Diab018 0972 (2018.07)

employee invention compensation paid to the representative shall be subject to the application of wrongful calculation.

The payment of employee invention compensation to the representative constitutes an abnormal act that has no economic rationality in light of sound social norms or commercial practices, and thus is subject to rejection of unfair calculation, and it is difficult to recognize that there is a justifiable reason for not performing the duty of return and payment. This is also justifiable to impose penalty tax.

Article 52 (Dispudiation of Wrongful Calculation)

2018Guhap52523 Revocation of Disposition of Corporate Tax Imposition

AA Corporation

BB Director of the Tax Office

May 16, 2019

July 4, 2019

1. All of the plaintiff's claims are dismissed.

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

Cheong-gu Office

The Defendant’s imposition of corporate tax (including additional tax) of KRW 82,847,650 for the business year 2016, which was made on December 11, 2017, and the income earner’s income as of January 1, 2018, and the income earner’s income amount of KRW 437,77,761 for the year 2016, respectively, shall be revoked.

1. Details of disposition;

A. The Plaintiff is a company with the purpose of manufacturing and selling electric machinery, vagabonds products, distillers, heat exchangeers, and gas generators. SS is a shareholder (98.65% of the holding shares) and a representative director.

B. S was an employee’s invention (hereinafter referred to as “instant employee’s invention”) with respect to the “product created for the co-rating of the heat of the exhaust gas facility,” and the Plaintiff succeeded to the right to obtain a patent with respect to the instant employee’s invention from SS and registered the establishment of the patent right as the number No. 2012-00****, registration number No. 10-*****.

다. 원고는 2016. 10. 14. 이 사건 직무발명에 대한 실시보상금을 547,222,200원[이 사건 직무발명을 실시한 제품의 매출액 18,240,740,026원 × 특허기여도(30%) × 발명자 보상율(10%), 이하 '이 사건 직무발명보상금']으로 산정하여 SSS에게 지급하고, 이를 손금으로 계상하여 피고에게 2014. 1. 1.〜2016. 12. 31. 사업연도 법인세 신고를 하였다.

D. The Defendant paid the Plaintiff’s employee’s invention compensation to the representative (SS) who is a specially related party.

It was considered that the Defendant voluntarily calculated the royalty without consideration of the royalty rate. Accordingly, the Defendant imposed a tax on KRW 82,847,650 (including a total of KRW 12,428,90,90) for the business year 2016, which reverts to the Plaintiff on December 11, 2017, imposed a tax on KRW 82,847,650 (including a total of KRW 12,428,907), and notified the change in the amount of income for KRW 437,77,761 as of January 1, 2018 (hereinafter referred to as "disposition") and the Defendant recognized as an adequate amount of compensation for the employee's invention as a bonus for the representative director, and issued a tax on KRW 437,77,77,761 as of the amount of compensation for the employee's invention in this case by multiplying the amount of compensation for the employee's invention in this case by the amount of compensation for the employee's invention in this case (hereinafter referred to as "each Disposition").

E. The Plaintiff filed an appeal with the Tax Tribunal on February 8, 2018, but the appeal was dismissed on June 7, 2018. The Plaintiff received the foregoing decision on June 14, 2018.

[Reasons for Recognition] Facts without dispute, Gap 1, 4, 5, 6, 13-16, Eul 1-4, 7, 10, the purport of the whole pleadings

2. Whether the disposition of this case is legitimate;

A. The parties' assertion

1) Plaintiff’s assertion

A) The instant employee’s invention compensation is not subject to wrongful calculation, and it cannot be deemed that the Defendant’s adequate amount of compensation is “market price”.

① Unlike the case where the issue is whether Article 10 (Tax Credit for Research and Human Resources Development Expenses) of the former Restriction of Special Taxation Act is applicable to the employee’s invention compensation, it is not necessary to comply with the provisions related to the compensation for the employee’s invention under the Invention Promotion Act in order to recognize the employee’s invention compensation as deductible expenses under the Corporate Tax Act. ② The employee’s invention compensation does not immediately apply the royalty rate when calculating the employee’s invention compensation, and it cannot be deemed that the employee invention compensation in excess of the royalty rate is subject to unfair calculation. ③ The Plaintiff’s employee’s employee invention compensation provision applies uniformly to all the employees of the Plaintiff. ④ Although the Plaintiff was able to enter into a negotiated contract with the power plant and 80% of the sales of the Plaintiff’s invention in the instant case, the Plaintiff’s employee invention compensation cannot be deemed to fall under the employee invention compensation standard 40% compared with the Defendant’s invention compensation standard 40% compared to the Plaintiff’s employee invention compensation provision or the Defendant’s invention compensation standard 40% compared to the above employee invention compensation standard 40%.

