Whether the business is transferred where the transferee of the leased building is registered as a simplified taxable person at the time of transfer.

If a person who has carried on a real estate rental as a general entrepreneur sells real estate for rental business and takes over this real estate has registered a real estate rental as a simplified taxable person, it shall not fall under the transfer of business.

Article 6 (Supply of Goods)

1. The plaintiff's appeal is dismissed.

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

The judgment of the first instance shall be revoked. The defendant shall revoke the disposition of imposition of value-added tax of KRW 12,094,550 for the first term of January 2002 against the plaintiff on July 16, 2003.

1. Details of the disposition;

The following facts are not disputed between the parties, or acknowledged by taking account of the overall purport of the pleadings in each entry in Gap evidence, Eul evidence No. 1-2, Eul evidence No. 2, and Eul evidence No. 2:

A. On August 24, 199, the Plaintiff acquired ○○○-dong, Busan, 129-14, 202.6 square meters, and 590.39 square meters on its ground, and operated a leasing business with a business registration as a general taxable person on the above building, and transferred the above site and building to Nonparty ○○-○○ on March 20, 2002. This ○○ operated a real estate rental business on April 1, 2002 after filing a business registration as a simplified taxable person.

B. On July 16, 2003, the Defendant imposed a value-added tax of KRW 12,094,550 (including additional tax) on the Plaintiff on July 16, 2002, according to the records of the Board of Audit and Inspection that the Plaintiff’s transfer of the said building does not fall under the blanket transfer of business under the Value-Added Tax Act (hereinafter “the Act”).

2. Whether the disposition is lawful;

A. The plaintiff's assertion

Since the following illegal grounds exist, the instant disposition should be revoked.

(1) Article 2 of the Act provides for a taxpayer of value-added tax as an entrepreneur, and the business refers to the case of supplying goods or services with continuous and repeated intent by meeting the business form to create a value-added tax, and thus, the Plaintiff, a real estate rental business operator, sells to another person the above building used for the business purpose, is irrelevant to the business, and thus cannot be subject to value-added tax on the ground that there is no “business”

(2) Article 6(6) of the Act and Article 17(2) of the Enforcement Decree of the Act provide that the value-added tax shall be levied on a general taxable person where the general taxable person transfers his business to a simplified taxable person. However, this provision applies only to the intermediate materials, such as raw materials, goods, and products possessed for business purposes, and it cannot be applied to the business capital goods. Since the above building is a business capital goods, value-added tax, which is essentially a consumption tax,

(3) Article 17(2) of the Enforcement Decree of the Act provides that a business shall be transferred only when a business is comprehensively transferred without specific delegation of the Act. Thus, it constitutes a comprehensive delegation and thus null and void.

(4) The imposition of value-added tax is contrary to the principle of self-responsibility by deeming that it does not fall under the comprehensive transfer of business on the ground of business registration as a simplified taxable person, which is not within the scope of control of the Plaintiff, at the free choice of the transferee.

B. Relevant statutes

Value Added Tax Act

Article 6 (Supply of Goods) (6) Any of the following shall not be deemed the supply of goods:

2. Transfer of business as prescribed by the Presidential Decree, and omission of the proviso.

Enforcement Decree

(2) For the purpose of the main sentence of Article 6 (6) 2 of the Act, the term “those as prescribed by the Presidential Decree” means the comprehensive succession of all rights and obligations with respect to the business by place of business (including the case of division meeting the requirements of Article 46 (1) of the Corporate Tax Act, but excluding the case where a general taxable person transfers the business to a simplified taxable person).

C. Determination

(1) Determination as to the assertion of the above A(1)

According to Article 1(2) through (5) of the Act and Article 3 of the Enforcement Decree of the Act, the term “person who supplies goods or services independently for business purposes” under Article 2(1) of the Act, which provides for a taxpayer of value-added tax, includes not only the person who supplies the goods or services produced in his/her own business but also the person who supplies the goods or services produced in his/her own business as well as the suppliers of the goods or services produced in his/her own business with continuous and repeated intent, but also the person who supplies the goods or services produced in his/her business, within the scope of the business (see, e.g., Supreme Court Decisions 86Nu622, Jan. 20, 198; 93Nu18396, Feb. 10, 1995

The plaintiff acquired the above building in order to operate a real estate leasing business and offered it for the above purpose business, and as the above building constitutes goods used or to be used for the plaintiff's business, the tax authorities deducted or refunded the value-added tax amount borne by the plaintiff from the acquisition process of the above building as an input tax amount (Article 17 (1) 1 of the Act). Therefore, it is clear that the above building is related to the plaintiff's leasing business. Therefore, the above building transferred by the plaintiff to another person constitutes "goods supplied contingent or temporarily in relation to the main business" under Article 3 subparagraph 3 of the Enforcement Decree of the Act, and therefore, the plaintiff is the person liable to pay value-added tax. Therefore

(ii)The determination of the allegation in paragraph (1)(2) above;

(A) In addition, according to Article 1(2) of the Act and Article 1(1) of the Enforcement Decree of the Act, goods “transfer of goods” subject to value-added tax, mean all tangible goods and intangible goods, and among them, tangible goods, such as goods, raw materials, machinery, and buildings, do not distinguish between whether they are consumed or intermediate goods in terms of their use.

According to the law, the value-added tax is a tax based on the ability to pay for consumption, and ultimately the final consumer bears the burden. However, the law does not impose the value-added tax on both intermediate materials and capital goods transactions, but rather deducts all input tax on the said goods (see Article 17(1) of the Act).

