Seocho 2014Seoul Northern 3769 (2016.05)

The right to motion pictures has been transferred from motion picture companies to companies engaged in cultural industries, and the right of the plaintiff does not change.

The imposition of value-added tax is illegal on the ground that the rights to motion pictures were transferred from motion picture companies to companies engaged in cultural industries, and the status of the plaintiff related to the rights to motion pictures has changed.

2016Guhap58765 Disposition to revoke the imposition of value-added tax

○○○○ Incorporated Company

AA Head of the Tax Office

January 13, 2017

February 10, 2017

1. Of the disposition of imposition of the value-added tax on April 1, 2014 against the Plaintiff on April 1, 2014 by the Defendant, the part of the disposition of imposition of the value-added tax on the first half of 2012 that exceeds thexxx number, and the disposition of imposition of the value-added tax on the second half of 2012 that exceeds thex number shall be revoked

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

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. The Plaintiff planned and produced the film BB (hereinafter referred to as “the film of this case”) jointly with AAA corporation (hereinafter referred to as “motion picture producer”) which is a motion picture producer, as a company that engages in various kinds of video works including motion pictures, such as planning, production, investment, and distribution.

B. On June 15, 2012, with respect to the production and investment of the film of this case with a film company, the Plaintiff, as soon as possible, established ○○○○○○○ Cultural Industries Company (hereinafter “○○○○○”) which is a company engaged in cultural industries under the Framework Act on the Promotion of Cultural Industries, and agreed to transfer all the rights and assets of the film held by the film company to the literature company.

C. The Defendant imposed, on April 1, 2012, value-added taxxxxxxxxxxxxxx and value-added taxxxxxxx on the ground that the Plaintiff transferred the film-related assets of this case to the literature company and received a return under a monetary loan contract and received a payment from external investors due to investments, etc., on which the Defendant did not report the relevant value-added tax (hereinafter “instant disposition”).

D. On June 26, 2014, the Plaintiff filed an appeal with the Tax Tribunal, but the Tax Tribunal dismissed the said appeal on January 5, 2016.

[Ground of recognition] Facts without dispute, Gap evidence 1-2, Gap evidence 2-2, Eul evidence 1-1, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff did not transfer any asset to a literature company, and the right to the film of this case was only transferred from a film company to a literature company, and the Plaintiff’s status is the same as the transfer of establishment even after the establishment of a literature company. Therefore, the instant disposition is unlawful.

B. Relevant statutes

▣ 구 부가가치세법(2013. 6. 7. 법률 제11873호로 개정되기 전의 것)

Article 1 (Taxable Objects)

(1) Value-added tax shall be imposed on the following transactions:

1. Supply of goods or services; and

2. Import of goods.

(2) The term "goods" in paragraph (1) means all tangible things and intangible things which have property value.

▣ 구 부가가치세법 시행령(2013. 6. 28. 대통령령 제24638호로 개정되기 전의 것)

Article 1 (Scope of Goods)

(1) Goods, products, raw materials and fluids provided for in Article 1 (2) of the Value-Added Tax Act (hereinafter referred to as the "Act").

Machines, buildings and all other tangible objects shall be included.

(c) Fact of recognition;

1) The co-production agreement between the Plaintiff and the film company on April 27, 2012

On April 27, 2012, the Plaintiff drafted a joint production agreement with a film company, and its main contents are as follows.

Article 3 (Joint Production, etc.)

The plaintiff and the film company jointly intend to produce the motion picture of this case and perform their respective roles for this purpose as prescribed in the following subparagraphs: Provided, That they will closely consult on the main duties performed by each person for the successful production and promotion of the motion picture of this case:

(a) Movies: Conduct, management, etc. of professional ethics;

B. Plaintiff: Costs of production, global distribution, etc.

Article 4 (Right to Distribution)

(1) All rights to make profits from the film of this case to the world are vested in the Plaintiff.

(2) The Plaintiff shall independently establish and enforce a business strategy, such as sales, distribution agency, and direct distribution, to a third party.

2) The contract between the Plaintiff and the film company on June 15, 2012

On June 15, 2012, the Plaintiff entered into a basic contract for production and use with a film company. The main contents are as follows.

(1) On April 4, 2005, the Plaintiff and the film company: (a) planning and development cost investment contract with △△△△△△△△△△△△△ corporation (hereinafter referred to as “△△△△△△△”); (b) planning and development cost investment contract extension agreement with △△△△△△△△△△△ on April 3, 201; (c) planning and development cost investment agreement with △△△△△△△△△△△△ on May 20, 201; (d) planning and development cost investment agreement on May 20, 201; (e) change agreement on October 5, 201; and (e) consultation on the acquisition of the planning and development cost investment agreement on November 19, 201.