B) The penalty of this case’s disposition is unlawful.

Even if the employee’s invention compensation in this case is subject to unfair calculation, the royalty rate should be applied to the employee’s invention compensation, and if the invention invention does not comply with the Invention Promotion Act, there is no established interpretation or precedent as to whether the employee’s invention compensation is subject to unfair calculation under the Corporate Tax Act, and it is difficult to expect the report to the Plaintiff.

2) Defendant’s assertion

A) The instant employee’s invention compensation falls under Article 52 of the former Corporate Tax Act (amended by Act No. 16008, Dec. 24, 2018; hereinafter the same) and Article 88(1)7 or 9 of the former Enforcement Decree of the Corporate Tax Act (amended by Presidential Decree No. 29529, Feb. 12, 2019; hereinafter the same) and thus subject to unfair calculation.

The Plaintiff’s provision on the employee’s invention compensation cannot be said to be a provision on compensation in compliance with lawful procedures due to significant and apparent defects in violation of the provisions of the Invention Promotion Act and the Enforcement Decree of the Invention Promotion Act. In calculating the employee’s invention compensation, the “profit that the employer would gain” and “the level of employee’s contribution” should be reflected, and at this time, the “the royalty rate” should be applied to the “the exclusive sales”. The Plaintiff applied the royalty rate to 100% in calculating the instant employee’s invention to be paid to the representative director, and considered the total sales amount as the profit that the Plaintiff would gain from the employee’s employee’s invention. This provision applies to the calculation of unfair calculation based on the unfair reduction of the tax burden on the Plaintiff’s income through abnormal transactions with the representative director who is a specially related

B) Of the instant disposition, the penalty tax part is lawful.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Whether it is subject to wrongful calculation

A) Relevant legal principles

Article 52 of the former Corporate Tax Act (amended by Presidential Decree No. 2035, Dec. 28, 2018; Presidential Decree No. 20358, Dec. 28, 2018; Presidential Decree No. 2010, Jan. 28, 2018; Presidential Decree No. 2010, Jan. 28, 2018; Presidential Decree No. 2010, Jan. 22, 2018; Presidential Decree No. 20135, Feb. 28, 2018; Presidential Decree No. 20135, Feb. 28, 2018).

According to Article 52(2) of the former Corporate Tax Act, when applying the denial of wrongful calculation, the market price is the price applied or determined to be applied in sound common practice and commercial practice and normal transaction between persons who are not specially related parties (including premium rates, interest rates, rents, exchange rates, and other similar rates). In applying Article 89(1) of the former Enforcement Decree of Corporate Tax Act, which provides for the scope of market price, etc. according to delegation under Article 52(4) of the former Corporate Tax Act, Article 52(2) of the former Enforcement Decree of Corporate Tax Act, where the relevant corporation is similar to the relevant transaction, and where there is a price generally traded between third parties who are not specially related parties or persons who are not specially related parties,

B) recognized facts

① The employee’s invention of this case is an invention that complementarys the problems of oil-generating products Corning on the surface of the material in order to prevent the corrosion by mountain or the damage caused by physical shock of the material that constitutes the exhaust gas equipment supplied to the power plant.

② On January 21, 2016, the Plaintiff received performance certification for supply from the Administrator of the Small and Medium Business Administration with respect to 'Hybid gas coheat who used 'Hybid Co.' to which the instant employee invention was applied.

③ From April 1, 2013 to September 29, 2016, the Plaintiff manufactured and supplied the product to which the instant employee’s invention was applied, and the sales amount is KRW 18,240,740,026.

④ On September 21, 2016, the Plaintiff’s board of directors enacted a provision on compensation for employee’s inventions under the Patent Act and the Invention Promotion Act, and resolved to establish and operate the employee’s invention deliberation committee.

