Cho Jae-2016-west-359 ( October 28, 2016)

Whether the cash subsidy of this case constitutes sales overcharge

Since it is reasonable to see the cash subsidy of the instant device as the discount amount directly related to the supply of the device, it is difficult to see that it falls under the incentive in light of the relationship with the sales of the device, etc.

Article 29 of the Value-Added Tax Act

Disposition Imposing Value-Added Tax

00 Telecom Co., Ltd.

00. Head of tax office

on October 14, 2017

on October 19, 2017

1. On November 16, 2015, the Defendant’s imposition of value-added tax (including additional tax) on each of the value-added tax (including the additional tax) on the first term X,xx,xx,xx, the second term portionx,xx, andxxxx, which was made against the Plaintiff on the Plaintiff on November 16, 2014.

2. The costs of the lawsuit are assessed against the defendant.

The same shall apply to the order.

1. Details of the disposition;

A. The Plaintiff entered into a contract with the Plaintiff, a mobile communications business entity, and a mobile communications terminal device (hereinafter referred to as “tel”) that is a sales business entity, and the Plaintiff was entrusted with the attraction and management of subscribers to mobile communications services from the case, and purchased and sold the devices to the subscribers. Accordingly, the Plaintiff operated a business by selling the devices purchased from the case to the customers in installments and returning part of cash after one month.

B. In filing a return of the value-added tax for the first and second years 2014, the Plaintiff filed a return of the total amount of x, x, x, xx, x, x, xx, xx (referring to the 2nd period, 2014; hereinafter referred to as “the instant subsidy”) that remains after deducting the remaining amount from the sales amount from the total sum of the cash paid to the customer as above from the sales amount of the terminal sales amount, as the total sum of x, x, x, x, x, x, x, x, xx, xx, xx (the 1st period, 2014), x, x, x, xx, xx (the 2nd period, 2014) as each value-added tax base.

C. From June 2, 2015 to September 11, 2015, the Defendant conducted a tax investigation with respect to the Plaintiff. From November 16, 2015, the Defendant deemed that the instant subsidy paid to the Plaintiff to the Plaintiff was omitted from sales, and on November 16, 2015, notified the Plaintiff of the correction and notification of the value-added taxx,xx,xx,xx (including additional tax) for the first term portion of value-added tax, for the second term of 2014, and the value-added taxx,xx, andxx (including additional tax) for the second term of 2014 (hereinafter “instant disposition”).

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 14, Eul evidence Nos. 1 and 2 (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. Summary of the plaintiff's assertion

The instant subsidies fall under the discount of part of the mobile device purchase price to the terminal customer, and thus, should be excluded from the value-added tax base, as it constitutes the discount amount under Article 29(5)1 of the Value-Added Tax Act.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Article 29(5)1 of the Value-Added Tax Act provides that an amount of direct reduction of a certain amount from an ordinary price shall be excluded from the value of supply in accordance with the quality, quantity, conditions of delivery, payment method of proceeds from supply, or other terms and conditions of supply when the goods or services are supplied. As such, in relation to the supply of goods or services, the amount of discount directly deducted and reduced from the ordinary value of supply is not limited to that prior to the time of the supply of the goods or services, but is not limited to that prior to the time of the supply of the goods or services (see, e.g., Supreme Court Decision 2013Du19615, Dec. 23, 2015).

2) In full view of the following facts and circumstances recognized by comprehensively taking account of the aforementioned evidence and the purport of the entire pleadings, it is reasonable to view the instant subsidy as not included in the supply value of the device or in the discount amount directly related to the supply of the device, and thus, it should be excluded from the value-added tax base for the mobile device supply transaction. Accordingly, the instant disposition that calculated the tax amount included in the value-added tax base for

A) The tax base of value-added tax imposed on the consumption of goods or services shall be the price actually paid by the final consumer of the goods or services. The price actually paid by the customer who purchased the device from the Plaintiff to the Plaintiff is the amount calculated by subtracting the amount of the instant subsidy from the ex-factory price of the device (the amount obtained by deducting the agreed subsidy from the ex-factory price if the customer satisfies the requirements for the agreed subsidy set forth in the case; hereinafter the same shall apply) and the purchasing customer also recognizes the amount obtained by deducting the instant subsidy from the ex-factory price as the

B) When concluding a contract with a customer to sell a device at the ex-factory price, the Plaintiff sold the device by means of an agreement to pay the amount of the instant subsidy at the same time, and the price calculated by subtracting the amount of the instant subsidy from the ex-factory price is the same as selling the device and its economic substance.

C) Since the amount of discount stipulated to be excluded from the value of supply under Article 29(5)1 of the Value-Added Tax Act is determined based on whether the substance is the reduction of the cost of supply, it cannot be said that the legal nature of the subsidy in this case differs solely on the ground that the Plaintiff sold the device at the ex-factory price and later paid the amount equivalent to the subsidy in this case

D) In addition, whether the amount of the instant subsidy should be excluded from the supply value of the Plaintiff’s mobile device supply transaction is determined depending on whether the price of the instant subsidy has actually been reduced between the Plaintiff and the customer of the mobile device, and it does not vary depending on whether there was an agreement between the Plaintiff and the case to reduce the amount of the instant subsidy from the supply value. This also applies to the case where the instant subsidy is financed with sales incentive, commission, etc. that the Plaintiff pays.

E) Incentives under Article 29(6) of the Value-Added Tax Act are money and other valuables paid to the other party to the transaction for the promotion of business without being linked to the individual transaction or the price thereof after the completion of the performance of the obligation under the supply agreement. It is generally paid to the intermediate distributor who is not the end consumer. It is difficult to view the instant subsidy to fall under the said incentive in light of the purpose and object of the payment, the relationship with

3) Meanwhile, if the Plaintiff’s output tax amount is reduced by considering the amount of the instant subsidy as the amount of discount, the purchase tax invoice, which is calculated by deducting the same amount from the case, shall be revised and issued, and the same amount of the input tax shall be reduced. Therefore, the Defendant asserts that the value-added tax does not have any influence on the value-added tax. However, there is no evidence to deem that there exists an agreement between the Plaintiff and the case to deduct the amount equivalent to

3. Conclusion

Therefore, the plaintiff's claim of this case is reasonable, and it is so decided as per Disposition.