Research and development expenses corresponding to the portion re-entrusted by a trustee to another business shall be subject to tax credit for research and development expenses.

Research and development expenses corresponding to the portion re-entrusted by a trustee company to another company that does not hold a dedicated department shall be subject to tax credit.

2012Guhap40469 Revocation of Disposition of Corporate Tax Imposition

Seoul Special Metropolitan City Insurance Co., Ltd.

○ Head of tax office

June 27, 2013

August 22, 2013

1. The Defendant’s disposition of imposition of KRW 4,00,***** is revoked on April 1, 2005 against the Plaintiff on June 27, 201 to March 31, 2006.

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

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. On April 1, 2005 to March 31, 2006 (hereinafter referred to as "206 business year"), the Plaintiff entered into a contract with a trustee company, such as △△ Technology Co., Ltd. (hereinafter referred to as "trustee company of this case"), to entrust the construction of an electronic computer system with the trustee company of this case on the amount of 22,****,000 (hereinafter referred to as "research and development costs of this case") which is a corporation running non-life insurance business, and the Plaintiff paid 20,000 won to the trustee company of this case on the aggregate of 0,00* 20,000,000 (hereinafter referred to as "7,000,000 won before amendment by Law No. 8146 of Dec. 30, 2006).****7,000,000,000 won of research and development expenses paid to the Plaintiff for the above business year**6,7,0006,0000 won of the tax credit amount of this case***6.

2. Whether the disposition of this case is legitimate or not, i.e., Gap evidence 1 to 4 (including the number number, hereinafter the same shall apply) and Eul evidence 1 and 2, and the purport of the whole pleading.

1) The plaintiff's assertion

According to the former Restriction of Special Taxation Act and the Enforcement Decree of the same Act, research and development expenses subject to the tax credit refer to "expenses for the entrustment of technology development services to a domestic or foreign research institute or a dedicated department," and if research and development is paid to a trustee with a dedicated department in order to achieve technical progress in terms of the legislative intent and literal interpretation of the provisions on the tax credit for research and development expenses, all of the expenses are subject to the tax credit for research and development expenses. However, the defendant considers that the trustee is not subject to the tax credit for research and development expenses corresponding to the portion re-entrusted to another company that is not held by the dedicated department without reasonable grounds, and thus, the defendant's assertion

In addition, “○○○○○○○ Limited Company (hereinafter “○○○○○○○○○○”) claiming that the Plaintiff was a re-entrusted company is not a re-entrusted company, but a trustee company. Even if ○○○○○○ is a re-entrusted company, research and development expenses corresponding to the re-entrusted portion is not subject to tax credit, and even if research and development expenses corresponding to the sub-entrusted portion are subject to tax credit, the expenses paid to the re-entrusted company that did not have a dedicated department are not subject to tax credit.”

The entries in the attached Table-related statutes are as follows.

C. 1) The organization of issues

구 조세특례제한법 제1〇조 제1항 제1호，같은 법 시행령(2006. 12. 30. 대통령령 제19811 호로 개정되기 전의 것, 이하 같다) 제9조 제2항，[별표 6] 제1호 나목 ①, ㉲에 의하면, 중소기업이 아닌 내국법인이 국내외 기업의 연구기관(과학기술분야를 연구하는 경우에 한한다) 또는 전담부서에 기술개발용역 등을 위탁함에 따른 비용은 연구개발비로서 세액공제 대상에 해당한다고 규정하고 있다. 이와 관련하여 원•피고가 다투는 ① 원고가 위탁한 용역이 연구개발용역에 해당하는지, ② (연구개발용역에 해당한다면) ○○○○○가 수탁업체인지 아니면 재수탁업체인지, ③ (○○○○○가 재수탁업체라면) 수탁 업체가 직접 연구개발용역을 수행하여야 하는지，④ (재위탁에 따른 용역비가 공제대상 에 해당한다면) 재수탁업체가 연구기관 또는 전담부서를 보유해야 하는지 가 문제 된다.

