Seoul Administrative Court-2016-Gu Partnership-9558 ( August 31, 2018)

Of the purchase agency services, the part entrusted to an overseas local corporation shall be deemed the domestic service supplied, so the zero tax rate shall not be applied.

Even if the purchase agency services provided to the domestic consumer can be divided into the domestic supply part and the overseas supply part entrusted to the overseas subsidiary, it is substantially combined and supplied as a single service, and the important and essential parts were domestically conducted, so it is reasonable to see that the entire service is domestically supplied.

Article 22 of the Value-Added Tax Act on Overseas Supply

Article 20 of the Value-Added Tax Act for Place of Supply

Seoul High Court-2017-Nu-73961

○○○○ Korea Ltd.

○ Head of tax office

Seoul Administrative Court-2016-Gu Partnership-9558

8.04.27

2018.06.01

1. The part against the defendant in the judgment of the court of first instance shall be revoked, and the plaintiff's claim corresponding to the revoked part shall be dismissed.

2. The plaintiff's appeal is dismissed.

3. All costs of the lawsuit shall be borne by the Plaintiff.

1. Purport of claim

The Defendant’s imposition disposition on the Plaintiff on April 18, 2016 is revoked in the amount equivalent to KRW 183,974,022 in the sum of the amount stated in the “amount of claim for cancellation” in the “amount of the imposition of value-added tax (including additional tax)” in the “amount of the imposition of value-added tax (including additional tax) from 1,01 to 2, 2014, and the Defendant’s imposition disposition of corporate tax (including additional tax) on April 14, 2016 to 31,806,870 in total from 2011 to 2014, the same “amount of claim for cancellation” in the “amount of the imposition disposition of corporate tax (including additional tax) of KRW 1,393,478 in the “amount of the same list of the imposition disposition of KRW 1,478.

2. Purport of appeal

A. The plaintiff

The part of the judgment of the court of first instance that lost the plaintiff falling under the following shall be revoked. The defendant's disposition of imposition of value-added tax on April 18, 2016 6,105,941 (including additional tax; hereinafter the same shall apply), 5,110,603 won for the second term, 2012 2,469,081), 2642,692 won for the second term, 2013, 3, 453, 626 won for the first term, 2013, 304, 207, 2057, 207, 305, 207, 205, 306, 207, 205, 207, 305, 207, 205, 207, 2014, 206, 207, 2014, 2016.

B. Defendant

The part against the defendant in the judgment of the court of first instance shall be revoked. The plaintiff's claim corresponding to the revocation shall be dismissed.

1. Quotation, etc. of judgment in the first instance;

The reasoning of this court's judgment is as stated in the reasoning of the judgment of the court of first instance (except for the part of '4. conclusion', excluding the part of '4. conclusion'), which is the same as that of the judgment of the court of first instance. Thus, it is accepted as it is in accordance with Article 8(2) of the Administrative Litigation Act and Article 420 of the Civil Procedure

2. Revised parts

○ Modification of the table between the lower end of the 8th page and the upper end of the 11st page as follows:

Article 1 (Purpose)

13. Definition and Contents of Services

(a) The term "delivery agency service" means a service provided by a member to a foreign logistics center that can be used as an intermediate delivery center where the plaintiff purchases goods in a foreign Internet shopping mall, etc., and then the member delivers goods directly purchased in a foreign Internet shopping mall, etc. to a foreign logistics center, the member will provide the service that enable the member to receive the goods after delivering the goods to a customer designated by the member through international transportation and import clearance through an international transportation company provided by the customer or the company at the time of settling the service charge (international transportation charge + costs of tax, etc. under domestic customs clearance and commission on behalf of the member).

B. The term "import agency service (○○ auction, Japanese purchase, post-sale auction, and US purchase)" means entering into an import agency contract with a domestic purchaser based on the import agency contents publicly announced on the Plaintiff's package site, and buying and settlement on behalf of a user from an overseas seller, sales site, etc., and transporting the goods to the domestic destination of the user through international transportation and import clearance after entering the foreign intermediate delivery center provided by the Plaintiff, and allowing the user to receive them.

