Cho Jae-2015-west-536 ( October 21, 2016),

The issue amount is subject to exemption from surtax in return for the supply of books.

The key amount is not sufficient to be considered as the price for the supply of educational services in accordance with the business franchise between the plaintiff and the franchise business operator, and it seems that it was given and received in return for the teaching materials supplied by the plaintiff.

Article 26 (1) 8 of the Value-Added Tax Act

2016Guhap60775 Disposition to revoke the imposition of value-added tax

A Stock Company

The director of the tax office

April 21, 2017

June 2, 2017

1. The Defendant’s disposition of imposition of KRW 46,716,540, KRW 540, KRW 2,549, KRW 549,90, KRW 2,010, KRW 46,109, KRW 54,59, KRW 990, KRW 61,61, KRW 61,60,80, KRW 47,012, KRW 47,017, KRW 700, KRW 49, KRW 49, KRW 469, KRW 2013, KRW 59, KRW 980, KRW 2,40, KRW 454, KRW 150, KRW 2013, KRW 25, KRW 649, KRW 206, KRW 2014, KRW 2014, KRW 2014, KRW 274, KRW 2084, KRW 2014, KRW 3784, KRW 2014.

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

Cheong-gu Office

The purport of the claim stated in the complaint shall be as follows: "The defendant's statement of claim shall be deemed as 46,48,260 won, 2010, 22,54, 583,440 won, 2011, 45, 869, 850 won, 85, 826, 980 won, 201, 2011, 46, 756, 700 won, 2012, 2012, 46, 49, 374, 080 won, 2013, 37,376, 140 won, 2,204, 2013, 32, 325, 2080 won, value-added tax, 2014, 61,826, 2011, 61,826, 937, 503 of receipts or receipts.

1. Details of the disposition;

A. The Plaintiff is a company established in August 199 for the purpose of research and dissemination of the early, middle, and high-level certified learning areas.

B. From around 2010 to 2014, the Plaintiff entered into a “A Gifted Education Center Operating Contract” with its franchisees (hereinafter “instant operating contract”). From the franchisees who entered into a contract from around 2010 to around 2011, the Plaintiff was paid KRW 4 million each year from the franchisees who entered into the contract, KRW 2 million each year, KRW 5 million from the franchise business operators who entered into the contract from around 2012 to 2014, and KRW 3 million each year from the date of entering into the contract (hereinafter “instant issues”).

C. When the Plaintiff reported value-added tax to the Defendant from January 2010 to February 2014, the Plaintiff reported the instant key amount as sales exempt from value-added tax on the ground that it constitutes “supply of books” under Article 26(1)8 of the Value-Added Tax Act [Article 12(1)8 of the former Value-Added Tax Act (wholly amended by Act No. 11873, Jun. 7, 2013)].

D. On July 2, 2015, the Defendant: (a) deemed that “the instant key issue amount is a franchise fee paid as consideration for the operation right, trade name and trademark use right, teachers’ education and education programs know-how, etc., and thus, constitutes subject to value-added tax; (b) rendered dispositions on July 2, 2015 to the Plaintiff on January 46, 2010, KRW 46,716,540; (c) February 54, 2010, KRW 54,859,90; (d) January 46, 2011; (d) KRW 61,60,80; (b) February 61, 2011; (c) KRW 47,017,700; (d) February 49, 659, 460; (d) Value-Added Tax; and (d) KRW 164,205,2045,2045.

[Reasons for Recognition] Facts without dispute, Gap 1, 4, 5 evidence, Eul 1 evidence, the purport of the whole pleadings

2. Relevant statutes;

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

3. Whether the instant disposition is lawful

A. Summary of the plaintiff's assertion

In light of the contents of the instant operating agreement, the Plaintiff’s business type (franchising for distribution of goods), etc., the key value of the instant case ought to be considered as the price for the supply of books subject to value-added tax exemption. Even if the key value of the instant case is a franchise fee, the amount equivalent to the appropriate wholesale price of books, etc. supplied by the Plaintiff

B. Facts of recognition

1) The Plaintiff has been engaged in the business of publishing learning sites, etc. and selling them through franchisees who are not intermediate stores.

2) A franchisee used the Plaintiff’s learning site as a teaching material, but operated a private teaching institute at each of its own facilities. A franchisee paid the Plaintiff the teaching material cost when receiving teaching materials from its members, and the Plaintiff paid a certain fee to the Plaintiff.

3) The purpose of the instant operational contract and the entry of the pertinent part of the issues in the instant operational contract are as follows.

(Contract from 2010 to 2011) (Contract from 2010 to 2012 shall be '5 million won', and '2 million won' shall be '3 million won', as well as 'the contract from 2010 to 2012

Article 1 (Purpose of Contract)

B shall be supplied with learning materials from A, manage members, maintain the superior advantage in competition with similar enterprises, and deposit A with A after receiving the proceeds of learning designated by A, and A shall pay B the proceeds of sale agreed upon under a contract.

Article 7 (Expenses Incurred in Executing Contract)

1.B shall pay 4 million won at the initial contract and shall pay 2 million won per year thereafter as consideration for the provision of books, papers of information, and other materials related to education, which are published by A, together with the conclusion of this contract.

2. Expenses following the conclusion of a contract shall be paid to A each year at the time of re-contract;

3. If the period of this contract expires after the conclusion of this contract, the expenses for the conclusion of the contract shall not be refunded as a penalty for breach of contract. In addition, the expenses for the establishment of the Education Center and for the conclusion of the contract shall not be refunded as a penalty for breach of contract, even if the establishment of the Education Center is postponed or otherwise it is impossible due to

4.In addition, B shall be liable for damages if B incurred during the period of the contract to A.