On April 27, 2012, each of the co-production agreements was concluded."(2) The Plaintiff paid USD 000 and KRW 000 to the film company in accordance with each of the above agreements.

Article 1 (Purpose of Contract)

The purpose of this contract is to maximize the interests of both parties by establishing companies engaged in cultural industries for the production and investment of ‘BB(A)', setting forth the rights and obligations between the Plaintiff and the film company and transferring companies engaged in cultural industries for the production of the film to the companies engaged in cultural industries which newly establish rights related to the production of the film held by the film company as of the date of conclusion of this contract, thereby successful production and distribution of the film through companies engaged in cultural industries.

Article 3 (Establishment and Operation of Companies Specializing in Cultural Industries)

(1) In order to produce the instant film and attract investment, the Plaintiff shall promptly establish a literature museum under the Framework Act on the Promotion of Cultural Industries after the date of conclusion of this contract at the time when there is no legal or factual impediment.

Article 4 (Transfer of Rights to Motion Pictures to Companies Specializing in Cultural Industries)

(1) After the establishment of a literature author, the film author shall transfer all the rights and assets relating to the film of this case (hereinafter referred to as “the film of this case”) including the rights of the film author and/or the representative of the film author until that time, including the following rights:

A. Right to planning for the production of the motion picture of this case

B. All rights to film and use the cartoons of the motion picture of this case acquired by the motion picture company for the production of the motion picture of this case

C. Agreement with the contributor and distribution of the motion picture of this case, contract with the supervisor for the production of the motion picture of this case, recording supervision and verification, illumination and illumination, sound supervision and verification, sound supervision and verification, music supervision and verification, license and verification, agreement with all other stamps, and agreement with the film company for the production of the motion picture of this case, such as copyright, neighboring rights, right to use name and other rights corresponding thereto which are reverted to the film company due to the agreement entered into by the film company with respect to the motion picture of this case.

D. Rights of filmers, such as copyright to scenarios of the motion picture of this case

E. The copyright of any video and various related works taken by the time of conclusion of the contract of this case

(f) Other rights and assets currently acquired by a film company for the production of the motion picture of this case or in connection therewith, and all rights and assets acquired by the film company;

(4) When the transfer of “the film-related asset of this case” is completed, the film company is exempt from all obligations to be legally borne by the Plaintiff among the obligations to be borne by the Plaintiff based on the instant contract and the agreement/agreement/agreement/contract as referred to in the preamble of the instant contract, and the film company is to take over the pertinent obligations. The Plaintiff consented to the assumption of the above-exempt obligation and confirmed the fact at the request of the film company.

Article 5 (Investment Performance by Plaintiff)

The Plaintiff shall raise the production cost of the film of this case directly or by attracting a third party investor.

Article 8 (Right to Use the Motion Pictures of this case, such as Distribution of Profits and Distribution)

(2) The net proceeds of the literary work shall be distributed in the following order:

(a) Redemption of 100% of the principal invested in accordance with Article 5 (where multiple investors are involved, repayment shall be made in proportion to the amount of investment);

(b)The amount of 20 per cent of the investment principal of the above subparagraph (a) shall be paid to each investor as the interest, financial costs, and opportunity costs on the investment principal, with the top priority in the ratio of the investment amount.

(c) Each investor shall be allocated 50 per cent of the net profits of the literary profession, excluding the amounts of paragraphs (a) and (b), in return for investment.

D. Motion picture makers and the Plaintiff are allocated 28.5% of the net profits of the literature museum 50% excluding the amount set forth in subparagraphs (a) and (b) in return for co-production, respectively, from the literature museum (i.e., distribution of the portion arising from the production agency is made in proportion to the film company and the Plaintiff 5.7:4.3).

Article 11 (Reversion of Intellectual Property Rights, etc.)

(1) A literaturer shall independently hold and exercise all rights, including intellectual property rights, to devices, creation, development, production, provision, derived information, products, etc. relating to the film of this case, including trademark rights on the title, log, etc. of the film of this case.

(2) In the event that a filmr holds the right to the film of this case in relation to paragraph (1), the filmr shall transfer the film to a literaturer without any separate consideration.

(3) In a case where the production of the film of this case was interrupted due to reasons not attributable to the Plaintiff, or the contract was rescinded as the film of this case, and the film of this case did not reach the completion of the film of this case, all intellectual property rights and other contractual and legal rights and assets related to the production of the film of this case shall be reverted to the Plaintiff (However, after the film of this case was transferred to the literature company, it shall belong to the Plaintiff ultimately at the time of the liquidation of the

3) The contract between the Plaintiff and the film company on June 30, 2012

On June 30, 2012, the Plaintiff entered into a contract for film production, investment, and distribution with a film company. The main contents are as follows.