⑤ On September 28, 2016, the Plaintiff: (a) held a deliberative committee on employee’s invention; and (b) enacted the rules on the employee’s invention compensation and the detailed rules on the calculation standards for employee’s invention compensation. The method of calculating the amount of compensation

i. Periodical implementation compensation

Compensation for implementation shall be determined by taking into consideration the patent contribution and the inventor compensation rate to the sales amount of the product to which the relevant intellectual property right directly applies. In cases of a joint invention, the amount of contribution of the inventor

(c) If there are a large number of kinds of products, it may be determined by product;

Compensation for implementation = Sales of products 】 patent contribution limit 】 inventor compensation rate;

The above patent contribution ratio means the ratio of the contribution of the patent product to the sales amount of the product, the inventor compensation ratio means the ratio of the inventor's contribution to the patent, and in the case of joint inventions, the patent contribution ratio means the ratio of the inventor's contribution from the compensation amount

The patent contribution limit shall be determined by the Compensation Deliberation Committee for Employee Inventions, and the maximum limit shall be 30%.

The rate of inventor compensation shall be determined by the Work Invention Compensation Deliberation Committee, but in principle, it shall be 10%, but it may be adjusted by up to 5%p in the Work Invention Compensation Deliberation Committee.

The compensation for implementation calculated shall be paid within one month after the regular general meeting of shareholders: Provided, That the compensation for past implementation may be paid before the regular general meeting of shareholders.

④ On October 11, 2016, SS filed an application for compensation with the Plaintiff for the implementation of the instant employee’s invention. On October 14, 2016, the Plaintiff held the second employee’s invention deliberation committee to apply the patent contribution rate to the calculation of compensation for the instant employee’s invention to 30%, and decided the inventor’s compensation rate to 10% (as seen earlier, compensation for the instant employee’s invention computed accordingly).

547,221,00 won

[인정 근거] 다툼 없는 사실, 갑 6〜13, 17〜21, 갑 26, 을 7, 변론 전체의 취지

C) In a case where assets, etc. are received at a rate higher than the market price or equivalent thereto (Article 88(1)7 or 9 of the former Enforcement Decree of the Corporate Tax Act), whether it constitutes an abnormal act with no economic rationality in light of sound social norms or commercial practices

(1) According to Article 15(1) of the Invention Promotion Act, an employee’s invention compensation is a compensation in cases where the employee, etc., succeeds to the right to obtain a patent, etc., patent rights, etc., for an employee’s invention, or establishes an exclusive license in accordance with a contract or employment regulations. The amount of the employee’s invention compensation is determined by taking into account the benefits the employer, etc. would obtain from the employee’s invention and the degree of contribution by the employer, etc. to the completion

According to Article 10(1) of the Invention Promotion Act, an employer has a non-exclusive license on a patent without compensation even if he/she did not succeed to an employee invention. Thus, the aforementioned “profit that an employer would gain” refers to a profit obtained by acquiring the status of exclusively and exclusively executing an employee invention beyond a non-exclusive license (see, e.g., Supreme Court Decision 2014Da220347, Jan. 25, 2017).

In the instant case, if an employer succeeds to the right to an employee invention and registers a patent and directly implements the patent, the employer would ordinarily benefit from exempting the payment of the amount equivalent to the royalty. However, the amount equivalent to the royalty is included in the amount corresponding to a non-exclusive license as seen earlier. In addition, when an employee invention is related to a part of the product completed by it, the amount equivalent to the royalty should be determined by considering the level of contribution to the sales. Such portion of profit should be excluded, regardless of the employee invention, as the sales amount includes the portion arising from the user’s personal guidance, market status, reputation, and quality or function other than the employee invention. Considering these circumstances, the profit gained by the employer by directly implementing the employee invention may be determined by taking into account (i) the sales amount of the product performed by the employee invention, (ii) the contribution to the employee invention, (iii) the ratio of the remaining portion excluding the non-exclusive license to the profit derived from the employee invention, and (iv) the ratio of compensation for the inventor’s contribution to the employee invention to the completion rate of the invention.

On the other hand, the royalty rate shall vary depending on the negotiating power between the patentee and the person who intends to conduct the patented invention, but if the royalty rate is hardened as the practice of each industry, or if the average royalty rate can be obtained, it would be possible to calculate the amount of the employee’s invention compensation to be paid in normal transactions between persons who are not related parties by applying such royalty rate or the average royalty rate.

(2) As such, an employee’s invention compensation calculated can also be applied to a general transaction between a third party, not a corporation, such as a transaction between an employer and his/her employees, and thus, the price generally transacted between the third party under Article 89(1) of the former Enforcement Decree of the Corporate Tax Act falls under “price applied or deemed applicable to a normal transaction between a person who is not a related party” under Article 52(2) of the former Corporate Tax Act, i.e., “market price.” Therefore, the payment of a higher amount of employee’s invention compensation to a related party constitutes “money, other assets, or services received at an interest rate, tariff, or rental rate higher than the market price” under Article 88(1)7 of the former Enforcement Decree of the Corporate Tax Act.

