Cho Jae-2017-west-2195 (2017.08)

The Plaintiff’s benefits recognized on the financial statements cannot be considered as the actual value of services, and thus does not constitute a commercial transaction for value.

Benefits recognized by the Plaintiff on the financial statements are merely adjusted for tax purposes, not for actual services, but for tax purposes, and do not constitute a commercial transaction.

Article 12 of the Value-Added Tax Act (Special Cases for Supply of Services)

2017Guhap69793 Revocation of Disposition of Imposition of Value-Added Tax

OOOO Co.

O Head of tax office

2018.04.03

oly 2018.18

1. The imposition of value-added tax (including additional tax) for each taxable period described in the column of "taxation period" against the plaintiff on each corresponding date as stated in the separate sheet "disposition Date" shall be revoked.

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 is a U.S. legal entity whose head office in the U.S.A. owns 100% shares. AA established the Plaintiff not only in Korea but also a multi-national company that supplies freezing and processing goods, etc. to the world to manage Korean sales, and the Plaintiff is close to a company with no human and material facilities. B. The Plaintiff established a business office in the Republic of Korea around February 1995 (hereinafter “instant business office”). The instant business office (hereinafter “instant business office”). The instant business office is a transaction in which AA imports and sells products related to freezing and freezing (hereinafter “Stockholm”) from AA, and ② AA directly exports the said products to domestic companies, a transaction in which services (hereinafter “instant services”) are provided, such as negotiations of transaction terms, logistics support services, and sales incentives, etc. (hereinafter “services”).

C. AA and the Plaintiff set the final selling price of the products to domestic companies at the same level, and, as in the Stockholm transaction, AA sold the products first to the Plaintiff, and dealt with the accounts as if the Plaintiff sold them to the Plaintiff. During the above accounting process, AA included the Plaintiff’s liability (related unpaid amount) in the account book, and the Plaintiff also included the amount in the account book as the claim (related outstanding amount) against AA against the Plaintiff.

D. The Defendant determined that the business office of this case was the price for the service of this case provided to A in the course of an erroneous transaction of the related accounts accounts related to the unpaid amounts related to A and the accounts of the Plaintiff, and that the business office of this case did not report and pay the value-added tax even though the service of this case was provided for a fee, and thus, imposed the value-added tax and the additional tax as shown in the attached list on the Plaintiff (hereinafter “instant disposition”).

Facts without dispute over the basis of recognition, entry of Gap evidence 1 and 2, the purport of the whole pleadings

2. Relevant statutes;

The entries in the attached Table-related statutes shall be as follows.

3. Whether the instant disposition is lawful

A. Accounting books shall be prepared in order to provide corporate current and potential investors, borrowers, and other creditors with useful corporate financial information. Accordingly, accounting books shall be prepared in accordance with accounting practices generally accepted as fair and reasonable, such as accounting standards, so that they can fairly indicate corporate financial status, business performance, cash flow, and changes in capital by reflecting economic facts and the substance of transactions, and that they can provide information on corporate financial status in good faith to information users (see Articles 29 and 30 of the Commercial Act; hereinafter referred to as the "Korean International Financial Reporting Standards Act").

In light of the characteristics of a juristic person having no substance, it is clear that the accounting book is the most valuable evidence to capture the corporate income subject to taxation. However, it is also true that the accounting book does not reflect the assets of the juristic person as it is, such as where the operator or the manager of a juristic person does not enter the sales profit in the accounting book and separately raises and manages the funds, etc., and in such a case, the tax authority shall make a tax assessment according to the substance regardless of the entry in the accounting book. On the contrary, even if a juristic person recognizes profits in the accounting book, if it did not actually generate such profits, the tax authority may not, in principle, regard it as the corporate income in accordance with the substance over form principle.

B. The Defendant also recognized the fact that the AA and the Plaintiff, and the instant business office conducted accounting in the manner described below, while engaging in Switzerland and Switzerland transactions.

C. As to the profits (the outstanding amount) recorded in the financial statements by the Plaintiff while keeping accounts in the same manner as Stockholm transactions, the Defendant is merely merely a document company, and the actual provider of the instant service is a business office of this case, and thus, the outstanding amount of the related company stated in the financial statements is ultimately counted in the financial statements

The interest in the amount equivalent to the claim was deemed to have been paid as the price for the instant service provided by the instant business office in the course of Obsing transaction.

However, if the price for the instant service is not actually received or scheduled to be received with respect to the supply of the instant service between AA and the Plaintiff notwithstanding the entry in the account book, the supply of the instant service cannot be deemed as the supply subject to value-added tax for the foregoing reasons.

D. In light of the following circumstances, it is insufficient to view that the supply of the instant service to A of the instant business establishment was made in exchange for payment, according to the following circumstances, which can be seen by adding up the respective descriptions of Gap evidence Nos. 3, Eul evidence Nos. 2, 6, and 7 and the purport of the entire pleadings.

