Cho High-2018-west-839 ( April 27, 2018)

An input tax amount deduction for false tax invoices;

Since the instant tax invoice constitutes a tax invoice different from the fact that it was issued by a corporation established at will to receive sales incentives, it does not constitute a transactional party with good faith and negligence, which did not know that the Plaintiffs’ entries of the instant tax invoice are different from the fact.

Article 52 (Dispudiation of Wrongful Calculation)

2018Guhap6954 Revocation of Disposition of Imposition of Value-Added Tax

KimAA et al.

○ Head of Tax Office and 2

November 16, 2018

January 11, 2019

1. All of the plaintiffs' claims are dismissed.

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

① The head of ○○○ Tax Office imposed on Plaintiff KimA on October 1, 2017 (including additional taxes); KRW 00,000,000 (including additional taxes); KRW 00,000,000 (including additional taxes); and KRW 00,000,000 (including additional taxes) for the second term portion of value-added tax for 2 years, 2013; ② the head of Defendant BB Tax Office imposed on Plaintiff ParkD on December 4, 2017 (including additional taxes); and ③ the imposition of value-added tax for 2 years, 200,000,000 (including additional taxes); and ③ the imposition of value-added tax for 2 years, 200,000 for 2 years, 200,000 for 2 years, 200,000 (including additional taxes for 3 years, 200,000, 2015).

1. Details of the disposition;

A. The Plaintiffs are business operators operating the FF Motor Vehicle Sales Agency.

B. GGGG (hereinafter referred to as “GGGG”) is a corporation established on April 17, 200 and engaged in automobile rental business, etc., and the FFF (hereinafter referred to as “FFF”) is a corporation established on May 28, 2010 and engaged in automobile information provision business, etc.

C. Plaintiff KimA, Plaintiff EE issued a tax invoice of KRW 449,83,770 in total value-added tax (hereinafter “instant tax invoice”) from 2012 to 2013, and Plaintiff Park DongD received a provision of vehicle purchase information from FF during the respective taxable periods of value-added tax in 2012, on the grounds that Plaintiff KimA was supplied with vehicle purchase information from FF during the respective taxable periods of value-added tax in 2012, and Plaintiff Kim Dong-A received each tax invoice of KRW 276,15,213 in total value-added tax, Plaintiff Park Jong-D’s total value-added value-added tax amounting to KRW 8,73,00 in total value-added value, and Plaintiff EE received each tax invoice of KRW 449,83,770

D. The Defendant, on the ground that the instant tax invoice was issued by the Plaintiffs to the FF for sales incentives to be paid to the GGG, and thus constitutes a false tax invoice, deducts the input tax amount, and accordingly, issued each of the value-added tax from 1 to 2013 to 2013 to Plaintiff KimA, as stated in the purport of the claim, and issued each of the value-added tax on 2012 to Plaintiff GGD respectively (hereinafter “each of the instant dispositions”).

E. The Plaintiffs were dissatisfied with each of the instant dispositions and filed an appeal with the Tax Tribunal, but was dismissed on April 27, 2018.

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1-3, 6, Eul evidence Nos. 1 and 3 (including each number), and the purport of the whole pleadings

2. Whether each of the dispositions of this case is legitimate

A. The plaintiffs' assertion

1) The primary argument

The Plaintiffs were unable to pay the sales incentive for the purpose of sales promotion to the GGGG, a motor vehicle buyer, due to the policy of the manufacturer, while operating the FF motor vehicle sales agency. The representative director of the GGGG, HaH, a representative director of the GGG, established the FF in order to receive the said sales incentive. The Plaintiffs were provided with the vehicle purchase information from the auditor Hah of the FF, and paid the money equivalent to the sales incentive to the FF. As such, the instant tax invoice is not a false tax invoice.

2) Preliminary assertion

Even if the instant tax invoice constitutes a false tax invoice, the Plaintiffs did not know that the FF was not the actual supplier of services, and did not err by failing to know that the FF was not the actual supplier of services.