Article 3 (Raising Funds)

(1) The Plaintiff shall raise the budget for net production of the instant film by lending the film company to the film company or attracting its direct investment or third party investors, and the net production cost budget shall be US$ 42,722,820.

(3) Regarding the method of raising net production cost budget, US$ 15,00,000, out of the pre-paid funds that the Plaintiff paid to the film company prior to the conclusion of this contract, is deemed to have been lent to the literature company, which is a special purpose company for the film of this case to be established in the future by the Plaintiff, at 7.5% per annum per annum, and at interest rate per May 31, 2012.

Article 11 (Reversion of Intellectual Property Rights, etc.)

(1) The filmer shall independently hold all rights, including intellectual property rights, to devices, creation, development, production, provision, derived information, products, etc. in relation to the film of this case, including trademark rights on the title, log, etc. of the film of this case. However, the filmer shall grant the Plaintiff the authority to exercise exclusive rights under the above paragraph.

Article 12 (Right to Use the Motion Pictures of this case, Including Distribution)

(1) The Plaintiff has all the authority to create profits and receive all sales using the intellectual property rights of the instant film including the right to distribute the world to the film of this case, and has the right to determine the sales strategies and profit-making methods necessary for the creation of profits as the sole event of this right.

(2) The Plaintiff shall make a final decision after obtaining full prior consultation with the film company with respect to the opening time, size, marketing strategies, etc. of the domestic and direct distribution of the instant film.

Article 13 (Appointment, etc. of Sales Manager)

(3) The Plaintiff’s remaining amount after deducting the following amount from the total amount of theater sales and value added sales generated from distribution in the overseas direct distribution area, i.e., net sales from overseas direct distribution, i.e., within 90 days from the date of the first closing of the business, within 90 days from the date of the second to fourth preceding settlement, and every one year from the date of the fourth settlement, shall be deposited into the sales management account at the last day of the following month.

4) On October 1, 2012 between a film company and a literature company

On October 1, 2012, filmers and literary writers entered into an asset transfer agreement, and the main contents thereof are as follows:

Article 1 (Purpose of Contract)

The purpose of this contract is to transfer all the rights and assets held by the film company in relation to the film of this case (hereinafter referred to as the "motion picture of this case") to the literature company, and to provide for the rights and duties and relevant matters between the film company and the film company, and to produce and distribute the motion picture of this case in a successful manner through the literature company.

Article 2 (Emotion picture-Related Assets of this case)

(1) The film-related assets of this case include the following rights:

A. Right to planning for the production of the motion picture of this case

B. All rights to film and use the cartoons of the motion picture of this case acquired by the motion picture company for the production of the motion picture of this case

C. The agreement with the contributor and distribution of the motion picture of this case, the agreement with the film company for the production of the motion picture of this case, the photographer's supervision and verification of shooting, illumination and illumination, sound supervision and verification, sound supervision and verification, music supervision and verification, license and verification, agreement with all other stamps, and the agreement entered into by the film company for the production of the motion picture of this case, such as the scenario writing agreement entered into with the film company for the production of the motion picture of this case, and the agreement entered into by the film company for the production of the motion picture of this case, including copyright, neighboring rights, right to use name and other rights corresponding thereto.

D. Rights of filmers, such as copyright to scenarios of the motion picture of this case

E. The copyright of any video and various related works taken by the time of conclusion of the contract of this case

F. All intellectual property rights to devices, creation, development, production, provision, derived information, product, etc. related to the film of this case, including trademark rights to the title, log, etc. of the film of this case

(g) Other rights to produce, screen, distribute and use the motion picture of this case or any other rights and assets acquired by a motion picture company at present or in connection therewith and acquired in the future (including legal status in existence and interests and status in administrative procedures);

Article 5 (Performance of this Agreement)

(3) The literaryian shall be exempted from the following obligations owed by the film company to the Plaintiff:

Debt Principal: US$ 29,500,000 and US$ 1,500,000

Article 6 (Other Agreed Matters)

(1) The film company, regardless of the completion of the individual transfer process of the film-related assets of this case, recognizes the film company as the holder of the film-related assets of this case after the date of its implementation and shall not raise any objection thereto in the future.

5) On November 7, 2012 between the Plaintiff and the literature museum

On November 7, 2012, the Plaintiff entered into a film investment contract with a literature museum, and its main contents are as follows.

Article 3 (Raising Funds)

(1) The net production cost budget shall be determined as US zzz dollars.

(2) The Plaintiff shall make an investment of USD 000 as an equity investment in the film of this case (hereinafter referred to as “investment”) in literature companies. However, the payment method of the investment amount shall be as follows:

A. In accordance with a contract on the production of motion pictures, investment, and distribution of profits concluded by the Plaintiff and the film company on June 15, 2012, the film company recognizes that the Plaintiff paid USD 000 to the film company by the date of the conclusion of this contract, was directly invested in the film company.