Even if not, compensation for employee’s inventions calculated by the above method is based on the price (market price) applied or determined as applicable to sound social norms, commercial practices, and ordinary transactions between persons who are not related parties. Therefore, the payment of compensation for employee’s inventions by a corporation to a related party constitutes “an act or account corresponding to Article 88(1)9 of the former Enforcement Decree of the Corporate Tax Act” among acts stipulated in Article 88(1)9 of the former Enforcement Decree.

(3) In full view of the following circumstances that can be recognized by the Defendant based on the overall purport of the arguments and facts as seen earlier, it is reasonable to deem that the Defendant’s payment of KRW 109,44,440 recognized as the adequate compensation for the instant employee’s invention is an “market price” under Article 52(2) of the former Corporate Tax Act. The Plaintiff’s payment of KRW 547,22,200 to the representative director SS who is a specially related party is an act under Article 88(1)7 or 9 of the former Enforcement Decree of the Corporate Tax Act and is an abnormal act that is unfair in light of sound social norms and commercial practices.

(A) 547,22,200 won calculated by the Plaintiff’s employee’s invention compensation is not “the Plaintiff’s profit from the employee’s invention,” but “the amount calculated by multiplying the sales amount of the Plaintiff’s product conducted by the employee’s invention by the patent contribution rate (the Plaintiff’s contribution rate to the sales amount of the product under the Plaintiff’s compensation provision),” and the amount also reaches 3% of the sales amount. This seems to be difficult to be recognized in a normal transaction between persons who are not specially related parties.

(B) The Defendant admitted the Plaintiff’s assertion as to the remainder of the calculation elements of the employee’s invention compensation as seen earlier. However, the Defendant recognized KRW 109,44,440 as the adequate employee’s invention compensation by multiplying the royalty rate of KRW 20%, which the Plaintiff did not consider at all, by the royalty rate of KRW 547,22,200 calculated by the Plaintiff.

(다) 피고가 적용한 실시료율 20%는 특허청의 '개정 직무발명보상제도 해설 및 편람'에 수록된 '산업별 적정 실시료율 예시표'(특허청이 산업별 적정 실시료율 추정의 기초를 분석하여 적정 실시료율 목표값을 산출한 다음 이를 다시 국제적 지표를 통하여 검토ㆍ보완한 것이다. 위 표는 농림수산업, 전기ㆍ전자산업, 기계ㆍ기구산업, 금속산업, 화학산업 등으로 산업을 분류하고, 각 산업별로 적정 실시료율의 범위를 제시하고 있다. 각 산업별로 하한은 1〜7%, 상한은 4〜20% 사이에 분포하고 있다)의 적정 실시료율 중 원고에게 유리하도록 가장 높은 실시료율을 적용한 것이다(이는 직무발명보상금 청구소송 등에서 법원이 통상적으로 인정하는 실시료율에 비해서도 현저히 높은 것이다).

(D) Article 17(1) of the former Regulations on the Disposal, Management, Compensation, etc. of Public Officials’ Inventions (amended by Presidential Decree No. 29123, Aug. 28, 2018) provides that the Commissioner of the Korean Intellectual Property Office shall pay to the inventor a disposal compensation equivalent to 50/100 of the disposal revenue (the total amount of revenue generated within one fiscal year from the disposition of a national-owned patent right or a patent-related right with respect to an employee invention for which a patent application is filed pursuant to Article 2(5) of the said Regulations) if he/she disposes of the patent for a state-owned patent or the right to obtain a patent with respect to an employee invention for which a patent is filed. The Plaintiff asserts to the purport that the employee

However, the above provision is a provision on the calculation of compensation in the case where a public official's "dispositions" for an employee's invention that was succeeded to the State or a local government due to the invention, and in this case, the compensation for employee's invention should be calculated based on the profits that the plaintiff acquired by the "direct implementation" of the employee's invention in this case. Therefore, the two cannot be compared to the two

(E) According to Gap 26 and Eul 7, the Korean Intellectual Property Office recognized the calculation of the employee’s invention compensation under the so-called Slovad Act, other than the aforementioned method, and accordingly, the Korean Intellectual Property Office’s explanation and manual for the revised employee’s invention compensation system is also applied to the calculation standard of the employee’s invention compensation in cases where the company directly executes the employee’s invention, the sales amount multiplied the net profit less the manufacturing cost and operating expenses, by the utilization rate of the pertinent product, and again, by a certain ratio and a certain amount by multiplying the net profit amount. (1) The plaintiff cannot be deemed excessive in the employee’s invention compensation in this case, on the grounds that the royalty rate is not applied to the calculation of the employee’s invention compensation under the Slovad Act.