2) Whether research and development services are applicable

Article 9(5) of the current Restriction of Special Taxation Act provides that research and development refers to activities to achieve scientific or technical development, and activities to develop a new service and service delivery system. ① The service entrusted by the Plaintiff is an activity to achieve technical development by establishing a systematic and comprehensive system to achieve the optimal and efficient operation of information and communications technology, ② The National Tax Service interpreted that the service entrusted by a domestic corporation that operates a financial and insurance business constitutes a research and development service (Corporate Tax and Corporate Tax and-675 on July 14, 2010). ② The Defendant excluded the service cost paid to a re-entrusted business from the tax credit for the service cost paid to the re-entrusted business on the premise that the service entrusted by the Plaintiff is a research and development service; ④ The term "new" or "new" under Article 9(5) of the current Restriction of Special Taxation Act is included, but it is reasonable to interpret that the service is not a "patent for the research and development of the Plaintiff's new service," as it does not meet the requirements for patent acquisition.

In full view of the overall purport of the arguments in Gap evidence Nos. 5, 6, and 3, the plaintiff will newly develop a computer system (ERP, EDW, EAI3, and fixed period system) around 2005.

수립하고, 각 시스템별로 대상업체로부터 제안서를 제출받은 사실, 원고는 제안서를 검토한 결과 내부적으로 ERP는 ○○○○○에, EDW는 **** 주식회사에, EAI는 ☆☆에, 기간계는 ◇◇기술에 각 위탁하기로 결정하였으나, 전산시스템 구축은 업무적으로 상호 유기적으로 연관되어 있고 기술적인 측면에서 전체 통합 아키텍처를 고려하여 구성되어야 하며 프로젝트 진행 시 전체적으로 일관성 있고 효율적으 로 관리되어야 한다는 이유로 프로젝트 전반을 책임지고 통합•관리할 하나의 업체를 수탁업체로 선정하기로 한 사실, 이에 따라 원고는 ◇◇기술을 유일한 수탁업체로 선정하여 2005. 6. 27. ◇◇기술 주식회사와 전산시스템 구축을 위탁하는 내용의 계약을 체결한 사실，◇◇기술은 위 전산시스템 개발 용역 중 일부에 관하여 ○○○○○ 등에게 다시 위탁하고, 그에 따른 용역비를 지급한 사실을 인정할 수 있고, 을 제 3, 4호의 각 기재는 위 인정에 방해가 되지 않는다. 위 인정 사실에 의하면 ○○○○○는 이 사건 수탁업체인 ◇◇기술로부터 연구개발용역을 다시 위탁 받은 재위탁업체라고 봄이 타당하다.

4) Whether research and development expenses corresponding to the portion re-entrusted by the trustee are not subject to tax credit

Under the principle of no taxation without law, or under the theory of no taxation without law, the interpretation of tax laws and regulations is to be interpreted as the law, barring special circumstances, and it is not allowed to expand or analogically interpret without reasonable grounds (see Supreme Court Decision 2002Du6781, May 27, 2004).

In light of the above legal principles, the health team, and the following circumstances are reviewed.

It is reasonable to view that research and development expenses corresponding to the sub-entrusted portion are also subject to tax credit.

(1) Article 10 (1) 1 of the former Restriction of Special Taxation Act provides that the expenses prescribed by the Presidential Decree among the expenses for research and development may be deducted, and Article 9 (2) [Attached Table 6] subparagraph 1 (b) of the Enforcement Decree of the same Act provides that "the expenses incurred in the entrustment of technology development services to a domestic or foreign research institute (limited to research on science and technology) or a dedicated department (hereinafter referred to as "the provisions of this case") shall be excluded from the amount of tax payable unless there is any express provision that "the expenses paid by the plaintiff fall under the expenses incurred in the entrustment of technology development services to a domestic or foreign research institute or a dedicated department."

② Under Article 6(2) of the Enforcement Decree of the Restriction of Special Taxation Act, the Defendant asserts that if the research and development service is re-entrusted to a third party, it should be excluded from the tax credit if it is re-entrusted. Since Article 6(2) of the Enforcement Decree of the Restriction of Special Taxation Act provides that the entity (person in charge of research and development) is different from one another, and that the entity (person in charge of research and development) is a truster, and Article 6(2)1(b) of the Enforcement Decree of the Restriction of Special Taxation Act provides that the entity shall be entrusted with the manufacture and supply of the product by OEM method, and that the latter shall be entrusted with the manufacture and supply of the product by sub-trustee. However, it is reasonable to interpret that the above two provisions are not re-entrusted to a research institution under Article 6(1)1(b) of the Enforcement Decree of the Restriction of Special Taxation Act (the above provision is included in Article 6(2) of the Enforcement Decree of the Restriction of Special Taxation Act).

