The original disposition in which the total expenses incurred in golf membership purchase are deemed entertainment expenses and the total expenses incurred in golf membership purchase are deemed to be the entertainment expenses, on the grounds that golf membership acquired by a corporation

Golf membership was widely used for not only in-house events, welfare of executives and employees, etc., and there is no evidence to deem that the Plaintiff acquired the instant golf membership solely or mainly for the purpose of using it. Therefore, it cannot be deemed that the instant golf membership purchase constitutes entertainment expenses under Article 17 (2) 5 of the former Value-Added Tax Act and expenses similar thereto.

Article 60 of the Enforcement Decree of the Value-Added Tax Act: Exclusion of Entertainment Expenses under Article 25 of the Corporate Tax Act and exclusion of expenses not related to business under Article 27 of the same Act

2013Guhap1045 Disposition to revoke the imposition of value-added tax

AAA Corporation

The Director of Incheon Tax Office

August 29, 2013

October 10, 2013

1. On September 13, 2012, the Defendant’s imposition of value-added tax for the second term portion of the value-added tax for the year 2007 against the Plaintiff, for the first term portion of the value-added tax for the year 2008, for the second term portion of the value-added tax for the year 2010, and for the second term portion of the value-added tax for the second term of the year 2010 is revoked.

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. The plaintiff is a corporation engaged in the manufacture and sales business of various kinds of construction machinery machinery machinery machinery machinery engines, etc., and acquired golf membership from BBT companies, etc. (hereinafter "the instant golf membership membership") during the taxable period from the second half of 2007 to the second half of 2010, and received tax invoices from BBT companies, etc., and filed a value-added tax return after deducting the relevant input tax amount (hereinafter "the instant input tax amount") from the output tax amount."

B. The Defendant denied input tax deduction on the ground that the instant input tax amount is the input tax amount for expenditures not directly related to the business. On September 13, 2012, the Defendant issued a notice of correction and correction to the Plaintiff on September 13, 2007, the value-added tax OOOO for the second quarter of 2008, the second quarter of 2010, the value-added tax OOO for the second quarter of 2010, and the second quarter of 2010 (hereinafter “instant disposition”). The Plaintiff filed a request for a trial with the Tax Tribunal on November 28, 2012, but the Tax Tribunal did not decide that the period for decision under Article 81 of the Framework Act on National Taxes should expire 90 days.

[Reasons for Recognition] Facts without dispute, Gap evidence 1, 2, Eul evidence 1 (including each natural disaster) and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The parties' assertion

1) The plaintiff's assertion

A) The Plaintiff purchased the instant golf membership membership to promote the welfare of its officers and employees, strengthen their business performance, and improve their external business activities, which cannot be deemed as the input tax amount for expenditures not directly related to the business.

B) According to Article 17(2)3 of the former Value-Added Tax Act (amended by Act No. 10409, Oct. 27, 2010; hereinafter the same) (Article 17(2)2 of the former Value-Added Tax Act (amended by Act No. 915, Jan. 1, 2010); Article 17(2)3 of the former Value-Added Tax Act (amended by Act No. 9915, Jan. 1, 201); Article 17(2)3 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 22578, Dec. 30, 2010; hereinafter the same shall apply); Article 9(2)5 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 20401; hereinafter the same shall apply); Article 49(3) of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 975, Feb. 18, 2019, 2019) of the former Value-Added Tax Act).

A) The Plaintiff’s purchase of golf membership in this case is not for the Plaintiff’s business, but for the consumption of the Plaintiff and the Plaintiff’s customers. Even if not, the purchase cost goes beyond the scope of business expenses normally acceptable.

B) In light of the usage of golf membership in the instant case, the purchase cost constitutes entertainment expenses, and thus, the relevant input tax amount cannot be deducted from the output tax amount pursuant to Article 17(2)5 of the former Value-Added Tax Act.

(b) Acts and subordinate statutes on the marketing;

It is as shown in the attached Form.

C. Determination

1) Article 17(2)3 of the former Value-Added Tax Act provides that an input tax amount for an expenditure not directly related to a business shall not be deducted from the output tax amount. Here, whether a business relationship exists or not should be determined by examining whether the expenditure was necessary for the implementation of the business in light of the size and circumstance of the expenditure, details of the business, etc. (see, e.g., Supreme Court Decision 2010Du12552, Jul. 26, 2012).

① In light of the overall purport of the arguments in this case, the Plaintiff established and implemented the “Golf membership management guidelines (No. 3) for the purpose of ensuring transparency in managing and operating expenses of its executives and employees.” According to the above, golf membership is prohibited from using private golf membership only when it is deemed necessary for the promotion of welfare of executives and employees, sports activities related to various intra-company events, and the performance of the corporation’s business. The Plaintiff’s usage of golf membership is prohibited from using private golf membership under the Plaintiff’s tax accounting team (No. 4)’s name in light of the fact that it appears that the Plaintiff’s general purpose was not the use of the instant golf membership under the Plaintiff’s name of its employees and employees, such as cooperative events, middle-term events, OP general meetings, business consultation, and inter-agency meetings, etc., or that it is recognized that the Plaintiff’s use of the instant golf membership under the name of its employees and employees for the purpose of using the instant case’s welfare facilities under the name of its employees and employees for the purpose of using them.

2) Whether it falls under Article 17(2)5 of the former Value-Added Tax Act (whether to recognize entertainment expenses)

Article 17 (2) 5 of the former Value-Added Tax Act and Article 60 (5) of the former Enforcement Decree of the Value-Added Tax Act provide that input tax amount related to the disbursement of expenses under Article 25 of the Corporate Tax Act shall not be deducted from the output tax amount. Article 25 (5) of the Corporate Tax Act provides that entertainment expenses are entertainment expenses, school expenses, recompense, and other expenses of a similar nature regardless of the pretext thereof, which are paid by a corporation in connection with its business. Thus, if the Plaintiff acquired the instant golf membership solely for the purpose of using it, the amount disbursed in relation to its business

However, as seen earlier, the golf club membership in this case was widely used for not only in-house events, welfare of executives and employees, etc., but also in-house events, and there is no evidence to deem that the Plaintiff acquired the golf club membership in this case solely or mainly for the purpose of using it. Thus, it cannot be deemed that the purchase of the golf club membership in this case constitutes entertainment expenses under Article 17(2)5 of the former Value-Added Tax Act

3) Sub-decisions

Therefore, the disposition of this case which did not deduct the purchase tax amount from the output tax amount without examining the remainder of the plaintiff's remaining arguments is unlawful.

3. Conclusion

Therefore, the plaintiff's claim is reasonable, and it is decided as per Disposition by admitting it.