Whether the real estate for rent remains after the closure of such real estate

The reason that there is no lessee at the time of the transfer of leased real estate can not be deemed to have closed the real estate rental business, and because the leased real estate is transferred to the business operator

Article 6 (Supply of Goods)

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of value-added tax of KRW 37,450,850 against the Plaintiff on November 1, 2005 shall be revoked.

1. Details of the disposition;

A. On April 18, 2001, the Plaintiff entered into a sales contract with ○○ Housing Construction Co., Ltd. to purchase KRW 550,000,000 ○○○○○○○○ ○○○○○○○ 106, 107, and 108 (hereinafter “instant real estate”) on the first floor, and completed the registration of ownership transfer on the instant real estate on December 13, 201 after paying the purchase price at that time.

B. On June 21, 2001, the Plaintiff: (a) completed a real estate rental business registration on April 18, 2001; and (b) entered into a lease agreement between Ma○ and Ma○○ on July 2, 2001 to lease the instant real estate from August 3, 2001 to August 2, 2004; (b) Ma○○ operated a restaurant on the instant real estate from September 10, 201 to September 2, 2004.

C. When the Plaintiff reported the tax base and the amount of value-added tax for the portion of the instant real estate belonging to the first and second years in 2001, the Plaintiff reported 23,100,000 won for the first and second years in 2001 and 15,40,000 won for the second years in 2001 as the input tax deduction amount for each input tax amount and received a refund.

D. On February 12, 2004, the Plaintiff entered into a sales contract to sell the instant real property with Lee○-○ and Gangwon-○○, with a price of KRW 750,000,000,000, the contract deposit of KRW 50,000 out of the above sales amount was concluded on March 2, 2004, and the intermediate payment of KRW 100,000,000,000, the remainder payment of KRW 600,000 from March 2, 2004, was agreed to receive each of the charges (hereinafter “instant sales”).

E. On February 26, 2004, on February 20, 2004, regular ○○ made a report on the discontinuance of business of the above restaurant on February 20, 2004, and the Plaintiff completed the registration of the ownership transfer of the instant real estate on March 22, 2004 to ○○ and Gangwon○ on March 22, 2004.

F. On May 6, 2005, the Plaintiff reported and paid tax base of KRW 192,50,000 due to supply of the instant real estate and tax amount KRW 23,405,975 on the ground that the instant real estate constitutes the remaining goods at the time of closure, as the Plaintiff closed the real estate rental business on February 20, 2004, when filing a revised return on the tax base of value-added tax and its tax amount attributed to the first year of 2004.

G. On November 1, 2005, the Defendant issued a corrective disposition imposing value-added tax of KRW 37,450,850 for the first term portion of the real estate in 2004 on the ground that the real estate in this case does not fall under the remaining goods at the time of discontinuance of the business, and that the real estate in this case does not fall under the remaining goods at the time of discontinuance of the business, and thus, it does not constitute the sale of the real estate in this case, which imposes value-added tax of KRW 37,450,850 for the first term portion of the real estate in this case (hereinafter “instant disposition”).

H. Accordingly, the plaintiff served on November 7, 2005 the above disposition and filed an appeal with the National Tax Tribunal on December 26, 2005, but was dismissed on May 9, 2006.

I. Meanwhile, on the other hand, on December 9, 2005, the Plaintiff reported the closure of its real estate rental business on February 20, 2004.

[Ground for Recognition: Facts without dispute, Gap 1 through 9 evidence, each entry in Eul 1 through 4 (including each number), the purport of the whole pleadings]

2. Whether the instant disposition is lawful

A. The parties' assertion

The Defendant asserts that the disposition of this case is lawful on the grounds of the above disposition and related statutes. Accordingly, the Plaintiff asserted that the disposition of this case is legitimate, and that, on February 20, 2004, the Plaintiff, the lessee of the instant real estate, the only leased asset, discontinued the above restaurant and removed the restaurant, substantially discontinued the real estate leasing business, and subsequently transferred the ownership of the instant real estate thereafter, the instant real estate constitutes the remaining goods at the time of closure, regardless of the sale of this case.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

On February 26, 2004, the above term of lease has not expired at the time of the sale of this case, and the Plaintiff reported the closure of the above restaurant on February 26, 2004, which was later after the date, and the Plaintiff reported the closure of the business of leasing real estate only on December 9, 2005, barring any special circumstances, it cannot be deemed that the real estate rental business was immediately discontinued due to the fact that there was no lessee. Although the real estate rental business operator may discontinue the lease business by disposing of all the leased real estate, this is merely one procedure for business discontinuance, and the disposal itself cannot be deemed the disposal of the leased property under the condition that the business was already discontinued, in light of the fact that even if ○○ moved out after the report on closure of business on February 20, 204, it is insufficient to deem that the Plaintiff discontinued the real estate rental business, and there is no evidence to acknowledge it otherwise, the Defendant’s disposition of this case is legitimate.