(4) In determining whether to grant a tax credit for the portion entrusted to a third party under his/her own responsibility, excluding the tax credit for the portion entrusted to the third party, is against the principle of self-responsibility by having the truster take responsibility for the economic decision that he/she did not himself/herself, and imposes on the truster an obligation to verify the expenses corresponding to the portion entrusted to the third party and to deduct the expenses that the trustee entrusts to the third party, and the taxpayer bears an obligation not to do so under Acts and subordinate statutes.

⑤ The legislative purport of the instant provision is to facilitate research and development by granting taxpayers more benefits from tax credit on investment in research and development (see, e.g., Supreme Court Decision 2000Du3115, Jan. 22, 2002). Since large-scale computer development services are convergence technology development that makes it impossible for a single company to carry out all research and development services depending only on its own human resources and technology, it is inevitable to re-consign part of electronic development services to another company. Therefore, excluding research and development expenses corresponding to the re-entrusted portion by the entrusted company as eligible for tax credit is an interpretation that does not take into account the legislative purport of the instant provision and the reality according to

5) Whether the re-trustee is eligible for a tax credit where the re-trustee does not hold a research institute or a dedicated department

In light of the above legal principles, it is reasonable to view the instant case as eligible for tax credit in cases where the re-entrusted company does not have a research institute or a dedicated department by comprehensively taking into account the following circumstances:

① The provision of this case provides that the expenses incurred by the Plaintiff for the entrustment of technology development services to a domestic or foreign research institute or a dedicated department is subject to the tax credit if the expenses incurred by the Plaintiff constitute the expenses for the entrustment of technology development services to a domestic or foreign research institute or a dedicated department. Thus, the trustee company (a domestic or foreign research institute or a dedicated department) is not required to perform all the entrusted research and development services in its dedicated department, and may have another department or a sub-trustee (a dedicated department) other than the dedicated department (a dedicated department) perform all the entrusted research and development services. ② In the case of large-scale electronic development services, the integration and linkage of individual systems is the key factor of development, and the trustee company is important for the role and responsibility of the trustee company, such as performance responsibility, repair liability, delay liability, liability, liability, etc. As such, the provision of this case sets the ownership of the dedicated department as the requirements for the tax credit. On the other hand, the trustee company is not directly liable to the Plaintiff, and the trustee company is not required to have another dedicated department (a).

③ If the outcome of a service performance falls under research and development services, and such research and development services were conducted under the responsibility of an entrusted company’s calculation and responsibility pursuant to an entrustment contract with a trustee holding a dedicated department, it may be deemed that it does not go against the legislative intent of the provisions on tax credit for research and development expenses, and it is difficult to deem that the Plaintiff, the truster, has abused the provisions on tax credit for research and development expenses on the ground

④ Meanwhile, Subparag. 1 (b) of the Enforcement Decree of the Restriction of Special Taxation Act (Separate Table 6) amended by Presidential Decree No. 24368, Feb. 15, 2013 (amended by Presidential Decree No. 24368) amended the portion of “research institutes or dedicated departments of domestic or foreign enterprises” in the instant provision to research institutes or dedicated departments, etc. (limited to the portion directly performed by the responsible department, etc.) of domestic or foreign enterprises, and explicitly excluded the expenses for research and development services performed by the non-dedicated department of the re-entrusted enterprise from the tax credit subject to tax credit (the foregoing amended provision applies

⑤ The Seoul High Court Decision 2010Nu25635 cited by the Defendant in the case of self-research and development is a matter of whether the expenditure (the personnel expenses of the staff employed by the responsible department, etc. prescribed by Ordinance of the Ministry of Strategy and Finance) constitutes a person eligible for tax credit for research and development expenses. In the case of entrusted research and development, it is inappropriate to invoke it as it is in the case of self-research and development in this case because the expense of the staff of the responsible department (the personnel expenses of the staff of the responsible department) is the subject of tax credit for research and development expenses, and in the case of entrusted research and development, it is necessary to interpret more strictly than that of entrusted research and development in the case of self-research and development, and it is necessary to interpret more strictly the subject of tax credit than that of the entrusted research and development in the case of self-research and development

3. Conclusion

The plaintiff's claim is justified and accepted.