C. The term “△△△△△” means a service that falls under the type of an import agency-type transaction contract, and “△△△△△△△△△△△△△△△△” means a service that the user purchases and makes payments on behalf of the user in a registered company, credit card, and overseas Internet shopping mall, etc., where the user sells the goods in question through international use and overseas remittance, etc., and then delivers the goods purchased on behalf of the user to the domestic destination designated by the user through international transportation and import clearance, after entering the goods purchased on behalf of the user into the overseas intermediate delivery center provided by the “Plaintiff package site”.

15. The plaintiff will act on behalf of the plaintiff for the settlement, service request and order of the following services provided by Japan (AA) and the US BBB Inc. by contract:

(a) Providing information on goods or services by overseas auction sites, overseas shopping sites, overseas sellers, etc. and concluding an import agency contract;

B. Bidding on an overseas auction site via the Plaintiff’s package page

(c) Acts of sending goods, etc. at an overseas auction or shopping site or remittance of the purchase contract amount with a seller;

(d) Entering into a contract for the purchase of goods, etc. at an overseas auction or shopping site or with a seller and entrusting the delivery service of goods or services as an agent;

(e) Overseas sales-related services, such as overseas sales agency and delivery agency for goods;

(f) Article 10 (Application and Conclusion of Contract) of the duties set forth by the Plaintiff’s paro site.

2. In principle, an application for auction and a purchase agency and a contract shall be concluded on the membershipID basis, and in the event of an application for auction and purchase agency of a member, the contract shall be concluded under the following conditions:

(a) When applying for auction and purchase as an agent, using the membership ID registered at the “Plaintiff’s package site”;

(b) At the time of auction, the award was received by the “Plaintiff”, who obtained permission for use in accordance with the procedures set out in the “Plaintiff’s Sampion Site”, using the ID and Sampion.

(c)the time the purchase price was paid after the request for the purchase;

3.The "Plaintiff's package site" shall be deemed to have approved the following terms and conditions, if a member applies for an auction or a purchase agency and the contract is concluded:

(a)A contract with the Plaintiff’s package site is deemed to have been delegated to the Plaintiff for the purpose of auction and purchase of the goods in question;

Article 11 (Payment of Price)

1. The settlement of costs and expenses incurred in the delivery and acceptance of goods, etc. sold by auction and buying agency to the Plaintiff shall be the means of settlement recognized on the Plaintiff’s website, such as credit cards, deposits without passbook, virtual accounts, and cyber money.

5. The terms and conditions of the amount of payment shall include agency fees, local consumption taxes, commodity prices, remittance charges, local delivery charges, and other actual expenses and international delivery charges. The details of the settlement screen and guidance for use shall be specified in the details of the settlement screen.

Article 12 (Change and Revocation of Request for Auction and Purchase)

1.The member will enter into a purchase contract with the sender at the time of winning the contract through an auction from the overseas auction site, and the member will be deemed to delegate to the plaintiff the obligations of the user under this contract.

6. Where the goods the plaintiff wishes to purchase fall under any subparagraph of Article 6 of the terms and conditions, the plaintiff may terminate all of the contracts on the purchase and delivery of the goods in question.

Article 13 (Acceptance, Delivery, or Storage of Goods, etc.)

1. The plaintiff is responsible for taking over goods purchased at the local office abroad, and may use appropriate means of delivery in connection therewith.

3. The plaintiff shall use the method of safe payment in connection with the successful bid goods and the vicarious payment and acceptance of the purchased goods, and the plaintiff shall assume the responsibility if there is a problem in the payment due to the plaintiff's negligence.

7. If a member fails to pay the Plaintiff’s service charge within a designated time after filing an application for purchase, the company may handle the product at will and charge the member for expenses, etc. related to the storage and disposal of the product.

Article 14 (Adjustment of Differences)

3. In the event of a difference between the amount paid by a user and the actual cost incurred by the Plaintiff’s import agency due to a change in the product price, the amendment of the Tariff Schedules, the change in the three categories, the error in computer system, the volume and weight of the goods, etc., the balance may be settled at the second settlement, and in the event of a failure to pay it, the Plaintiff may limit the use of services by its members. The calculation of all the costs shall be subject to various provisions concerning the Plaintiff’s cost

Article 15 (Transport and Customs Clearance)

1. Transportation;

A. The plaintiff as a transport contract agent will provide services for air/ship transportation, import clearance, and domestic delivery from the plaintiff's overseas logistics center to the point of receipt designated by the user.

