The judgment below is reversed and the case is remanded to Seoul High Court.

The grounds of appeal are examined.

1. Regarding ground of appeal No. 1

A. In a case where the insured under liability insurance was filed by a third party in a lawsuit claiming compensation for damage caused by an insured event, and paid attorney’s fees in order to defend the lawsuit, the insured is an entrepreneur liable to pay value-added tax. If the value-added tax related to attorney’s fees is related to goods or services supplied for his/her own business and can be deducted or refunded from the insured’s output tax amount under the Value-Added Tax Act, the amount equivalent to such value-added tax does not constitute defense expenses paid by the insured due to an insured event (see, e.g., Supreme Court Decision 9Da8155, May 11, 1999). Furthermore, only when the insured was actually deducted or refunded from the amount of value-added tax, if the insured was unable to obtain the deduction or refund under his/her own responsibility, the disadvantage therefrom should be borne by the insured, and such value-added tax should also be deducted from the defense expenses.

B. (See, e.g., Supreme Court Decision 92Da47328, Jul. 27, 1993).

The court below found the following facts based on evidence.

1) The Plaintiff is an accounting firm whose principal members are certified public accountants and operates accounting audits, accounting accounts, and tax services, and is a business that operates a taxable business under the Value-Added Tax Act. 2) The Plaintiff filed a lawsuit against the Plaintiff for damages pursuant to the aforementioned Act on the ground that the Plaintiff’s accounting firm, etc., while conducting the accounting audit for the corporation B, violated the Financial Investment Services and Capital Markets Act and the Act

3. The plaintiff has appointed an attorney-at-law in order to file a lawsuit seeking compensation for damages.