However, the Plaintiff calculated the instant employee’s invention compensation based on sales, not net profit, and cannot be deemed as the calculation of compensation pursuant to the Badrid Act. Therefore, the Plaintiff’s calculation method of compensation, which did not apply the royalty rate solely on the sole basis as alleged by the Plaintiff, cannot be deemed justifiable solely for the reason that it was alleged by the Plaintiff. In addition, the Defendant’s measure, which did not calculate compensation pursuant to the Badrid Act, is not unlawful, inasmuch as there was no evidence to verify the net profit

(F) Furthermore, when calculating the amount of compensation for the instant employee’s invention by applying 30% of the patent credit (use rate) decided by the Plaintiff’s Employee’s Invention Deliberation Committee, the amount of compensation for the instant employee’s invention is to be KRW 547,222,200,000, the net profit earned by the Plaintiff as of KRW 18,240,740,026, out of the sales of the product that performed the instant employee’s invention, ought to reach KRW 12 billion (net profit x 12 billion x 30% x 15% x 350,500,000 + 54,500,000). In light of this, the instant employee’s invention compensation seems to be an abnormal amount that has no economic rationality.

(G) SS is the representative director of the Plaintiff and the major shareholder holding 98.65% of the Plaintiff’s shares issued, and is a member of the Employee’s Invention Deliberation Committee, the Plaintiff’s provision on compensation for employee’s invention, or the Plaintiff’s decision to calculate compensation for employee’s invention of this case.

(h) There is no evidence to support that the Plaintiff paid employee invention compensation by applying the method prescribed in the Plaintiff’s employee invention compensation regulations to other employees than SS, or that other employees have the Plaintiff’s claim against the Plaintiff.

D) Sub-determination

Without economic rationality, the Plaintiff paid the instant employee’s invention compensation to SS that is a specially related representative director at a higher rate than the market price and can be deemed to have reduced the tax burden unfairly. Therefore, it cannot be deemed that the Plaintiff deemed that the instant employee’s invention compensation amount exceeds KRW 109,44,440, and exceeds KRW 437,777,761, which can be deemed as applicable or applicable to normal transactions among the instant employee’s invention compensation amounting to KRW 547,22,200, and thus, it cannot be deemed that the Plaintiff excluded the amount from deductible expenses and disposed of it as a bonus for SS as illegal.

2) Whether there is a justifiable reason for failure to perform the corporate tax return obligation properly

A) Relevant legal principles

Additional tax is an administrative sanction imposed in accordance with the Act in cases where a taxpayer violates various duties, such as a report and tax payment, in order to facilitate the exercise of the right to impose taxes and the realization of a tax claim, and where there exist justifiable grounds, it shall not be imposed (Article 48(1) of the Framework Act on National Taxes). Therefore, where there exists a reasonable ground that a taxpayer cannot be held liable for failure to know his/her duty due to a conflict of views in the interpretation of the tax law beyond the scope of simple legal sites or misunderstandings, or where there exists a justifiable ground that makes it difficult to criticize the fact that the taxpayer neglected his/her duty, such as when it is difficult to expect the performance of such duty, etc. (see, e.g., Supreme Court Decision 2017Du36885, Jul.

B) Determination

In light of the aforementioned circumstances, in particular, the Plaintiff’s “amount obtained by multiplying the sales amount of the product executed by the Plaintiff’s employee invention by the patent contribution rate” as the profit that the Plaintiff acquired by the employee invention, and calculated the inventor’s compensation rate, as a result, the Defendant’s payment of approximately five times the amount of adequate compensation calculated by the Defendant (which also seems to be the amount calculated in close favor to the Plaintiff) and about KRW 3% of the sales amount to the SS, and other factors such as the status that the SS occupies in the Plaintiff, it is difficult to recognize that the evidence submitted by the Plaintiff alone is insufficient to criticize the Plaintiff that the Plaintiff neglected to pay taxes. The Plaintiff’s assertion on this part is without merit.

3. Conclusion

The plaintiff's claim of this case is dismissed for all reasons.