Criteria for the deduction of input tax invoices (business nature)

Article 17 of the Value-Added Tax Act provides for the criteria for the whole input tax amount to be deducted from the output tax amount as long as it falls under the tax amount on the supply or import of goods or services used or to be used for its own business by the taxable entrepreneur.

Article 17 of the Highest Value Tax Act

2014Guhap6588 Disposition of Imposing value-added tax

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##세무서장

January 7, 2015

February 13, 2015

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

XX. The Defendant’s imposition of value-added tax of 20 XX 100 won (including additional tax) against the Plaintiff shall be revoked.

1. Details of the disposition;

A. The Plaintiff was established X. 19 XX. and engaged in steel pressure, new steel processing business, and sales business. The Plaintiff added “(i) construction material sales business, ② automobile parts manufacturing and sales business, ③ surface treatment steel sales business, ④ real estate rental business, ⑤ warehouse business, ⑤ automobile transport and multimodal transport mediation business, 7 electronic commerce transaction business, and 9’s incidental business related to each subparagraph to its intended business.”

(B) (1) The Plaintiff donated 20 XX. X. AA (referring to the reference of BB, the representative director of the Plaintiff), from the Gangseo-gu Seoul Metropolitan Government OOO-dong OO 00 m200 m200 m200 m200 m200 m200 m200 m200 m200 m200 m200 (hereinafter referred to as the “instant land in total”) to the Plaintiff, and entered into a sales advisory service contract with the CC accounting corporation of X. X. X. m200 m20 m20 m200 m20 (hereinafter referred to as the “instant land”). (2) According to the sales advisory service contract (Evidence evidence 11), CCC accounting corporation provided the Plaintiff with a strategy to sell the instant land, support for potential purchasers and potential purchaser’s information data, support related to transaction, preparation of various documents, accounting and tax advice, and other related services (Article 23).

C. (1) AAA owned three buildings on the instant land (i) three buildings (i) a reinforced concrete sloping roof, and cement block string roof, a cement block 100 square meters warehouse, and a warehouse of 00 square meters, ② a cement block string roof of cement string, ② a steel string 100 square meters warehouse of steel string, a steel string house of 00 square meters underground room, ③ a steel string house of 00 square meters, ③ an 1st floor of car-related facilities of 1st floor of lightweight steel structure, and other roof; hereinafter referred to as “instant building”). Accordingly, the Plaintiff registered a real estate rental business as a rental business operator of the instant land in X, and entered into a lease agreement with XA on the instant land with the Plaintiff.

(2) The Plaintiff reported and paid to the Defendant corporate tax for 20x business year, 20 XX X period, and 20 XX value-added tax for the X period, including the rent revenue received from AA.

D. The Plaintiff entered into a sales contract for selling the instant land to X. DD Co., Ltd. for KRW 000, and received an advisory fee of KRW 000 (hereinafter referred to as “the advisory fee of this case”) from X. X. cCC accounting corporation, and received a deduction of KRW 000,000,000. Meanwhile, AA removed the instant building on October 20, 200 and closed the registry on the instant building on the ground of 200 XX. X. X. X. 201. The Defendant, on the ground that “the instant advisory fee constitutes expenses for the sale of land exempt from the input tax amount, and is not subject to the deduction of the input tax amount, and received a decision to dismiss the Plaintiff from the Director of the Regional Tax Tribunal on the grounds that the Plaintiff was dissatisfied with the request for a trial to correct the XM 1000 (including additional tax of this case) for the year 20,000.”

(2) According to the National Tax Service’s national tax law information system, the National Tax Service’s National Tax Service on December 26, 2013 as follows.

[No. 1] Whether the input tax amount paid for the transfer of real estate is deducted

[Summarys] An input tax amount borne by an entrepreneur who runs real estate leasing business at the time of paying real estate consulting and brokerage fees to transfer a building used for a taxable business and its appurtenant land, shall be deducted from his output tax amount.

[Correspondence] In the case of an inquiry, the existing interpretation cases (written Internet visiting Counseling Team 3-309, 2008, 12.) shall be referred to.

0 Written Internet Visit Counseling Team-309, February 12, 2008

The input tax amount borne at the time of paying the real estate consulting and brokerage fee to transfer the building used by the entrepreneur who has operated the real estate rental business and its accessory land in order to transfer the land shall be deducted from his output tax amount under Article 17 (1) of the Value-Added Tax Act.

