The Plaintiff’s trading of the apartment of this case is sufficient to regard it as real estate trading business.

It is sufficient to view the Plaintiff’s apartment transaction of this case as real estate sales, and it is reasonable to deem that apartment sales right is subject to real estate supply business or real estate sales business under the Value-Added Tax Act.

Article 2 of the Enforcement Rule of the Value-Added Tax Act

2019Guhap21048 Disposition of revocation of Value-Added Tax Imposition

AA

BB Director of the Tax Office

September 5, 2019

September 19, 2019

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s imposition of value-added tax for the second term of December 1, 2017, 12,076,530 won for the second term of 2013, 156,576,280 won for the first term of 2014, and 45,306,430 won for the second term of 2014 shall be revoked.

1. Details of the disposition;

A. From July 30, 2013 to August 30, 2013, the Plaintiff acquired the right to sell apartment units for 4 households and apartment units for 12 households (hereinafter the above 16 apartment units and right to sell apartment units for 16 households and apartment units for 2013 as follows, and transferred the instant apartment units to a third party (hereinafter referred to as “instant apartment”) from November 28, 2013 to September 30, 2014; or (b) on December 1, 2017, the Defendant issued a disposition of KRW 12,076,530, value-added tax for 2013 to 12,076,530, value-added tax for 156,306, 204, 2014 to 156, 2056, 204, 2014 to 306, 2014.

C. The Plaintiff filed an objection against the instant disposition with the Commissioner of the FF Regional Tax Office, but was dismissed on February 8, 2018, and filed an appeal with the Director of the Tax Tribunal on May 10, 2018, but was dismissed on December 6, 2018.

[Reasons for Recognition] Unsatisfy, Gap 4, 5, 6, Eul evidence 2 (including Serial number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The GG Industry Development Co., Ltd. (hereinafter “GGGGG”) whose representative is the Plaintiff entered into a sales agency contract with the instant apartment, and performed the sales agency business, and the sales of large-scale apartment units was delayed. Accordingly, the Plaintiff acquired 16 households of the instant apartment units to inevitably file a claim for service payment under the request and contract terms and conditions of HHH and transferred them to a third party, and there was no actual profit in the process. In light of the above transaction size, frequency, mode, profit, etc., the Plaintiff’s instant transaction cannot be deemed as having continued and repeated to the extent that it can be deemed as real estate sales business, and therefore, it was unlawful for the Defendant to take the instant disposition that imposed value-added tax by deeming the transaction of the instant apartment as the real estate sales business (hereinafter “the first assertion”).

2) Of the instant apartment 16 households, 12 households out of the 16 households traded the sales right, and the sales right is merely the right to acquire real estate, not the real estate itself, and they do not belong to the object of real estate sales business under the Value-Added Tax Act. In determining whether the Plaintiff engaged in real estate sales business, only the sales act on the remaining apartment except the trading act of the sales right should be determined, and no value-added tax shall be imposed on the sales act of the said sales right. Therefore, the instant disposition based on the premise that the sales right is subject to real estate sales business (hereinafter referred to as the “second assertion

B. Relevant statutes

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

(c) Fact of recognition;

1) On June 30, 2012, GG entered into a contract with the HH under which GGG entered into a contract that takes charge of the sales agency service for the Port EED apartment (hereinafter “instant service contract”) *** the sales agency contract prepared at the time includes the following:

Sales agency contract

Article 4 (Period of Sales Agency)

On June 25, 2012, the date of commencement of the sale contract shall be 100% of the object of the completion date.

Article 6 [Methods of Payment of Sales Fees and Incentives per Household)

(2) Fees per household due to the vicarious sale of buildings in units shall be as follows (units: 1,00 won and VAT degrees):

(3) The monthly target sale rate shall be as follows:

(4) HH shall reduce the sale period of the target sale period under Article 6 (3) and shall provide the following incentives to the GGG during the fulfillment of the sale target:

(5) When the monthly target sale is below the unit price, 10% of the sales commission per household shall be reserved, and the reservation amount shall be paid when the monthly target sale rate is achieved.

6. The sales commission per household shall be paid by the HH upon the request of the GGG, and the tax invoice shall be the case.

HH is to be issued under the name of HH, the main entity of the project.

Article 9 (Operation of Special Team)

(1) HH shall enter into a contract for sales agency for the operation of a special sales team for promoting the sales of 165m25m2 among the above contract objects.

