District Court-2015-Guhap-9501 ( November 15, 2016)

Whether the film producer belongs to the refund of taxes paid by the government of the Republic of Korea and the payment for the film production service is made

The refund money of this case received by the Plaintiff from the Republic of Korea shall be deemed substantially attributable to the Plaintiff, the producer, and it shall not be included in the tax base of value added tax on the supply of film production services to the non-party company, the investor.

Article 14 of the Framework Act on National Taxes and Article 13 of the Value-Added Tax Act

2016Nu78396 Revocation of Disposition of Imposition of Value-Added Tax, etc.

New**Co.*

*The Director of the Tax Office

Suwon District Court Decision 2015Guhap9501 Decided November 15, 2016

June 29, 2017

August 17, 2017

1. The defendant's appeal is dismissed.

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

1. Purport of claim

The Defendant’s disposition of imposition of KRW 321,94,342 and penalty tax of KRW 141,226,718 against the Plaintiff on May 15, 2014 is revoked.

2. Purport of appeal

The judgment of the first instance is revoked. The plaintiff's claim is dismissed.

1. Details of the disposition;

This Court's explanation is the same as the corresponding part of the judgment of the court of first instance (as stated in the corresponding part of the judgment of the court of first instance (as stated in the second to third to tenth) except that the second to fifth of the judgment of the court of first instance "**** 195,30***)" as "*** 195,30*)". Thus, this Court cites it in accordance with Article 8 (2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act.

2. Whether the disposition is lawful;

A. The plaintiff's assertion

1) As the Plaintiff and the Nonparty Company agreed to vest the instant refund in the Plaintiff, and explicitly stated that the instant refund was excluded from the manufacturing cost in the contract, there is no room to deem that the instant refund was actually reverted to the Nonparty Company and re-investment in the Plaintiff.

2) Inasmuch as the instant refund is not a refund received from the non-party company, but is a refund received from the government of the Republic of Korea, the Plaintiff cannot be deemed as the payment for the services provided to non-party company with film production services and received from the company. The instant refund should be excluded from the value-added tax base, as public subsidies under Article 13(2)4 of the Value-Added Tax Act.

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) According to the Plaintiff’s 9, 10, 12, 13, and 3 and 4: (a) Nonparty Company’s 1 and Nonparty Company’s 15 June 2012 agreement (No. 9) entered into between the Plaintiff and Nonparty Company (hereinafter “Non-Party 2”) / [Attachment 4] production cost of the film in question, reflecting the factors for modifying the existing budget (i) production cost of the film production cost of this case / 200, the Plaintiff and Nonparty Company’s 2000 U.S. dollars were to be determined by mutual agreement. (b) production cost of the film production in this case should not be deducted for the purpose of calculating the amount of net refund paid to Nonparty 2, 200,000, excluding the Plaintiff’s TS-2’s 30,000,000,000,0000,000). The Plaintiff’s 230,000,000,000.

The Defendant, based on the above circumstances and the fact that the refund money of this case was paid at the film production cost, was actually reverted to the non-party company, and the Plaintiff issued the instant disposition to the effect that it was sold again by the non-party company to which it was invested.

2) However, in full view of the evidence mentioned above and the evidence stated in the evidence Nos. 5 and 11 as well as the testimony of the witness at the appellate court, it is difficult to readily conclude that the instant refund was actually reverted to the non-party company solely on the grounds that the Defendant was the ground of disposition, and rather, deeming that the instant refund was actually reverted to the Plaintiff not only in the form and appearance, but also in substance, accords with the substance of the transaction relationship related to the production of the film. The Defendant’s assertion that the instant refund was substantially reverted to the non-party company is reconsumed in excess of the limit of the substance over form under Article 14 of the Framework Act on National Taxes, and thus, it is difficult to accept the principle of no taxation without law, since

A) The Plaintiff and Nonparty Company entered into a contract on June 30, 2012 for the production of the instant film with the contract on June 15, 2012, and the contract on June 15, 2012 (basic contract on the production and utilization of △△△△△△△), as known in the aforementioned item, is a basic contract for the production and utilization of the instant film, and the contract on June 30, 2012 (contract on the production, investment, and distribution of the instant film) is a contract which sets forth the specific contents of the production, distribution of the instant film. However, in relation to the production cost of the instant film, both contracts are concurrently existing. According to the contract on June 15, 2012, the Plaintiff and Nonparty Company concluded a contract on June 15, 2012 with Nonparty Company and the Plaintiff on June 21, 2012, which subsequently takes precedence over the contract on the production and distribution of the instant film, and thus, it is reasonable to interpret that the contract would take precedence over the contract.

At the time of entering into a contract on June 15, 2012 and a contract on June 30, 2012, the SouthCC participating in the overseas investment production project of this case as a witness with the overseas investment team team leader's duties, stated to the effect that the Plaintiff prepared a film to be invested in a foreign country as a plan to receive an initial investment, and that it was urgent that the Plaintiff requested the investment of the non-party company, and that the production cost was entered into a film with a large amount of production cost, so the production itself should not be released if it was immediately produced, and that the production should be promptly released, and the relevant contents were collected as a basic contract on June 15, 2012 by supplementing the parts that were neither the basic contract nor the specific contents were stated. In light of the aforementioned circumstances, it is reasonable to interpret the aforementioned contract to the effect that the agreement was concluded on June 30, 2012, first of all, taking into account the details of the contract as seen earlier.