The question was asked as value-added tax and -174.

[Reasons for Recognition] Facts without dispute, Gap evidence 1 to 11 (including additional numbers), Eul evidence 1 to 7 (including additional numbers), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

(1) AA only donated the instant land due to the inconsistency between the building ledger and the copy of the register of the building concerning the instant building, and paid the Plaintiff rent for the instant land as it is, in fact, that the Plaintiff was the lessee of the instant building; the Plaintiff attempted to continue real estate rental business by constructing the instant building or selling the instant land (construction or purchase of a new building with sale funds) after removing the instant building; the Plaintiff was subject to a large amount of objection from AA car Co., Ltd.; the Plaintiff sold the instant land; paid the advisory fee; the Plaintiff was registered as a real estate rental business operator; the Plaintiff paid value-added tax and corporate tax; and the Plaintiff was constructing and leasing the instant building with the proceeds of sale of the instant land; and the Plaintiff is a real estate rental business operator and currently carrying on real estate rental business up to now.

However, since the real estate rental business is a taxable business, and the Plaintiff paid the value-added tax and corporate tax thereon, it cannot be viewed as the cost related to the supply of land, which is a tax-free business. Therefore, it does not constitute a reason for non-taxation of input tax amount under Article 17(2)3 and 6 of the Value-Added Tax Act (amended by Act No. 11873, Jun. 7, 2013).

(2) The Defendant authoritative interpretation that “in the event that an entrepreneur operating a real estate rental business pays real estate consulting and brokerage fees to transfer a building used for a taxable business and its appurtenant land, the input tax amount is subject to deduction.” The Plaintiff believed and processed the Defendant’s public opinion list, and there is no cause attributable to the Plaintiff to determine the Plaintiff as input tax deduction, the instant disposition is contrary to the principle of good faith.

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

(1) As to the business relevance

(A) The current method of imposing value-added tax is, in principle, a basic structure that allows the sum of self-production and purchase added value in calculating the tax amount to be paid and deducts the input tax amount to be collected from the output tax amount to the input tax amount to be collected. Here, Article 17 of the Value-Added Tax Act provides that if the input tax amount to be deducted from the output tax amount constitutes the tax amount on the supply or import of goods or services that are used or to be used for a taxable entrepreneur's own business, its standard is related to the whole business. Meanwhile, Article 17 (2) of the same Act provides that the sale of the goods or services that are exempt from value-added tax (including the business that supplies goods or services that are exempt from value-added tax) and the sale of the goods or services that are exempt from value-added tax should be determined on the basis of "the sale of the goods or services related to the sales of the relevant goods or services" as stipulated in the Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 24359, Feb. 15, 2013).

However, the plaintiff argued that "the building of this case was removed at the time of sale of the land of this case" based on the construction contract, but the sale price is less than KRW 000,000,000, and its purpose is unclear. The date of sale of the land of this case is 200,000,000,000,0000 won, and the date of conclusion of the construction contract is X., 20,000,000,0000,0000,0000,0000,0000,000,0000,000,0000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,00,000,00.

(2) As to the principle of good faith

(A) In general, in order to apply the principle of trust and good faith to the tax authority’s acts in tax and law relations, the tax authority should name the public opinion list that is the subject of taxpayer’s trust, the tax authority’s reliance on the reliance of the tax authority’s reliance on the reliance of the reliance on the reliance on the reliance on the reliance on the reliance on the reliance on the reliance on the reliance on the reliance on the reliance on the reliance on the reliance on the reliance on the reliance on the reliance on the reliance on the reliance on the Privacy on the Privacy on the Privacy on October 29,

(B) In light of the fact that the instant case was based on the premise of the “transfer of a building and its appurtenant land used for a taxable business”, the inquiry does not coincide with the content of the inquiry, and whether the input tax amount is deducted depending on whether it is a taxable business or a tax-free business. It is inevitable to deem that the Plaintiff, the taxpayer, was negligent in believing that the instant disposition was a taxable business. In short, the instant disposition is not contrary to the principle of trust and good faith.

3. Conclusion

Therefore, the plaintiff's claim is dismissed as it is without merit. It is so decided as per Disposition.