GGG shall pay incentives other than the sales agency fees referred to in Article 6.

(3) The number of households eligible for monthly sales and the amount of incentives shall be as follows (applicable only to 165m25m2):

2) On May 23, 2013, GG and HH drafted a sales agency contract under which Article 6 of the content of the instant service contract is modified as follows.

Contracts for Change of Sales Agency

Article 6 (Change of Sales Fees and Methods of Payment of Incentives per Household)

(1) The monthly target allotment rate referred to in Article 6 (3) of the contract for vicarious sale of buildings in units shall be modified, and the number of households eligible for monthly sale shall be as follows:

(2) The GGG shall ensure that the whole remaining households (73 households) are sold to themselves or third parties by August 2013, 2013, and the sale price shall be paid in full by December 2013.

(5) If the number of monthly sales units of the relevant 165.25 square meters fails to meet the monthly target number, GGG may not claim the service price to HH, and the payment of the service price shall be reserved until the 60 unit sales contract is completed, and the payment shall be made after the completion of the 60 unit sales contract.

3) Meanwhile, from April 10, 2014 to May 10, 2015, the Plaintiff purchased 9 apartment units and 11 units among 20 households of JJ-gu K1, JEEEE apartment units, from among 20 households of JEEE apartment units, and sold all of 3 units apartment units and unit sale rights among them from October 28, 2014 to October 28, 2016. The Plaintiff traded a number of real estate transactions, including purchase on August 30, 2013 and sale on October 14, 2013. The details of the Plaintiff’s business registration related to real estate are as follows.

[Reasons for Recognition] Facts without dispute, Gap 1, 7, 8, Eul evidence 3, the purport of the whole pleadings

D. Determination

1) Determination on the first argument

A) Article 2 subparag. 1 and 3 of the Value-Added Tax Act refers to goods and rights with property value, and matters necessary for goods and rights shall be prescribed by Presidential Decree. Articles 3 and 4 of the same Act stipulate that an entrepreneur who supplies goods and services independently for business regardless of whether the business purpose is profit-making or non-profit. Articles 3 and 4 of the same Act stipulate that an entrepreneur who supplies goods and services is liable to pay value-added tax on the transaction. Article 3(2) of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 26071, Feb. 3, 2015; hereinafter referred to as the “former Enforcement Decree of the Value-Added Tax Act”) provides that a business prescribed by Ordinance of the Ministry of Strategy and Finance among real estate businesses shall be deemed a business of supplying goods. Accordingly, Article 2(1)1 and 2 of the former Enforcement Rule of the Value-Added Tax Act (amended by Ordinance of the Ministry of Strategy and Finance, Mar. 6, 2015; hereinafter referred to as the former Enforcement Rule of the Value-Added Tax Act) provides for sale.

Meanwhile, whether the transaction of real estate constitutes a supply of goods subject to taxation under the Value-Added Tax Act, should be determined in light of ordinary social norms by taking into account whether the transaction was conducted as part of real estate trading and whether the transaction is continued and repeated to the extent that it can be seen as business activities in light of its size, frequency, mode, etc. (see Supreme Court Decisions 9Du6071, Dec. 26, 200; 96Nu10881, Feb. 25, 1997).

B) According to the following circumstances acknowledged by the overall purport of Gap evidence, Gap evidence No. 11-2 and the whole pleadings, it is reasonable to view that the plaintiff engaged in real estate sales business by continuously and repeatedly acquiring and transferring the apartment complex of this case for the purpose of earning profits from the original transaction in light of the frequency, frequency, holding period, size of sale, etc., and therefore, the transaction of this case constitutes the supply of goods subject to taxation under the Value-Added Value Act.

① The Plaintiff acquired the instant apartment 16 household from July 30, 2013 to August 30, 2013, and transferred the instant apartment from November 29, 2013 to September 30, 2014, and within five months from the date of acquisition of the right to sell, the Plaintiff transferred the instant apartment 16 household. In light of the aforementioned transaction size, time, etc., the continuity and repetition of the instant transaction is recognized to the extent that it can be seen as business activities.

② From August 30, 2013 to October 14, 2013, the same taxable period as the instant apartment, the Plaintiff acquired and transferred the sales right to 26 households in the same apartment complex as the instant apartment complex, and acquired the sales right to 9 households and 11 households among the 20 households of separate apartment units from April 10, 2014 to May 10, 2015, and disposed of three households from October 28, 2014 to October 28, 2016, including the transfer of all of the apartment units and sales right to 3 households from around 2013 to 2016, and it appears that the Plaintiff’s business operation was not limited to the sales business for profit-making purposes (general real estate trading business: real estate trading business; 24.28. 20. 28. 20. 26. 20. 208. 201. 28. 2014.