B) From June 15, 2012, the term "(1)" in Section 1 (2) of the Special Agreement provides that "the production costs of the above (1) shall not exceed US$00,000 (USD 40,000,000), excluding rebates (Tax), but the main text and proviso are applicable to the non-party company." However, when the proviso provides that "all rebatess arising after the conclusion of this Agreement shall belong to the non-party company, it may be interpreted that there are logical provisions inconsistent with each other as a structure of principles and exceptions. In other words, if the proviso provides on the premise that the "bubal rebates rebates" belongs to the non-party company, the term "Lib" in the main sentence may be interpreted as belonging to the plaintiff. In conclusion of the Agreement on June 15, 2012, the Plaintiff is already expected to be entitled to receive the refund of this case from the co-subsidiary government, and even if having received the refund through some co-subsidiarys, it seems naturally included in the proviso of this case.

C) On June 30, 2012, the Plaintiff and Nonparty Company agreed to deduct the instant refund from the net production cost when the net production cost is settled, and Article 7(4) of the same contract provides that “the Plaintiff shall settle actual expenses for the use of the net production cost, notify the Nonparty Company thereof, and the Plaintiff shall issue a tax invoice to the Nonparty Company based on the settlement details.” However, as seen earlier, as seen earlier, the Plaintiff issued a tax invoice with the amount of the production cost that the Plaintiff received from the Nonparty Company at the time of the receipt of the film production cost at the time of the film production cost, deeming the time of the receipt of the production cost as the time of the film production. Accordingly, the Plaintiff appears to have agreed to issue a tax invoice based on the actual production cost that was not included in the instant refund from the Nonparty Company. Accordingly, it is reasonable to interpret that “the Plaintiff between the Plaintiff and the Nonparty Company excluded the instant refund from the net production cost that the Plaintiff would actually pay to the Plaintiff the Plaintiff the refund amount under the premise that the Plaintiff would not actually pay the refund amount to the Plaintiff.

라) 실제로 이 사건 영화의 정산서에서 소외회사의 투자지분인 '에쿼티투자금'을 산정함에 있어서도 이 사건 환급금은 제외되어 있다. 즉, 이 사건 영화의 정산서에 대한 감사보고서(갑 제11호증) 제14쪽에 의하면, 원고와 소외회사가 지출한 순제작비 합계액은 USD 38,760,605로 집계되었는데, 이 사건 환급금 USD 3,278,889는 순제작비 집계액에서 차감되었고, 순제작비 확정액은 USD 35,481,716(= 38,760,605 - 3,278,889)으로 되었다. 그리고 위 순제작비 확정액인 USD 35,481,716을 기준으로 부채에 해당하는 '선리쿱조달금'을 USD 15,000,000으로 하고, 자본에 해당하는 '에쿼티투자금'을 USD 20,481,716으로 정산하였다.

E) The refund money of this case was refunded value-added tax paid by the Plaintiff to the non-party company in relation to the production cost incurred by the Plaintiff through the co-subsidiary. Thus, it is not the money belonging to the non-party company that is merely a domestic investor, but the money of the nature that will be reverted to the Plaintiff that actually engaged in the film production work in the co-nose. Moreover, it is not the non-party company, but the non-party company did not have any legal relationship with the non-party company. If the non-party company appears to have paid the amount corresponding to the refund money of this case to the Plaintiff as the proceeds of the film of this case, it shall be deemed that the Plaintiff received the refund money of this case and donated it to the non-party company and invested it again in the non-party company. It is difficult to see that the Plaintiff

F) It is reasonable to recognize the instant refund as having already been included in the entire production cost as the tax expense received during the production period. It cannot be recognized as the sales revenue generated in return for goods and services.

G) The Defendant agreed to make full investments in the production of the film of this case in the production cost of the film of this case, and the third party, other than the non-party company, did not actually invest in the production cost of the film of this case. If the refund money of this case was not paid due to changes in the policy of the government, the non-party company should additionally invest in the production cost of the film of this case. Thus, the non-party company should be deemed to have paid to the Plaintiff in return for the production of the film of

However, it cannot be deemed reasonable to levy taxes on the assumption that the situation actually occurred, and since the non-party company did not actually pay the amount corresponding to the refund of this case to the plaintiff as the production cost of the film of this case, the above argument by the defendant is not acceptable (However, the above argument by the defendant can be understood in terms of the sum of the production cost that the non-party company actually paid to the plaintiff and the refund of this case. However, among the total production cost of the film of this case, the costs paid by the non-party company to the plaintiff as the price for the production of the film of this case

F) In addition, where a supplier receives money from a third party who is not a person who receives a service in relation to the supply, it may be included in the tax base for value-added tax if it is in a quid pro quo relationship. However, if it is separate from the pertinent supply, it is related to other supply between a third party and a supplier, and it cannot be deemed that it is in a quid pro quo relationship, it shall not be included in the tax base for value-added tax on the relevant supply (see, e.g., Supreme Court Decision 2014Du144, Jun. 23, 2016). However, as seen earlier, the instant refund is based not on the contract for film production service between the Plaintiff and the non-party company, but on the policy for refund of the amount of tax to the Plaintiff of the zeco Government. In this regard, the instant refund cannot be included in the tax base for value-added tax on the supply of film production services to the non-party

3) Therefore, the disposition of the instant case on a different premise is unlawful, and the Plaintiff’s disposition pointing this out is inappropriate.

The argument is with merit.

2. Conclusion

Since the judgment of the first instance is justifiable, the defendant's appeal is dismissed as it is groundless.