Cho High-2014-Seoul Government-5850 (2015.02)

Where rental services are supplied, whether the actual rent is paid or not shall be irrelevant to the liability to pay the value-added tax.

As long as real estate is leased, there is a duty to pay the value-added tax on rent equivalent to the amount of service supplied, regardless of whether the rent is actually paid.

Article 57 (Determination and Correction)

2015Guhap4259 Disposition of revocation of Disposition of Imposition of Value-Added Tax

1. AA2. BB

1.CC head of the tax office;

September 18, 2015

oly 23, 2015

1. The imposition of KRW 0,00,000 on August 1, 201 against Plaintiff BB; the imposition of KRW 00,000,000 on December 31, 201; the imposition of KRW 00,00,000 on gift tax on December 4, 2012; the imposition of KRW 00,00,000 on gift tax on April 10, 2013; and the imposition of KRW 0,00,00,000 on gift tax on July 2, 2013.

2. The plaintiff AA's claim against the defendant DD director is dismissed.

3. Of the costs of lawsuit, the part arising between the Plaintiff AA and the Defendant DD director shall be borne by the Plaintiff AA, and the part arising between the Plaintiff BB and the DefendantCC director, respectively, by the head of the OnCC director.

Cheong-gu Office

The part of the disposition imposing value-added tax imposed on Plaintiff A on August 11, 2014, which exceeds KRW 00,000,000 among the second period 00,000,000 for 200,000 for 2011, which exceeds KRW 00,000 among the first period 00,000,000 for 20,000,000 for 20,000 for 20,000,000 for 20,000,000 for 20,000 for 20,000,000 for 20,000 for 20,000 for 20,000 for 2013, which exceeds KRW 0,00,000 for 0,000 for 20,000 shall be revoked, respectively.

1. Details of the disposition;

A. Status of the plaintiffs

The plaintiff AA and the plaintiff BB, who are their children, engaged in real estate rental business as co-owners of the building (hereinafter referred to as "the real estate of this case") and above-ground buildings (hereinafter referred to as "the real estate of this case") in Gangnam-gu Seoul Metropolitan Government DDdong 000-00 large 0,000 square meters and above-ground buildings.

B. Imposition of value-added tax on Plaintiff AA

1) As to the rent of KRW 00,000,000, which Plaintiff AA leased the instant real estate to EE and received from July 11, 2011 to April 10, 2013, Defendant DD head of the tax office deemed as omitting filing a return as follows: (a) on August 11, 2014, Plaintiff A notified Plaintiff AA of the amount of KRW 00,000 for the second period of August 201, 201; (b) the amount of KRW 00,000 for the first period of 20,000,000 for the second period of 2012; and (c) the amount of KRW 00,00,000 for the second period of 20,000 for the second period of 2012; and (d) the amount of KRW 10,000 for the first period of 20,000 for the first year of 2013 (hereinafter “instant disposition imposing an additional tax”).

2) Plaintiff AA filed an appeal with the Tax Tribunal on October 31, 2014, but was dismissed on December 31, 2014.

C. Imposition of gift tax on Plaintiff BB

1) The director of the tax office, from November 2, 201 to May 2013, 201, Plaintiff BB paid KRW 00,000,000,000 on December 4, 2012, and KRW 00,000,000 on April 10, 2013, as the rent for the instant real estate on behalf of Plaintiff AAA, and deemed that Plaintiff BB received the said amount as donated from Plaintiff AA on behalf of the head of the tax office. On July 2, 2013, Plaintiff B took the disposition of imposition of gift tax on the aggregate of KRW 00,00,00,00,00 (hereinafter referred to as “the instant store”), and the gift tax was imposed on Plaintiff B0,00,00,00,00,000,000,000,000,00,00,00,00.

2) Plaintiff BB filed an appeal with the Tax Tribunal on October 31, 2014, but was dismissed on January 2, 2015.

[Ground of recognition] Unsatisfy, Gap evidence Nos. 1 through 5 (including branch numbers, if any)

each entry of evidence Nos. 1 and 2, and the purport of the whole pleadings.

2. Whether the disposition of imposing the surtax of this case is legitimate

A. The plaintiff's assertion

Since Plaintiff BB received KRW 00 million from EE from November 201 to May 2013, 201, it is a salary for working as an employee of “FF,” a restaurant operated by EE, the instant disposition imposing value-added tax on the premise that AAA was paid the said amount at rent is unlawful.

(b) Fact of recognition;

1) On July 11, 2011, Plaintiff AA and six other persons (hereinafter referred to as “the lessor, including the Plaintiff”) leased the instant real estate to GG and EE by setting the lease deposit amount of KRW 00 million and monthly rent of KRW 00 million (hereinafter referred to as “instant first lease contract”).

2) EE and HH type (hereinafter referred to as “EE, etc.”) operated a restaurant (hereinafter referred to as “FF”) with the trade name of “FFF” on the instant real estate after completing a business preparation, such as the installation of the instant real estate and completing a business preparation.