B. Relevant statutes

It is as shown in the attached Form.

(c) Fact of recognition;

1) While running a car rental business, GGG purchased a number of automobiles every year, and received money in the process of receiving sales incentives from sales agents. Of these, the representative director HH of GG established the FGF on May 28, 2010 in order to receive sales incentives received by the GGG in lieu of the sales incentives. From around that time, sales agencies around that time to 2014 had the sales agencies pay the sales incentives to be paid for the automobiles purchased by the GGGGG in the FF. From the end of 2014, Plaintiff KimA, who operated the automobile sales agency, and Plaintiff PGGGE received sales incentives again from the end of 2012 to 2013, and Plaintiff ParkD received the sales incentives in the instant tax invoice from the supply amount as the instant tax invoice, stating the details of the sales incentives in the instant taxable period of value-added tax for each of the value-added tax for the second period of 2012 to the supply value of the automobiles in the instant case.

3) FFFF는 조HH의 자녀인 조KK와 조TT가 총 발행주식의 각 50%를 보유하고 있고, FFFF의 대표자는 조HH의 아내 QQQ이었다가 조KK로 변경되었으며, 조HH는 FFFF의 설립 당시부터 현재까지 감사의 지위를 유지하고 있다.

4) From the time of establishment to October 20, 2014, FF was intended as an automobile sales agent business and automobile information provision business. From October 21, 2014, the automobile sales agent business was deleted from the purpose business and added as an insurance agent business. From October 21, 2014, GGG began to receive sales incentives directly, from around 2015, it mainly runs an insurance agent business. The sales amount from 2010 to 2014, which was reported by FFF to the tax authority, is all sales allowances paid by the Plaintiffs and the same sales agent.

5) On July 1, 2016, and August 10, 2016, WT stated the FF’s establishment circumstances and operational status as follows.

○ 본인이 판매대리점들로부터 비공식적으로 받을 수 있던 리베이트를 합법적으로 처리하기 위해 FFFF를 설립하였다. FFFF의 대표자 조KK는 본인의 아들로서 학생이고, 직전 대표 QQQ은 본인의 처로서, 모두 FFFF의 업무를 하지 않았으며 주로 본인이 일을 하였다. FFFF에 상주하는 직원은 없고 판매수당을 공식적으로 처리하기 위해 설립한 법인으로 볼 수 있으며, 실질적인 대표자는 본인이다.

○○ FF determined that the money received from a sales agency was rebates to be received from a sales agency as an individual qualification and that there was no reason to belong to GGGG.

If it is confirmed that ○○ sales agency made a direct transaction, the payment of rebates would be problematic, but the business allowance paid to intermediate trade is not problematic, and the FF is received as a transfer of FF to intermediate trade. During the investigation period (2010-2014), the allowance received from the sales agency is about 100% of the FF revenue, and the major expenses of FF are not larger than the amount such as personnel expenses, entertainment expenses, handphones, etc.

From the end of 2014, sales allowance again belonged to GGG. This is because it was discussed from the end of 2015 the Fair Transactions Act, which was passed at the end of 2014, it is thought that there was no problem from that time.

FF paid business income to SSS and its family members, YY and their relatives, for the purpose of reverting income to Y from the Y of the General Affairs Team of GGG, the head of the business team, YG, who played a role in relation to the purchase of vehicles and the receipt of allowances.

○ At present, the FF will have revenue from insurance agency.

6) The FF reported and paid value-added tax on the money received from such sales agencies as the Plaintiff, but the tax authorities around October 6, 2016 decided to refund value-added tax paid by the FF on the ground that the said money does not constitute FF’s sales.