3. Conclusion

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

Relevant statutes

◆ 부가가치세법(2006. 12. 30. 법률 제8142호로 개정되기 전의 것)

Article 6 (Supply of Goods)

(4) The remaining goods when an entrepreneur discontinues his/her business shall be deemed to be supplied to him/her.

The same shall apply to a case where a person registers pursuant to the proviso of Article 5 (1) and actually fails to commence the business.

◆ 부가가치세법 시행령(2006. 2. 9. 대통령령 제19330호로 개정되기 전의 것)

Article 21 (Time of Supply for Goods)

(1) The time of supply for goods under Article 9 (1) of the Act shall be as follows: Provided, That if the time of supply for goods supplied prior to the closure of business arrives after the date of such closure of business, the time of such cessation of business shall be deemed the time of supply:

1. For cash sales, outdoor sales, or installment sales, when goods are delivered or made available;

2. For long-term installment sales, when each part of the price is decided to be received;

3. For conditional sale, conditional sale, and other conditional sale and time-limit sale, when the conditions are fulfilled or the sale becomes final and conclusive after the lapse of time limit;

4. The continuous supply of goods upon completion, standard payment or interim payment, or upon the continuous supply of goods with electricity or other indivisible units of supply, when each part of the price is decided to be received;

5. In the case of processing deemed the supply of goods, the time of delivery of the processed goods;

6. In the case where deemed the supply of goods under Article 6 (2) and (3) of the Act, the time when the goods are used or consumed;

7. In case of Article 6 (4) of the Act, when the business is closed;

8. In the case of the supply of goods using an unmanned vending machine, when the entrepreneur concerned takes cash from the unmanned vending machine.

9. In other cases, when the goods are delivered or transferable.

10. Omission; and

(5) The long-term installment sale referred to in paragraph (1) 2 shall be any of the following subparagraphs among those for which the price for the supply of goods is paid in monthly, yearly, or by other installments:

1. The price shall be paid in two or more installments;

2. The period from the day after the delivery date of the goods to the date of payment of the last installment shall be one year or more.

Article 49 (Calculation of Tax Base for Private Supply, etc.)

(1) Where goods offered for a taxable business fall under depreciable assets referred to in Article 62 of the Enforcement Decree of the Income Tax Act, or Article 24 of the Enforcement Decree of the Corporate Tax Act (hereinafter referred to as the “ depreciable assets”), and such goods are deemed to be supplied pursuant to Article 6 (2) through (4) of the Act, the amount calculated by the following formula shall be deemed to be the market price of the relevant goods. In this case, the number of taxable periods elapsed shall be calculated by the taxable period under Article 3 of the Act, and where the number of taxable periods elapsed exceeds 20, it shall be calculated by the taxable period under Article 3 of the Act, and where the number of taxable periods elapsed for the buildings or structures exceeds 20, it shall be deemed 20, and where the number of taxable periods elapsed for the other depreciable assets exceeds 4, it shall be four:

1. Buildings or structures:

The acquisition price X (the number of taxable periods elapsed 1-5/100) of the goods concerned = the market price

◆ 부가가치세법 시행규칙(2005. 3. 11. 부령 제422호로 개정되기 전의 것)

Article 6 (Standards for Closure Date of Business)

(1) In closing a business as provided for in Article 5 (4) of the Act, the date of actual closure of the business by workplace shall be the date of business closure: Provided, That in case of a domestic corporation being liquidated due to dissolution or a domestic corporation undergoing a company reorganization procedure after obtaining a company reorganization plan from a court under the Company Reorganization Act, a business operator who is the head of the competent district tax office having jurisdiction over the place of business shall report it to the head of the competent tax office having jurisdiction over the place of business within 25 days from the date of actual closure of the business, and obtain the approval, the date of confirmation of the value of residual assets (if no residual assets are determined by the date on which 365 days from

(2) If it is unclear whether business is closed, the receipt date of the report on business suspension under Article 4 (1) shall be deemed the cessation date.