National Tax Service Review Income 2013-0051 (2013.09.04)

Whether income from monetary lending is business income must be determined in light of social norms.

The issue of whether income from a lending of money is a profit for non-business loan depends on whether the lending of money is a business, and the issue of whether the lending of money constitutes a business shall be determined in light of social norms, considering all circumstances, such as profit-making, continuity, repetition, and the length of the trading period.

Article 16 of the Income Tax Act, Article 19 of the Income Tax Act

2013Guhap15607 Disposition of revocation of imposition of global income tax, etc.

Ma-○

○○ Head of tax office

August 13, 2014

October 22, 2014

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

On April 12, 2013, the Defendant revoked each disposition of imposition of KRW 00,00,000 among the global income tax for the tax year 201, the global income tax for the tax year 2010, KRW 00,000 among the global income tax for the tax year 2009, KRW 00,000 among the global income tax for the tax year 2009, KRW 000,000 among the global income tax for the tax year 2008, KRW 00,000 among the global income tax for the tax year 207, and the global income tax for the tax year 200,000,000 among the global income tax for the tax year 206, and KRW 00,000,000 among the global income tax for the tax for the tax year 205.

1. Details of the disposition;

A. The Plaintiff borrowed money from around 2005 to the end of 2011 to received interest from the borrower. The details are as follows.

B. On April 12, 2013, the Defendant considered the Plaintiff’s income under a interest agreement between the Plaintiff and the borrower as interest income, which is a non-business loan interest income under the Income Tax Act, and calculated the unreported real estate rental income as the estimation. On April 12, 2013, the Defendant imposed the Plaintiff the global income tax of 00,000,000,000 global income tax of 201,000 global income tax of 2009,000,000 global income tax of 2008,000,000 global income tax of 207,000,000,000 global income tax of 206,000,000 global income tax of 205,000,000 global income tax of 205,000,000 global income tax of 200,000 additional tax (including separate notice).

C. The Plaintiff appealed and filed a request for examination with the Commissioner of the National Tax Service on June 5, 2013, but was dismissed on September 4, 2013.

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1, 2, 3, Eul evidence Nos. 1 and 2 (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

(a)the plaintiff's assertion;

Since 2005, the plaintiff had been engaged in the price business against many and unspecified persons, and 2005

Until 2011, 40 billion won has been loaned to 40 persons in total to 40 billion won. In light of the number of borrowers and the amount of loans, it shall be deemed that the Plaintiff continuously, repeatedly, and for a long-term profit-making purpose in light of the number of borrowers and the amount of loans. As such, the income accrued from the above loan shall be deemed business income, not interest income, under the Income Tax Act. In case of business income, the Defendant must levy tax by deducting

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

The issue of whether the income from a lending of money is a non-business loan under Article 16 (1) 11 of the Income Tax Act or a business income under Article 19 (1) 11 of the same Act depends on whether the lending of money constitutes a business under the same Act. The issue of whether it falls under a business under the business under the same Act shall not be determined entirely depending on whether it has claimed to be a purchaser externally, such as obtaining the approval of the Minister of Finance and Economy or completing the business registration under the Short-Term Finance Business Act, but rather, on the basis of whether it has claimed to be a purchaser, the determination shall be made in light of social norms, in light of social norms, such as the profit-making nature, continuity, repeatedness, the length of the transaction period, the amount of the loan and all other circumstances (see, e.g., Supreme Court Decision

In light of the above legal principles, we examine whether the income subject to the disposition of this case is interest income or business income under the Income Tax Act, and examine the following circumstances, i.e., the Plaintiff’s assertion to be a payment business entity, such as the completion of business registration related to the payment business; ② the Plaintiff did not seem to have been equipped with human and physical facilities related to the payment business; ③ the Plaintiff borrowed funds to 31 persons and received interest if it was excluded from duplicate borrowers during 7 years from 2005 to 2011; and the number of borrowers is difficult to be deemed to be more than the loan period. In full view of the following circumstances, the materials submitted by the Plaintiff are insufficient to deem that the Plaintiff’s repetition, continuity, and business nature is recognized; and there is no other evidence to acknowledge this otherwise.

Therefore, income earned by the Plaintiff from a monetary loan falls under interest income under the Income Tax Act.

Since it is reasonable to see the Plaintiff’s assertion, the Plaintiff’s assertion is without merit.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit. It is so decided as per Disposition.