5.B shall establish a computer system to use A’s computer program and, when constructing a system, shall meet the designation of A.

6. The expenses incurred in the establishment, maintenance, and repair of interiors, paintings, etc. required at the time of the establishment of the Education Center shall be borne by B, and A shall not participate in all the related enterprises or expenses: Provided, That the interiors and signboards of the Education Center shall be built in accordance with the standards of A without fail;

(Contract after 2013)

Article 1 (Purpose)

The purpose of this Agreement is to prescribe necessary rights, obligations, etc. between the parties in relation to obtaining permission to use trademarks, etc., permission to use a trademark, etc., teaching materials, educational programs, membership management methods, etc. from A after a franchisee (hereinafter referred to as "B") establishes the Education Center as "0 Education Center" in agreement with the plaintiff (hereinafter referred to as "A").

Article 9 (Expenses Incurred in Executing Contract)

1. B shall pay five million won of the initial franchise at the time of the initial contract to the depository designated by A after entering into the contract, as consideration for the provision of books, information papers, and other education-related data to be published by A along with the conclusion of this contract, and A shall deposit the initial franchise fee with the depository for a period of two months from the date of concluding the first franchise agreement. At the time of re-contract on a yearly basis, three million won shall be paid to the financial institution designated by A.

(hereinafter omitted)

4) Upon entering into a franchise agreement with a franchisee, the Plaintiff provided the franchisee with approximately KRW 200 of the learning teaching materials, approximately KRW 2,000 of the teachers’ instruction books, KRW 2,00 of the entrance information data collection, and various competition problem pool. The learning teaching materials provided by the Plaintiff are sold at least KRW 7,00 per ticket.

5) B engaging in franchise business of a private teaching institute is receiving KRW 30 million in the initial franchise fee (hereinafter referred to as “Franchis fee, educational expenses, and Scencing education expenses”), and C is receiving KRW 165 million in the initial franchise fee (the cost for obtaining the license to operate the Franchising Institute, the cost for obtaining the license to use the business marks, such as the trademark, the first education cost, the cost for the first goods, and the first teaching material cost), and D receives KRW 50 million in the initial franchise fee, and E receives KRW 50 million in the initial franchise fee of KRW 30 million and KRW 50 million in the initial franchise fee of KRW 30 million. The aforementioned business entity supports and supervises the construction of the initial facility, the test, and continuous management, supervision, and supervision of the franchisee.

[Reasons for Recognition] Facts without dispute, entry of Gap 4, 7, 9 through 17, and the purport of the whole pleadings

C. Determination

1) In full view of the following circumstances revealed by the above facts, Gap evidence No. 4 and the purport of the entire pleadings, despite the purpose of the instant operating agreement (such as granting trademark use permission, teaching materials, educational programs, and membership management methods) alleged by the defendant, and the terms and conditions of the relevant agreement (such as granting of education training, granting of ID to the members registered with a franchisee, offering of problems through computer programs, and conducting academic achievement evaluation, etc.), the instant key amount is insufficient to regard the instant key amount as the proceeds from the supply of educational services in accordance with the business type franchise between the plaintiff and the franchise, and it seems that the plaintiff received them in return for the teaching materials supplied by the plaintiff.

(1) The instant operational contract entered into between the Plaintiff and the franchisee expressly states that the instant key amount is “the price for providing material related to education, such as a fixed term book, information book, etc. issued by the Plaintiff.” The Plaintiff and the franchisee considered the first (or each year) amount to be paid as an important factor in the instant operational contract. If the agreement explicitly stated that the money is the price for book, etc., the Plaintiff and the franchisee clearly perceived that the money is the price for book, etc. supplied by the Plaintiff.

Even if the price per ticket of the teaching materials supplied between the Plaintiff and the franchisee was determined and the amount was determined not by multiplying the price by the number of tickets supplied by the Plaintiff, but by the price for the teaching materials supplied by the Plaintiff, the price for the booker who received the materials shall be the price for the materials provided, barring special circumstances, such as where the amount would inevitably be deemed to include the franchise fee, and barring such circumstances, barring any particular circumstance, the amount would be the price for the books supplied, and the amount after deducting the wholesale price of the materials provided shall not be deemed as the franchise fee. However, the value of the teaching materials and the guide books for teachers provided by the Plaintiff exceeds the key amount of the instant case (the guidance books for school use would not

Although it is not determined, the basic contents of the study materials are the same as those of the study materials, and the explanation for students are added, so the market price can be seen as at least 7,00 won per right.

Article 22(1) of the Civil Act provides that the Plaintiff shall participate in the education conducted by the Plaintiff and use the Plaintiff’s computer program to the franchisee. However, the Plaintiff may be deemed as an incidental provision for the sale of teaching materials, etc. through the franchisee.

Applicant The key issue amount is the amount less than the franchise fee received by other companies that run the franchise business of a private teaching institute. Unlike other companies, the Plaintiff does not participate in the first facility construction of a franchisee and does not continuously manage and supervise the franchisee.

2) The value-added tax on the instant key amount falls under the category of “price for the supply of books” under Article 26(1)8 of the Value-Added Tax Act. Nevertheless, the instant disposition against which the Defendant imposed value-added tax by deeming the instant key amount as a franchise fee is unlawful.

4. Conclusion

The claim of this case is justified, and it is so decided as per Disposition.