2. Customs clearance;

A. The Plaintiff, in accordance with the principle of personal import clearance that is imported for personal use by an individual, will serve as a taxpayer and meet the import requirements and carry out customs clearance procedures through a transportation partner.

Article 16 (Return, Exchange and Damage)

1.(b) Members may return and exchange goods, etc. on behalf of the seller, if such goods can be returned and exchanged under the terms and conditions of the transaction of the seller.

2. In the case that falls under paragraph 1, the Plaintiff shall process the return and exchange under the prescribed return and exchange terms.

Article 17 (Scope of Liability)

1. The plaintiff shall compensate the members within the limit of the price of the goods at the time of the purchase of the goods and the cost of the purchase for damages caused by the company's fault in relation to the provision of the service.

○ 11 Deleted.

○ 11. At the right end of the last 11.’ by inserting:

Article 22 of the former Value-Added Tax Act (amended by Act No. 12851, Dec. 23, 2014; hereinafter the same) provides that zero-rate tax shall apply to the supply of services supplied overseas. Moreover, “services supplied overseas” is not whether the other party to the service is a domestic corporation or a foreign corporation, or a domestic place of business of a foreign corporation. In addition, Article 20(1)1 of the former Value-Added Tax Act provides that “the place where the service is supplied is “the place where the service is supplied or the place where the goods are used, such as facilities, rights, etc.” As such, whether the service is subject to zero-rate tax shall be determined on the basis of the place where the service is supplied, if the important and essential parts of the single service supplied by a domestic corporation were performed domestically, the place where the service is supplied overseas shall be deemed domestic (see, e.g., Supreme Court Decision 2004Du7528, Jun. 16, 2006);

○ 12 Correction of “the facts cited in the preceding” by “the facts admitted in the first instance judgment cited by this court, the evidence admitted and adopted by this court, and the statements in B B from 9 to 12(including the number of pages).”

○ 12. 8 pages 12."on the right side, the following addition:

“and services supplied by the Plaintiff to domestic consumers through a purchase agency contract are partially combined with the services supplied in Korea by the Plaintiff to a foreign subsidiary, which are substantially combined with the services supplied overseas by the Plaintiff, and its importance and essential part was performed in Korea. Therefore, it is reasonable to deem the entire services supplied in Korea as a whole. Therefore, only the purchase agency fee for an overseas subsidiary corresponding to the payment for services supplied overseas by the Plaintiff is a transaction subject to zero tax, separate from the Plaintiff’s domestic supply services. The Plaintiff’s assertion on this part is without merit.”

○ 12 up to 12 last directions below 3 to 12

"Third, the plaintiff provides domestic consumers with information on goods and orders through its website, receive, settle and manage orders from domestic consumers, and is in the position of a transaction partner directly responsible for solving such problems as to domestic consumers when the problems such as exchange, refund, and compensation for damages occur after the receipt of foreign goods from domestic consumers. The above services are the part performed by the plaintiff in Korea, which is the part performed by the plaintiff, and it is difficult for domestic consumers to understand information on goods and orders due to the lack of understanding of information on goods and orders and to solve the problem of exchange, refund, and compensation for damages arising from the loss or damage of foreign goods. It is the largest motive and objective for the plaintiff to enter into a purchase agency service contract with the plaintiff. Therefore, even if the part performed by the local subsidiary in the purchase agency service is performed before the receipt of foreign goods from domestic consumers, it is reasonable to view that the part directly performed by the plaintiff in Korea is the most important and essential part in the purchase agency service

○ 13. There shall be no more than 5 parallels: "on the right side" adding:

The Plaintiff’s website explicitly states that the purchase agency fee included in the total expenses paid by the domestic consumers is the Plaintiff’s service fee. Moreover, the conclusion of the purchase contract and payment with the overseas sales store, which is performed by a foreign subsidiary, is merely a part of the purchase agency services that the Plaintiff can directly perform without having a foreign subsidiary, and is merely a part of the purchase agency services entrusted to a foreign subsidiary, and thus, cannot be deemed to be necessarily said to be a service that has no choice but to be performed abroad. Therefore, considering the purpose of the purchase agency contract with the Plaintiff, as seen earlier, when considering the aforementioned purpose of the purchase agency contract with the Plaintiff, the part of the purchase agency services performed by a foreign subsidiary, which is performed by the Plaintiff, is provided to the domestic consumer who is a domestic consumer and its independent function or independent from the services provided by the Plaintiff to the domestic consumer, and is included in the purchase agency services provided by the Plaintiff, but the entire part must be provided to the domestic consumer under Article 16(1)1 of the former Value-Added Tax Act, thereby achieving the purpose of the purchase service for domestic consumers’ use and consumption of domestic goods.