In other words, if all goods in business feasibility are supplied regardless of intermediate or capital goods, the tax base is to calculate the output tax amount by multiplying the supply value by the tax rate, and the tax amount to be paid by the entrepreneur after deducting the input tax amount, i.e., the tax amount for the supply of goods or services used or to be used for his own business, thereby prescribing the amount of value added tax paid by the entrepreneur to the supplier in the course of purchasing intermediate goods such as raw materials or machinery, etc. such as input tax amount as the input tax amount is deducted or refunded by the entrepreneur.

Therefore, even if the above building is capital goods of the Plaintiff’s business, and is capital goods of the person transferred from the Plaintiff, the Plaintiff is obligated to pay value-added tax (sales tax) according to the supply of the above building.

(B) In addition, Article 6(1) of the Act provides that the delivery or transfer of goods shall be deemed as the supply of goods and shall be subject to value-added tax, while Article 6(6)2 of the Act and Article 17 of the Enforcement Decree thereof provide that the transfer of goods or services subject to value-added tax shall not be deemed as the supply of goods and services, even if the supply of goods or services subject to value-added tax cannot be deemed as the supply of goods or services due to the nature of value-added tax, or the supply of goods is inappropriate, it shall be exempt from tax. In addition, the transfer of the business does not correspond to the intrinsic nature of the supply of value-added tax, which is the requirement of taxation for the individual supply of specific goods, and the transfer of the transaction amount and the value-added tax amount are so high that the transferee would be expected to receive the input tax amount without any exception and thus, it is limited to the tax or economic policy consideration that should be avoided by imposing unnecessary pressure on the business transferee.

Therefore, in a case where a general taxable person intends to transfer his/her business to a general taxable person, the transferee does not have the benefits of taxation by having the general taxable person deducted the input tax amount, and the transferee is in accordance with the purport of the system to prevent the increase in burden of financial pressure, etc. due to the burden of return after having paid the value-added tax. However, in a case where the other party to the transaction is a simplified taxable person, the supply price does not reach the output tax amount generated by the simplified taxable person (X10% of the supply price). Therefore, in a case where the tax authority cannot be said to have no benefits of taxation, it does not fulfill the legislative purpose of making the comprehensive transfer of business non-taxation. In light of Article 6(6)2 of the Act and Article 17(2) of the Enforcement Decree of the same Act, the transfer of the business subject to non-taxation pursuant to Article 17(2) of the same Act refers to the transfer of physical facilities including the business property for each place of business. Accordingly, the identity of the business is replaced by a comprehensive transfer of business (see Article 17(20).20).2).

(C) Examining these facts in light of the above legal principles, the Plaintiff’s transfer of the above building to ○○, a simplified taxable person, does not constitute a comprehensive transfer of business, and thus constitutes subject to the Value-Added Tax Act, and the Plaintiff’s assertion that no value-added tax may be imposed on the supply of capital goods, which is not a supply of goods,

(D) Therefore, the above argument is without merit.

(3)The determination of the allegation in paragraph (3) above

Article 6 (6) 2 of the Act provides that a person shall be exempted from the transfer of a business that can determine its concept and delegates specific scope and limits to the Presidential Decree. Any person may sufficiently predict the contents to be prescribed by the Presidential Decree from the above provision, and Article 17 (2) of the Enforcement Decree of the Act delegated by him shall not be deemed as a comprehensive delegation because the contents of the business transfer corresponding to it are concrete (see Constitutional Court Order 2005Hun-Ba69, Apr. 27, 2006).Therefore, there is no reason to assert this.

(4) Determination as to the assertion of the above A. (4)

As seen earlier, the transfer of the above building does not fall under the transfer of the business falling under the non-taxable object, and the transferee of the building does not fall under the scope of the plaintiff's control. However, the plaintiff is not entitled to choose the type of taxation, but the plaintiff is entitled to make the business registered first as a general taxable person at the time of the transfer of the business and then transfers the business or has the business registered as a general taxable person after the transfer of the business if the ○○○ had the ○○○○ had the business registered as a general taxable person, but if the ○○○○○ did not have registered the business, he shall make the business registered as a general taxable person after the transfer of the business: Provided, That if the ○○○○○ did so, it may avoid

3. Conclusion

Therefore, the judgment of the first instance is just, and the plaintiff's appeal is without merit, and it is so decided as per Disposition.

[Supreme Court Decision 2006Du17291 (Law No. 21, 2008)]

The appeal is dismissed.

The costs of appeal are assessed against the Plaintiff.

The grounds of appeal are examined (to the extent of supplement in case of supplemental appellate briefs not timely filed).

According to the relevant provisions of the Value-Added Tax Act and the Enforcement Decree of the Value-Added Tax Act, the supply of goods subject to value-added tax refers to the delivery or transfer of goods by all contractual or legal grounds, and the taxpayer is a person who independently supplies goods or services on a business basis regardless of whether it is for profit-making purposes. Thus, in a case where the entrepreneur delivers or transfers goods by contractual or legal grounds, the entrepreneur is subject to the imposition of value-added tax (see, e.g., Supreme Court Decisions 91Nu6221, Jul. 28, 1992; 91Nu621, Jul. 28, 1992; 207Du1684, Feb. 16, 2008; 207Du1684, Oct. 13, 1995; 207Du1684, Feb. 16, 2005).

According to the reasoning of the judgment below, the court below acknowledged the fact that the plaintiff acquired the building and site of this case on August 24, 199 and operated a real estate rental business after completing business registration on March 20, 2002, and transferred the building and site of this case to Lee ○-ri on March 20, 202, based on such employment evidence, that the transfer of the building of this case which the plaintiff who operated a real estate rental business was provided for his own rental business constitutes a case where he transfers goods related to business under a contract due to a business operator's reason, and that the sale of the building is a supply of goods subject to value-added tax regardless of whether profit for profit or the transfer of the building is continuously and repeatedly. The above judgment of the court below is just in light of the

Therefore, the appeal is dismissed, and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.