Suwon District Court 2012Guhap15907 ( December 11, 2013)

Income paid to a U.S. corporation for the use of a patented invention registered only in the U.S. without registration in Korea cannot be deemed domestic source income.

Income paid to a U.S. corporation for the use of a patented invention registered only in the U.S. without being registered in the Republic of Korea cannot be deemed domestic source income, and it is difficult to view the income of this case as a price for actual use of a unregistered patent right. Ultimately, the income of this case received by the Plaintiff

2014Nu894 Revocation of revocation of revocation of correction

AAA Overc (AA, Insc.)

The superintendent of the tax office

Suwon District Court Decision 2012Guhap15907 Decided December 11, 2013

May 14, 2014

June 11, 2014

1. The defendant's appeal is dismissed.

2. The costs of appeal shall be borne by the Defendant.

1. Purport of claim

The defendant's rejection of the claim for correction with respect to the amount of tax withheld for November 2009 against the plaintiff on February 15, 2012 shall be revoked.

2. Purport of appeal

The judgment of the first instance is revoked. The plaintiff's claim is dismissed.

1. Quotation of judgment of the first instance;

The reasons why this court should explain are as follows: (a) the reasons why the defendant is required to consider is identical to the reasons why the court of the first instance rendered a decision, except for any addition under the following: (b) Article 8(2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act.

2. Judgment on the defendant's assertion

A. The defendant's argument

Article 6 (3) and Article 14 (4) of the Korea-U.S. Tax Convention do not exclude the price for actual use of unregistered patents from domestic source income, and do not specifically stipulate the meaning of "use" in the Korea-U.S. Tax Convention. Thus, the meaning of "use" under Article 2 (2) of the Korea-U.S. Tax Convention should be determined in accordance with the definition of domestic law. According to the proviso of Article 93 (9) of the former Corporate Tax Act (amended by Act No. 10423, Dec. 30, 2010; hereinafter the same) of the former Corporate Tax Act (amended by Act No. 10423, Dec. 9, 2010; hereinafter the same) deemed the use of a patent right which is subject to domestic manufacture and sale in Korea as domestic source income. Accordingly, the price for such use can be determined by considering it as the price for the use of the patent right as domestic source income under the proviso of Article 93 (9) of the former Corporate Tax Act after concluding the Korea-U.S.

The proviso of Article 93 subparagraph 9 of the former Corporate Tax Act does not provide for the meaning of "use not stipulated in the Korea-U.S. Tax Convention", but for the scope of user fees deemed domestic source income, the provisions different from the provisions of Articles 6 (3) and 14 (4) of the Korea-U.S. Tax Convention shall be applied in accordance with Article 28 of the Adjustment of International Taxes Act. In such a case, Articles 6 (3) and 14 (4) of the Korea-U.S. Tax Convention shall be preferentially applied in accordance with Article 28 of the Korea-U.S. Tax Convention. Under the interpretation of Articles 6 (3) and 14 (4) of the Korea-U.S. Tax Convention, income paid for the use of a patented invention registered only in the United States without registration in the Republic of Korea shall not be deemed domestic source income. Thus, it is difficult to view the consideration that BB electronic shall pay to the Plaintiff under the instant contract as the actual use of the unregistered patent right. Accordingly, the Plaintiff's claim for correction cannot be accepted.

3. Conclusion

Therefore, the plaintiff's claim of this case is justified, and the judgment of the court of first instance is just, and the defendant's appeal is dismissed. It is so decided as per Disposition.