3) On May 22, 2012, the lessor, including the Plaintiff, terminated the lease agreement as indicated in the foregoing Paragraph 1, and concluded a lease agreement again with EE by increasing the monthly rent of KRW 00 million (hereinafter “instant second lease agreement”).

4) EE, etc. only paid only part of the rent to the lessor, including the Plaintiff, and closed the FF on May 2013 without paying the deposit and rent.

5) Meanwhile, from November 201 to May 2013, EE, etc. paid a total of KRW 00 million to the account of Plaintiff A or Plaintiff BB (hereinafter “instant dispute amount”).

[Ground of recognition] Facts without dispute, Gap evidence Nos. 6 and 7, the purport of the whole pleadings

C. Determination

1) The establishment of the liability for the payment of value-added tax cannot be affected by the determination of whether the payment of value-added tax has been actually made (see, e.g., Supreme Court Decision 2002Du8534, Nov. 28, 2003).

2) Considering that the key issue amount received by Plaintiff BB from EE, as alleged in Plaintiff AA, was the money in the name of benefits, Plaintiff B is obligated to pay the rent of KRW 00 million or KRW 00 million to EE, etc. under each of the instant lease agreements, insofar as the lessor, including the Plaintiff, was paid the rent of KRW 00,000 or KRW 00,000 according to the instant lease agreement, and the lease of the instant real estate was supplied to EE, etc., regardless of whether the lease was actually paid by EE, etc.

3) According to the facts acknowledged earlier, the tax base amount of the disposition imposing the surtax of this case is the amount that does not exceed the value of supply under each of the instant lease agreements (00 million won from July 11, 2011 to May 22, 2012 x number of lease months ± number of lease months ± number of lease months from May 23, 2012 to May 2013, 201) under each of the instant lease agreements for each of the following taxable periods of value-added tax. Accordingly, Plaintiff AAA’s assertion, based on the premise that part of the tax base amount was not paid as rent, is without merit without any need to further examine the remainder of the tax base amount.

3. Whether the imposition of gift tax of this case is legitimate

A. In light of the following facts and circumstances, it is reasonable to view that Plaintiff BB was employed as an employee in charge of FF’s business and marketing, around November 201, as an employee of FF, and received the key amount from EE by May 2013, 201, in light of the aforementioned facts and evidence and evidence, and the written evidence as seen earlier, Gap’s evidence Nos. 8 through 14.

① As of October 15, 201, GG and EE drafted an agreement with the effect that, as of October 15, 201, Plaintiff BB was employed by FF to help with FF’s business and marketing and that the EE would pay KRW 0 million per month from November 201, and that, as of October 28, 2013, the EE would include KRW 0 million per month in the rent under the said agreement.

② At the instant lawsuit filed against the Plaintiffs (Seoul Central District Court Decision 000Gahap00000) regarding each of the instant lease agreements, HH appeared as a witness and Plaintiff BB appeared to work almost every day in FF, and Plaintiff BB was willing to work only for FF due to the difficulties in FF’s operations, but Plaintiff BB was willing to work until the closure of business, due to the lessor’s son’s son’s son, thereby paying the issues to BB as wages. III, JJJJ, and KK also expressed the intent to waive Plaintiff BB’s claim during the conciliation procedure of the said lawsuit, and finally, a decision was made in lieu of conciliation and became final and conclusive.

③ As long as Plaintiff BB agreed to receive KRW 5 million per month as benefits and received the key amount in return for work, even if the EE et al. was affected by the relationship with Plaintiff AA, one of the lessors under each of the instant lease agreements, such circumstance alone is insufficient to deny that the key amount is Plaintiff BB’s benefits.

④ It is consistent with the fact that EE, etc. paid wages to Plaintiff BB while operating FF, or Plaintiff B, etc. did not withhold labor income tax and paid labor income tax. However, it cannot be deemed that Plaintiff B, etc. was not paid solely on the ground that Plaintiff B, etc. testified that there was an employee, other than Plaintiff BB, who did not withhold labor income tax even after having paid wages in the lawsuit as stated in the above paragraph (2).

B. As long as it is recognized that Plaintiff BB had income equivalent to the key amount, there is no evidence to deem that there exists any special circumstance to deny the Plaintiff’s assertion that the amount of KRW 00,000,000, out of the funds used to acquire the instant store, is the said income.

C. Therefore, among the disposition imposing the gift tax of this case, the imposition of KRW 0,00,000,000, prior to December 31, 201 on a different premise, on a different premise; the imposition of KRW 00,000,000 among the disposition imposing the gift tax of this case on December 4, 2012; the imposition of KRW 00,000,000 among the disposition imposing the gift tax of this case on December 4, 2012; the imposition of KRW 0,000,000,000 on the gift of April 10, 2013; and the imposition of KRW 00,00,000 on the gift of this case on July 2, 2013

4. Conclusion

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