Review-department -2015-0066 (Law No. 17, 2015.09)

When a joint project is commenced and a preservation registration is made after construction of the building, it shall be the return of the investment in kind.

In the event that an entrepreneur supplies goods either rapidly or temporarily in connection with the main business, it will be subject to taxation regardless of whether the purpose is to maintain and expand the business or to liquidate and organize the business.

Article 4 (Taxable Objects) of the Value-Added Tax Act

Article 9 (Supply of Goods)

Gwangju District Court 2015Guhap13581 Disposition rejecting the rectification of value-added tax

AA and one other

○ Head of tax office

August 11, 2016

September 8, 2016

1. All of the plaintiffs' claims are dismissed.

2. The costs of lawsuit are assessed against the plaintiffs.

On March 23, 2015, the disposition rejecting the correction of value-added tax against the plaintiffs by the defendant of the Gu office was revoked.

1. Details of the disposition;

A. On June 1, 2011, the Plaintiffs completed the registration of the business in the joint name of ○○○○○-ro 20, Jeonnam-gun, ○○○○○-ro, ○○○○-ro, and the real estate leasing business.

B. On the ground of the above place of business, the Plaintiffs agreed to newly construct a reinforced concrete structure sloping roof No. 1 (hereinafter “instant building”) and to engage in real estate leasing business, and completed the instant building by obtaining a building permit under the joint name. Meanwhile, with respect to the instant building, the Plaintiffs completed each registration of ownership preservation in the Plaintiff’s name as to No. 101, 102, 105, 106, 108, 201 through 204, 401, 103, 104, 107, 109 through 11, 301, 301 through 304, and 402.

D. The Plaintiffs did not include the supply value of the instant building in the tax base at the time of filing the final return on the second quarter of 201 to the Defendant.

E. On November 2014, the Defendant informed the Plaintiffs of a revised return that the Plaintiffs’ completion of registration of ownership preservation in their respective names regarding the instant building constitutes the supply of goods subject to value-added tax by returning the equity shares of joint business operators in kind. On November 12, 2014, the Plaintiffs paid value-added tax ○○○ upon filing a revised return to the Defendant by including the supply value of the instant building in the tax base on November 12, 2014.

F. On January 23, 2015, the Plaintiffs asserted that the value of supply of the building of this case should not be included in the tax base, and filed a claim for the correction of the value-added tax for the second period of 201. However, on March 23, 2015, the Defendant rejected the Plaintiffs’ claim for correction (hereinafter “instant disposition”).

G. The Plaintiffs were dissatisfied with the instant disposition and filed a request for review with the Commissioner of the National Tax Service on June 22, 2015, but the said request for review was dismissed on September 17, 2015.

[Ground of recognition] A without dispute, Gap evidence Nos. 1 through 6, Eul evidence Nos. 1 and 2 (including each number), the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiffs' assertion

In order to be recognized as a joint business proprietor under the Value-Added Tax Act, only the declaration as a joint business proprietor is sufficient, and the plaintiffs continued to conduct joint business in the building of this case until now, and the registration of preservation of ownership is completed in the sole name for the convenience of lease contract and conclusion of sales contract. The building of this case is reported and paid by the plaintiffs' joint business (supply of goods) and the value-added tax on the output tax is reported and paid, despite the declaration of income tax, profits and expenses related to the joint business are distributed and paid, and common expenses are shared. The plaintiffs' joint business with the building of this case as a joint business proprietor is not closed, and the form of the joint business of the plaintiffs can be seen as similar to the partnership. In light of the fact that the building of this case constitutes fixed assets or inventory assets of the joint business, and the building of this case can be deemed as owned by each of the plaintiffs except for the combination or joint ownership, and thus, it cannot be deemed unlawful as a separate disposition of this case.

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

1) Where an entrepreneur delivers or transfers goods due to contractual or legal grounds, unless there is a special provision that the value-added tax shall not be exempted or imposed, the taxable requirements shall be satisfied if the entrepreneur independently supplies the goods for his/her business. In cases where the entrepreneur supplies the goods in good faith or temporarily in connection with his/her main business, it shall be subject to taxation regardless of whether the purpose is to maintain and expand his/her business, and whether the person receiving the goods is subject to taxation depending on who is the recipient (see, e.g., Supreme Court Decision 98Du16644, Feb. 23, 2001).

2) We examine the above legal principles and evidence as follows. Each entry in Gap evidence Nos. 7, 9, 11 through 14 (including any number) is included in the sales contract, and the purport of the entire pleadings is added. In other words, as long as the plaintiffs have completed registration of preservation of ownership in their respective names by 2nd parts of the building in this case, they can exercise their rights as the owner with respect to each of the above sections, so economic profits and losses for each of the above sections are not attributable to the joint business operators, and eventually belong to each of the plaintiffs. ② The plaintiffs actually concluded a lease contract on the section in their names other than the joint business operators or the plaintiffs' names, and the rent was paid to each of the plaintiffs. ③ The plaintiffs were to sell 6 of the 11 parts of the building constructed in their own names, and stated themselves in the sales contract as the seller, ④ The plaintiffs reported the total income amount to the plaintiff bbbbbb and the total income amount to the plaintiff bbb and the plaintiff 3 of this case were not subject to the sale of each of the plaintiff 3's goods.

3. Conclusion

The plaintiffs' claim of this case is dismissed in entirety as it is without merit, and it is so decided as per Disposition.

Related Acts and subordinate statutes

/ Value-Added Tax Act

Article 4 (Taxable Objects)

Value-added tax shall be levied on the following transactions:

1. Supply of goods or services by an entrepreneur;

2. Import of goods.

Article 9 (Supply of Goods)

(1) The supply of goods shall be delivered or transferred pursuant to all contractual and legal grounds.

section 60.

(2) Necessary matters concerning the scope of the supply of goods under paragraph (1) shall be prescribed by Presidential Decree.

【Enforcement Decree of the Value-Added Tax Act

Article 18 (Scope of Supply of Goods)

(1) The supply of goods under Article 9 (1) of the Act shall be as follows:

1. Cash sales, credit sales, installment sales, long-term installment sales, conditional and fixed-term sales, consignment sales, and other sales;

Delivery or transfer of goods under a sales contract;

2. Processing goods delivered by the other party, bearing all or part of the principal materials;

Delivery of goods in accordance with a processing contract under which new goods are made;

3. Goods according to an exchange contract under which other goods are delivered or services are provided in return for the delivery of such goods;

Delivery or transfer

4. Delivery or quantity of goods based on auction, expropriation, investment in kind, or other contractual or legal grounds;

the end of the plan.