Cho High Court Decision 2008Du2722 ( November 24, 2008)

The legitimacy of the assertion that the sales agency fee was paid by the business operator

Considering that the Plaintiff bears all direct and indirect expenses necessary for the sale of buildings, including personnel expenses related to public relations helpers, all expenses for the operation of model helpers, personnel expenses for business employees, expenses for the management of business employees, etc., and that the sales agency fee was paid as a business operator.

The contents of the decision shall be the same as attached.

1. The plaintiff's claim is dismissed.

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

"The defendant's duty to pay value-added tax on April 1, 2008 to the plaintiff is only limited to managing and supervising the sales team employed by the company as a subordinate to the sales office provided by the first period of value-added tax 492,219,350 won for the plaintiff on April 1, 2003. Thus, it is not a "business operator" under Article 2 (1) of the former Value-Added Tax Act (amended by Act No. 9268 of Dec. 26, 2008; hereinafter referred to as the "Act"), and even if the "business operator" is a "business operator", the service provided by the plaintiff constitutes a "business operator" under Article 12 (1) 13 of the Act, Article 35 (1) 1 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 18175 of Dec. 30, 2003; hereinafter referred to as the "Enforcement Decree of the Act"), and thus, it does not constitute an "A's allowance or other similar performance.

(b) Related statutes;

It is as shown in the attached Table related statutes.

(c) Fact of recognition;

(1) On February 2, 2003, the Plaintiff entered into a sales agency contract with AAAplus to sell buildings, provide consultation, and conduct public relations activities for the early sale of the building of this case, and receive a sales agency fee of KRW 10 million per unit from AAAplus (hereinafter referred to as “the first sales agency contract”).

(2) The Plaintiff entered into the sales contract of the instant building on behalf of the Plaintiff under the said first sales agency contract, and received the sales agency commission of KRW 116,523,500 on March 7, 2003 from AAAB or the Plaintiff’s bank account from May 30, 2003.

(3) On May 20, 2003, the Plaintiff filed an application for the registration of real estate sales agent business under the trade name, "CC consulting" retroactively to the competent authority on January 10, 2003. At the time of the said application, the Plaintiff submitted the lease agreement (No. 3-2) between the Plaintiff and the AAAAAAD theater, Inc. to the competent authority.

(4) On May 26, 2003, the Plaintiff concluded a sale agency contract (hereinafter referred to as the "second sale agency contract") with the name of "CC consulting" between AAPS and that of "AAPS" and that of receiving KRW 13 million per unit from AAAPS as a sales agency fee.

[Ground of recognition] Facts without dispute, Gap 1 and 2 evidence, Gap 3 evidence 1, Gap 4, 5, 9, 10, 14, 15 evidence, Eul 1-6 evidence (including each natural disaster subparagraph) and the purport of the whole pleadings

D. Determination

(1) As to the assertion that the plaintiff does not correspond to "business operator" or that the service is subject to change

Comprehensively taking account of the above facts and the following circumstances revealed by the above evidence, the Plaintiff is a taxpayer under Article 2 (1) of the Act because the Plaintiff: (a) around January 2003, the head of Jongno-gu, AAAP, a corporation, established the first floor of the building located in 206-1, Jongno-gu, Seoul, and entered into a first sales agency contract with AAAPS on February of the same year with the head of Jongno-gu, Seoul, and (b) around that time, from around February of the same year, to around May of 2005, the Plaintiff was an agent for the sale of the building of this case by itself who employed the sales team staff and received the fees for the sales agency from AAAPS to the end of May of 2005, and was supplied with the services with a continuous and repeated intent with the form of business to create added value; and (c) the Plaintiff’s service alone provided by the evidence submitted by the Plaintiff falls under the tax exemption object under Article 12 (1) 13 of the Act and Article 35 subparagraph 1 (l) of the Enforcement Decree.

(A) Although the first and second contracts for the sale of buildings in lots differ in the amount, timing, etc. of the sales agency fees, the substance of the services stipulated in each of the above contracts is the same. The Plaintiff appears to have entered into the second sales agency contracts after the first contract for the sale of buildings in lots and making business registration for the refund of value-added tax on the advertising expenses, etc., and the substance of the services actually provided by the Plaintiff during the period of business registration before and after the second contract for the sale of buildings in lots is the same as each other (the Plaintiff voluntarily reported and paid value-added tax on the income from services provided after

(B) On January 23, 2007, the time when the tax investigation was conducted, the Plaintiff opened a sales agency around January 10, 2003, stating to the effect that "the Plaintiff was a resident employee, such as ChoD and EB, and that rent and salary was paid by the Plaintiff himself, and was managed by the sales team management, recruitment, and sales office management." The Plaintiff stated to the effect as above on December 22, 2006.

(C) Article 7(1) of the 1 and 2nd sales agency contract provides that the Plaintiff shall bear all the direct and indirect expenses necessary for sales, including public relations helpers’ personnel expenses, all the expenses for the operation of model know-hows, personnel expenses for business employees, and expenses for the management of business employees. Accordingly, the Plaintiff appears to have received a sales agency fee from AAAplos, and then distributed the commission internally to the head of the sales team employed by him/her, and the assertion that AAAAplos has paid the said fee to the employee employed by him/her without directly paying the payment to the employee employed by him/her is difficult to obtain in light of the transactional notion.

(D) In addition, the Plaintiff merely contributed to the amount equivalent to KRW 500,000 per transaction, which is a part of the sales agency fees received from AAAPS, and the remainder is divided into all the sales team leader, and thus, the imposition of value-added tax on the entire commission is unlawful. However, since value-added tax is not a tax imposed on an individual's income, but a tax imposed on an entrepreneur's transaction, i.e., the supply of goods or services, which is subject to the imposition of value-added tax, it cannot be deemed that there was any illegality in the instant disposition imposing value-added tax on the entire transaction, even if the Plaintiff was only 500

(2) As to the assertion that no tax liability exists due to the termination of the sales contract.

There is no evidence to acknowledge that each contract for sale by the plaintiff was cancelled and its effect became retroactively null and void. Thus, the plaintiff's above assertion based on this premise is without merit without further review.

3. Conclusion

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