⑤ Article 1 subparag. 13 of the Plaintiff’s Terms and Conditions for Use of Services stipulates that, with respect to the definition and content of the Plaintiff’s services provided by the Plaintiff, a delivery agency-type service (a), an import agency-type service (b), and an import agency-type service (c) provides that the Plaintiff purchases or pays products on behalf of users from overseas sellers, sales sites, etc., and after the Plaintiff entered the said products into an overseas intermediate delivery center, the Plaintiff’s transportation to the domestic destination through international transportation and import clearance. In addition, considering that the Plaintiff’s website simply marks a foreign local subsidiary as the Plaintiff’s local logistics center, domestic consumers who pay purchase agency-type service are parties to the contract and purchase agency-type service (purchase of goods in foreign Internet shopping malls, etc.), and that it is difficult to view that the Plaintiff directly supplies goods from the Plaintiff’s domestic subsidiary to the Plaintiff’s calculation and settlement of foreign goods, international delivery, and customs clearance, and that the Plaintiff directly supplies goods to the Plaintiff’s domestic subsidiary at its own expense. Accordingly, it appears that the Plaintiff’s payment of goods to the Plaintiff’s domestic subsidiary is difficult.

(6) Even if a contract for entrustment between the Plaintiff and an overseas local corporation provides that the sales commission and international shipping commission shall be distributed at a rate of about 50% for profits other than goods cost or international shipping practice cost, it is merely an internal circumstance about the distribution of economic profits between the Plaintiff and an overseas local corporation, and thus, it is difficult to readily conclude that the importance of the services supplied domestically and overseas is equal or separate from that of the services supplied overseas due to such circumstance. In addition, even if the Plaintiff recognized the transportation fee paid to an overseas local corporation as the cost and recognized the international shipping fee settlement, where only the remitted portion is appropriated as revenue or the delivery fee gains are not left, it is merely a problem about the expenses incurred by the Plaintiff in relation to the sales agency services provided to domestic consumers

7) Even if the part supplied domestically by the Plaintiff and the part supplied overseas by the Plaintiff to a foreign subsidiary are distinguishable, the part supplied overseas by the Plaintiff constitutes a part of "import of goods". Under the value-added tax system, the application of the zero-rate tax system is recognized as a matter of principle only for exports under the General Agreement on Tariffs and Trade in order to prevent double taxation in cases where the value-added tax is imposed and collected in terms of production and supply in international trade of goods or services and where the value-added tax is levied and collected in an importing country again in the trade of goods or services, the application of the zero-rate tax system is not consistent with the purpose of the country's policy, such as foreign exchange management and the collection order of value-added tax, even in cases where the consumption of domestic goods is equivalent to the above export, and it is recognized as an exceptional restriction only when it accords with the purpose of the country's policy, such as the promotion of foreign exchange earnings (see, e.g., Supreme Court Decisions 83Nu409, Dec. 27, 1983; 2005Du18).

(8) In the event that part of purchase agency services are entrusted to a foreign subsidiary like the Plaintiff, if the zero tax rate is deemed to apply even if foreign currency equal to the amount of commission is leaked to an overseas subsidiary, it is difficult to deem that the case of an enterprise that directly provides purchase agency services in the Republic of Korea is disadvantageous to the value-added tax of 10% imposed on the entire purchase agency fees, and therefore accords with the principle of fair taxation

○ 13 up to 15 pages 6 up to 15 pages

○ 17. Deletion from 17.0 to 5.0

3. Conclusion

Thus, the part of the plaintiff's claim which is subject to the judgment of this court shall be dismissed as it is without merit. Since the judgment of the court of first instance which partially different conclusions are unfair, the part against the defendant in the judgment of the court of first instance which accepted the defendant's appeal and revoked the part against the defendant in the judgment of the court of first instance,