenor and must be paid to the regular diskettes recruited by the plaintiff.

(1) In the instant contract, the Plaintiff and the Intervenor paid 70% of the amount of casino sales to the Plaintiff under the pretext of the recruitment fee, and the Plaintiff paid 1.7% of the amount of the intern’s amount to the scambling machine to the scambs, and 30% of the amount is borne by the Intervenor, and the remainder 70% is borne by the Plaintiff.

(2) According to the settlement details of the Plaintiff and the Intervenor, the Intervenor paid to the Plaintiff all of the roller structure agreed upon by the instant contract.

(3) In the case of Makao, in which rolling games are activated, Rawls was about 1.0% to 1.3% (current maximum lines are set at 1.2%). In the case of Korea, not only time and cost are high in the visit of Chinese customers who are mainly customers, but also in the case of casino size, it is not easy to attract customers under the same conditions as Makao. Therefore, if the Plaintiff recruited tickets and sent them to Korea, it is necessary to suggest more favorable conditions than the Mcar casino, and accordingly, the Plaintiff and the Intervenor agreed to pay 1.7% of the Maka amount by roller.

(4) Inasmuch as rollering is an essential element in rolling games, it is the money that the Plaintiff, a ticket business entity, may pay and not pay, but the money that ought to be paid to him/her, instead of the money of a mutually beneficial nature that may be able to pay and not pay. Therefore, if a roller fails to pay the first agreed roller, the Plaintiff is bound to face a big difficulty in soliciting sket so it is difficult to deem that the Plaintiff agreed to pay the roller and did not pay it even if the Plaintiff agreed to pay it.

E. Sub-committee

Each disposition of this case is partially unlawful, and since the amount of tax is not calculated based on the data submitted in this case, each disposition of this case in this case shall be revoked (see Supreme Court Decision 94Nu13527 delivered on April 28, 1995).

4. Conclusion

Therefore, the part of the plaintiff's conjunctive claim is justified, and the part against the plaintiff among the part of the conjunctive claim of the court of first instance against the plaintiff (the part against the plaintiff) is unfair, so it is revoked, and it is so decided as per Disposition by the defendant to revoke the main part of each disposition against the plaintiff of this case.

Judges Kim Jong-hee (Presiding Judge)

1) An internover refers to the total amount of the winnings in a casino’s place of business and the total amount of 10,000 won. In a case where a casino customer runs a game with chips of KRW 10,000,000,000,000,000. In a case where tickets and diskettes unilaterally lose money in the course of a game, if the tickets and diskettes lose money, the amount of 10,000,000,000 won is most. In such a case, the sum of the winnings is more than the amount of Loss.