(1) AA and the Plaintiff shall prepare consolidated financial statements in the United States and pay the tax by the consolidated tax return system, and the individual financial statements of AA and the Plaintiff shall not be disclosed outside.

② In order to negotiate the terms and conditions of transaction with AA while importing a large volume of capital reduction, etc., such as BB (CC), the Plaintiff paid a large amount of sales incentives to the Plaintiff. However, AA set the same time and the final consumer of Stockholm transactions at the same time, and thus, in terms of the final sales, it seems that there was no difference between the radioactive and Stockholm transactions in terms of the final sales.

Accordingly, AA did not observe the accounting standards when preparing the Plaintiff’s individual financial statements for the convenience of the management of Korean sales, and dealt with the accounts in the same way as Stockholm transactions. AA seems to have managed sales in Korea in a manner that recognizes the same profits as Stockholm transactions, and compared the performance with subsidiaries, etc. of other countries.

③ AA and the Plaintiff accounted as the Stockholm transaction, but, unlike the Stockholm transaction, Ora transaction was fully paid by a domestic company, not the Plaintiff. Nevertheless, in order for AA to recognize only some of the sales profits, such as the Stockholm transaction, in order to meet the balance of lending and borrowing, it is inevitable that the remainder of the sales profits should be accounted as a debt in the amount equivalent to the amount of the sales profits, in order to meet the balance of lending and borrowing. In addition, in order to recognize the sales profits of the same amount as the Stockholm transaction, even though there was no cash, nor there was no profit recognized as the cause of the sales of the products, in order to recognize the sales profits of the same amount as the Stockholm transaction in the account book, the sales profits of the products as the amount of the Stockholm transaction should be accounted as the assets.

In other words, when the substance of the transaction intends to keep accounts like Stockholm transactions, due to the characteristics of the account books prepared by the principle of double-entry bookkeeping, AA and the Plaintiff inevitably face the balance of lending and lending using a specific account. The AA and the Plaintiff use the relevant accounts and the relevant accounts accounts. The relevant accounts and the Plaintiff continued to increase the annual amount, and there was no actual remittance or settlement of accounts for the supply of the instant service between AA and the Plaintiff, and the instant business offices. In light of these circumstances, it is difficult to deem that the Plaintiff has a claim equal to the amount calculated by using the amount appropriated in the relevant accounts amount.

④ The Value-Added Tax Act applies to the supply of services to a foreign corporation having no domestic place of business to obtain foreign currencies, i.e., the export of the services (Article 24(1)3 of the Value-Added Tax Act). A is a foreign corporation having no domestic place of business, and if the business office of this case supplies services for compensation to AA, the zero-rate tax rate may apply: Provided, That in order to apply the zero-rate tax rate to the export of the services, conditions such as receiving the cost of services in Korean currency from the foreign exchange bank (Article 33 of the Enforcement Decree of the Value-Added Tax Act and Article 22 of the Enforcement Rule of the Value-Added Tax Act). In the case of AA, the Plaintiff, who is a related party, received the services of this case without compensation and then received the services of this case from the Plaintiff to exchange large amounts of US dollars into

(5) The Value-Added Tax Act does not provide for denying the supply of services at a low price or free of charge with a related party, except for the case of real estate leasing services for business purposes. However, in the case of corporate tax, the tax authorities may deny a low-price transaction with a related party overseas and determine and correct the tax base and tax amount based on the "normal price" (Article 4(1) of the Adjustment of International Taxes Act). Accordingly, even if the supply of the service of this case was conducted without compensation, the plaintiff as the plaintiff shall pay corporate tax on domestic source income accrued from the business of this case after calculating the "normal price of the service

" Normal price" means a reasonable price applied or determined to be applied to ordinary transactions with persons other than foreign specially related parties (Article 2(1)10 of the Adjustment of International Taxes Act). The Plaintiff did not work to find the arm's length price of the service in the instant case, as it has been accounted for in the same way as Stockholm transactions, and paid corporate tax in the Republic of Korea after adjusting the Plaintiff's sales profit as the price of the service in the instant case is larger than the arm's length price of the service in the instant case. As such, as the Plaintiff's corporate tax adjustment was made for other reasons, it cannot be deemed that the Plaintiff received the price of the service in the instant case from AA. As such, the Plaintiff cannot be deemed to have received the price of the service in the instant case on the ground that the service is not market value, unlike the Defendant's land registration. However, as long as the Value-Added Tax Act does not make it easy to calculate the tax base, it is difficult to view the Plaintiff's claim for the service in the instant case to reflect the market price of the service in the transaction.

(e) The Value-Added Tax Act excludes services provided without compensation from those subject to taxation (Value-Added Tax Act).

12(2). As seen earlier, it is difficult to view that the instant service was supplied for a fee.

Thus, the instant disposition was taken on the premise that the instant service was supplied at a cost.

2.2

4. Conclusion

Thus, since the plaintiff's claim is well-grounded, all of them shall be accepted, and it is so ordered as per Disposition.

partnership.