③ The Plaintiff transferred the instant apartment at the same price as the acquisition value. Considering the expenses incurred by the Plaintiff for the transfer of the instant apartment, the Plaintiff did not actually incur any loss, and thus, the Plaintiff cannot be deemed to have engaged in the instant apartment transaction for the purpose of profit-making. However, the 4 households of the instant apartment was transferred at a higher price than the acquisition value, and the Plaintiff appears to have paid expenses related to the installation of the indoor interior interior interior interior interior interior interior interior interior interior decoration and additional furniture or the sales promotion of the instant apartment to acquire the instant apartment in accordance with the management decision in order to receive the service cost under the instant service contract. Therefore, it is reasonable to deem that the instant apartment

④ As the instant apartment building is not easy to sell in large square meters (165m25m2), GG and HH entered into a separate alteration agreement with respect to the instant service agreement, and the remaining households are sold in lots. However, as seen earlier, GGG entered into an agreement that if the monthly target number of households in lots fails to meet the monthly target number, it would not claim for the service charges. However, profit-making determination is subject to transfer, and what is the purpose of acquisition is merely the indirect circumstance or fact of determining profit-making. Thus, even if the Plaintiff acquired the instant apartment building as the representative of GGG, who is a party to the instant service agreement, to receive the service charges under the instant service agreement, it does not interfere with recognizing that the instant transaction was for profit-making purposes.

⑤ According to Article 2(1)2 of the former Enforcement Rule of the Value-Added Tax Act, real estate shall be acquired at least once during one taxable period for business purpose, and real estate shall be deemed to be engaged in real estate sales business in the case of selling more than twice, and the above provision is an exemplary provision that can be seen as real estate sales business (see, e.g., Supreme Court Decisions 93Nu1752, Sept. 9, 194; 94Nu6352, Sept. 23, 1994; 94Nu6352, Sept. 23, 1994). Of the apartment of this case, the sale right transaction on apartment of Nos. 12 through No. 16 of the apartment of this case (the sale right transaction constitutes real estate sales business) is deemed to have been conducted at least once during one taxable period, and thus, it is sufficient to view the Plaintiff’s transaction of apartment of this case, including this, as real estate sales business.

C) Therefore, we cannot accept this part of the Plaintiff’s assertion.

2) Judgment on the second argument

A) Article 2 subparag. 1 of the Value-Added Tax Act provides that matters necessary for goods and rights shall be determined by Presidential Decree. Article 3(2) of the former Enforcement Decree of the Value-Added Tax Act provides that a real estate business prescribed by Ordinance of the Ministry of Strategy and Finance among real estate businesses shall be deemed a business that supplies goods and services. Article 4(1) of the former Enforcement Decree of the Value-Added Tax Act provides that the classification of the business that supplies goods and services shall comply with the Korean Standard Industrial Classification publicly notified by the Commissioner of the Statistics Korea, except in extenuating circumstances. In addition, the former Korean Standard Industrial Classification (amended by the Statistics Korea Notice No. 2015-311, Sept. 24, 2015; hereinafter referred to as the “former Korean Standard Industrial Classification”) prepared and publicly announced by the Commissioner of the Statistics Korea pursuant to Article 22(1) of the Statistics Act (hereinafter referred to as “former Korean Standard Industrial Classification”) shall be included in cases of real estate supply business.

B) In light of the following, it is reasonable to view that the sale and purchase contract for real estate is included in the real estate supply business under the Korean Standard Industrial Classification (see, e.g., Supreme Court Decision 2010Du29192, Feb. 28, 2013) and the sale and purchase contract for apartment land is transferred through a sales contract to the status of the purchaser of apartment land which is a real estate supply business under the Korean Standard Industrial Classification, and the resale of the real estate is made after the purchase and sale contract for the real estate without any difference in terms of similarity of industrial activities, and that it is also included in the real estate supply business under the Korean Standard Industrial Classification (see, e.g., Supreme Court Decision 2010Du29192, Feb. 28, 2013).

C) Therefore, the Plaintiff’s assertion on this part cannot be accepted.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit. It is so ordered as per Disposition.

shall be ruled.