(3) The literaturer will raise the remainder except the investment funds from the budget of the above net production cost in any of the following ways:

A. In accordance with a contract on production investment and profit-sharing, the literature company shall bear directly 7.5% of the annual interest rate from May 31, 2012 to the date of full payment with respect to loans of USD 000 owed by the film company to the Plaintiff, and the interest rate of USD 7.5% from May 31, 2012 to the date of full payment.

(4) The literaturer may attract investment from a third party within the scope of the investment amount, only if it has agreed in advance with the Plaintiff.

(5) The Plaintiff is exempted from the obligation to raise investment funds within the scope of the amount invested by the third investor, and the Do Governor shall, without delay, pay to the Plaintiff the amount invested by the third investor within the scope of the amount of investment funds actually received from the Plaintiff, and the same shall also apply to the case where

Article 8 (Completion of Production of Motion Pictures, Distribution, P&A; Funding of Costs)

(1) The literaturer must complete the production of the instant film in accordance with the production schedule.

(2) Shall make every effort to conclude a distribution contract with distributors in order to maximize profits, and endeavor to ensure that the film of this case is distributed at the optimal time of distribution.

Article 11 (Distribution and Settlement of Profits)

(1) The authority to receive all sales generated from the film of this case shall be the third party who entrusted the agency business, and the reporter shall conduct the profit distribution and settlement in accordance with the formula for calculating the net profit of No. 5 in the manner of entrusting the agency business directly or to a third party.

(5) If a literature company fails to pay an amount of settlement to investors on the date of settlement, the literature company shall additionally pay damages for delay at the rate of 15% per annum from the date of the original settlement to the date of actual payment for the amount of settlement that has not been paid to investors.

Article 15 (Statement and Guarantee)

(1) A literaturer confirms that all intellectual property rights without any factual and legal defect in relation to the film of this case are secured through legitimate procedures and methods.

Article 16 (Reversion of Intellectual Property Rights)

In relation to the film of this case, the literature shall independently hold all intellectual property rights on the devices, creation, development, production, provision, derived information, product, etc. of the film of this case, and in particular, the rights to produce and use copyrighted works by means of translation, transformation, painting, cinematographicization, performance, etc., and the rights to sell them domestically and abroad, including the rights to use, Sponor, Sponor’s license, books and other publications sales rights, film, domestic, overseas metreck, film, electric and spinfine-off, television dramaization, television film and animation, and animation, and all rights to produce and sell copyrighted works in the Republic of Korea and abroad, including rights to produce and sell copyrighted works in the Republic of Korea and abroad.

6) On May 31, 2012, the Plaintiff received KRW 000,000 converted the amount of USD 00,000, which was converted into the loan, into Korean won on June 1, 2012 between the Plaintiff and the film company on June 30, 2012, between the Plaintiff and the film company, and the film company and the film company on October 1, 2012. The Defendant imposed value-added tax on the Plaintiff, including the said amount as the value-added tax base for the first year of 2012.

7) ◇◇◇◇◇◇◇투자조합은 문전사에 2012. 11. 27. 7,590,800,000원, 2012. 12. 28. 3,215,100,000원의 투자금을 각 지급하였고 원고는 문전사로부터 2012. 11. 30. 및 2012. 12. 28. 위 각 투자금 상당액을 지급받았는데 피고는 위 각 금액을 2012년 제2기 부가가치세 과세표준에 포함하여 원고에게 부가가치세를 부과하였다.

8) Even after the establishment of a literature museum, the Plaintiff issued a tax invoice with the supplier as the Plaintiff and the recipient as the Plaintiff, and preferentially reverted to the Plaintiff with respect to the above profits.

[Ground of recognition] Facts without dispute, Eul evidence Nos. 1 through 4, Eul evidence No. 9, Eul evidence No. 10-1 and 2, the purport of the whole pleadings

D. Determination

The Defendant asserted that the Plaintiff transferred the Plaintiff’s right to the film of this case, in particular, the right to the film of this case to the Plaintiff’s 1 and all of its profits by using the right to the film of this case. However, it is insufficient to acknowledge that the Defendant submitted all evidence. Rather, the Plaintiff and the film company entered into a basic contract on the production and use of the film of this case, i.e., “the right to the film of this case” owned by the film company as of June 15, 2012, as of the date of the conclusion of this contract. (2) Since the Plaintiff entered into an agreement on the transfer of the film of this case’s 1 and 2, it is difficult to view that the Plaintiff had the right to the film of this case’s 1 and 2 as the transfer of the right to the film of this case’s 1 and the right to the film of this case’s 1 and the right to the film of this case’s 2 and the right to the film of this case’s 2 and the right to the film of this case’s 2.

3. Conclusion

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