2014west 4255 ( December 01, 2014)

The instant service constitutes financial and insurance services exempt from value-added tax, and the relevant input tax amount is non-deductible.

The instant service (a loan to a related party, etc. by borrowing funds from a multiple lender) constitutes financial and insurance services exempt from value-added tax, and the relevant input tax amount is non-deductible.

Article 1 of the former Value-Added Tax Act

2015Guhap5639 Disposition of revocation of the imposition of value-added tax

AA Stock Company

○ Head of tax office

September 25, 2015

October 16, 2015

1. All of the plaintiff's claims are dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

Cheong-gu Office

The imposition of each value-added tax on January 2, 2014 by the defendant against the plaintiff on January 2, 2014 shall be revoked.

1. Details of the disposition;

A. The Plaintiff was established for the purpose of management consulting, etc. on October 18, 2002, and the value-added tax was refunded on the grounds that sales for taxable businesses have not occurred after the first taxable period of value-added tax in 2010.

B. From the year 2010 to the first taxable period of the value-added tax in 2013, the Defendant: (a) there were only common purchase expenses, such as rent, advisory fee, bookkeeping fee, etc. without any sales for the taxable business; (b) there was no purchase expenses attributed to the taxable business; (c) the Plaintiff’s return of corporate tax for the business year 2012 total assets, which accounts for 98% of the total assets; (d) long-term short-term loan and interest income from the total assets; and (e) 93% of the total amount of long-term loan and interest income from the total debts; and (e) determined that the Plaintiff is a quasi-financial business and a single-financial business operator, and (e) determined that the common purchase tax amount already deducted after the first taxable period of the value-added tax in 2010 to be calculated and notified as indicated in attached Table 1 (the first and second taxable period of 2010 to be imposed by the ○○○○ upon the Plaintiff’s filing of the value-added tax for 100 years.

C. The Plaintiff appealed and filed an appeal with the Tax Tribunal on August 1, 2014, but the Tax Tribunal dismissed the Plaintiff’s appeal on December 1, 2014.

[Ground of recognition] Facts without dispute, Gap evidence 1, 2, Eul evidence 1 to 7 (including separate number for each paper), the purport of the whole pleadings

2. The plaintiff's assertion

The Plaintiff continued to engage in the business normally from the date of its establishment, and continued to implement projects such as ○○ Urban Corporation’s ○○ Development Project after 2010, but no sales have occurred since the temporary business failure to receive performance remuneration from the date of 2010. The Plaintiff’s interest income is recognized as a loan to an affiliate, and the Plaintiff’s interest income is also counted as an accrued interest on the business fund borrowed from the financial institution, and the interest paid is merely an interest on the business fund borrowed from the financial institution, and thus, the Plaintiff cannot be deemed to have engaged in a financial business separate from the business consulting, which is the object business. Accordingly, each of the instant dispositions taken on this premise

3. Relevant statutes;

Attached Form 2 shall be as listed in attached Table 2.

4. Determination

(a) Facts of recognition;

1) The annual profit and loss status from 2009 to 2012 of the Plaintiff is as follows.

2) Meanwhile, as of the end of the 2012 business year, the details of the Plaintiff’s loans and loans are as follows.

3) According to the loan and loan-related contract submitted by the Plaintiff to the Defendant, the Plaintiff entered into a monetary loan agreement with the Plaintiff on January 1, 2007 between ○○, the date when the loan was executed, and the interest rate of 9% per annum from January 1, 2007 to December 31, 2008. The Plaintiff entered into a contract on October 18, 2007 between CC bank (the State) with the date when the loan was granted and filed an application for change of the agreed date from August 31, 201 to February 29, 2012. In addition, the Plaintiff did not submit a document verifying the loan and the loan conditions.

[Ground of recognition] A without dispute, entry of Gap evidence 2, purport of whole pleadings

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

1) Article 1(4) of the former Value-Added Tax Act (amended by Act No. 11873, Jun. 7, 2013; hereinafter the same) provides that “The supply of services essential to the supply of services, which is the main transaction, shall be deemed to be included in the supply of services, which is the main transaction.” Article 12(1)11 of the former Value-Added Tax Act provides that the supply of services, prescribed by Presidential Decree, as financial and insurance services, shall be exempted from value-added tax. Article 33(1) of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 24638, Jun. 28, 2013; hereinafter the same) lists specific financial and insurance services exempt from value-added tax, such as banking and other money, under the Banking Act, and Article 12(2) provides services identical or similar to financial and insurance services, which are incidental to the main business.”

2) The following circumstances are comprehensively established with respect to the instant case: (a) the Plaintiff borrowed funds from various loan sources, includingCC Bank, with the terms and conditions of loans specified; (b) the Plaintiff’s loans as of the end of 2012 total amount KRW 00 billion; and (c) the amount of profits and losses excluding sales expenses and management expenses after 2010 constituted interest income and interest expenses; (d) the Plaintiff’s submission of evidence No. 3 through No. 7 (including each number); (e) the Plaintiff continued to provide management consulting services for its original business purpose from 2010 to 2010; (e) the Plaintiff’s loan from various corporations or individuals, including the relevant company, with the terms and conditions of loans; and (e) the Plaintiff’s loan as of the end of 2012 total amount KRW 00 billion; and (e) the Plaintiff’s loan from the Plaintiff’s financial service provider’s funds cannot be viewed as having been paid for the same business interest accrued from the Plaintiff’s financial consulting services.

3) Therefore, under such premise, the Defendant’s disposition of this case, which took place after calculating the common purchase tax pursuant to Article 17(1) and (2) of the former Value-Added Tax Act and Article 61(1) of the Enforcement Decree of the same Act, by deducting the input tax amount corresponding to the portion of the exempted business, is lawful. The Plaintiff’s above

5. Conclusion

The plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.