7) As to the question of the WW director of the World Tax Office on the process of selling vehicles in the GGG and paying honorariums to the FF, Plaintiff KimA and Plaintiff EE responded responded to the purport that, around August 2016, the payment of fees to the GGGG was not possible (a level sale violation) and that, around August 2016, HaH, the representative of the GGG, would have been paid to the FFF due to audit.

8) The head of the WW Tax Office imposed corporate tax for the business year of 2011-2014 on GGGG on the ground that the substance of the money paid by the sales agency to the FGF for sales commission in the business year of 2011-2014 was the sales incentive for the purchase of vehicles of the GGG, and thus, it should be deemed that the relevant amount belongs to the GGGG. This GGG was subject to corporate tax for the business year of 2011-2014. While the Seoul Administrative Court requested against the head of the WW Tax Office to revoke the disposition of the said corporate tax (Seoul Administrative Court Decision 2017Guhap727999), the first instance court dismissed the appeal of the 2GGGGF on September 13, 2018, because it was difficult to recognize the substance of the service called sales intermediary activities through the provision of vehicle information that the FFFFFF will not be a party to the vehicle purchase contract, and that the representative director of the GGGGG would have to receive the sales incentive282GGF.2.

Facts that there is no dispute over the basis of recognition, each entry in the evidence Nos. 4-6 (including each number), and

The purpose of body

D. Determination

1) Whether a tax invoice constitutes a false tax invoice (main assertion)

A) Article 39(1)2 of the former Value-Added Tax Act (amended by Act No. 12167, Jan. 1, 2014; hereinafter referred to as "value-Added Tax Act") and Article 17(2)2 of the former Value-Added Tax Act (amended by Act No. 11873, Jun. 7, 2013; hereinafter referred to as "former Value-Added Tax Act") provide that "in cases where no tax invoice is issued, or all or part of the requisite entry items are not entered or entered differently from the fact on the tax invoice or import tax invoice issued, the input tax amount shall not be deducted." Article 32(1) of the former Value-Added Tax Act and Article 16(1) of the former Value-Added Tax Act provide that "the business operator's registration number, name or title, and supply of the supplier."

The registration number, supply value, and value-added tax amount of the recipient are stipulated as the necessary entry of the tax invoice.

Article 39(1)2 of the Value-Added Tax Act and Article 17(2)2 of the former Value-Added Tax Act mean that it is different from the fact that “where necessary entries in a tax invoice are entered differently from the fact,” the ownership of income, profit, calculation, act or transaction subject to taxation is nominal, and if there is a separate person to whom such ownership belongs, the person to whom such ownership belongs shall be a tax obligor and the tax law shall apply.” In light of the purport of Article 14(1) of the Framework Act on National Taxes, where the necessary entries in a tax invoice are inconsistent with those in the contract, etc. prepared between the parties to the transaction of goods or service, notwithstanding the formal entries in the contract, etc. made between the parties concerned, such cases are where the necessary entries in the tax invoice are inconsistent with the actual supplier, price, and timing of the supply of the goods or service (see, e.g.

B) In full view of the following circumstances recognized earlier, it is difficult to view the FF as a normal business operator who has provided services with an independent business form and organization to an extent that added value can be created in each taxable period from the second period to the second period of the Value-Added Tax in 2012, and the Plaintiffs cannot be deemed to have actually received vehicle purchase information services from the FF. Accordingly, the instant tax invoice constitutes a tax invoice issued without the FFF’s provision, and constitutes a false tax invoice, and thus, the Plaintiffs’ primary assertion is rejected.

(1) The representative director of GG stated in the course of the tax investigation that the Plaintiff established the FGFFF for the purpose of devolving sales incentives upon the purchase of vehicles from such sales agencies as the Plaintiffs, and that all of the GG and the FGF made a substantial decision-making entity, and that: (a) the conclusion and performance of the contract, which is a follow-up procedure following the expression of intent to purchase the vehicle of HaGGGGG employees, were performed by HaGGG employees, Y, and the FFF did not have any employee to carry out such duties. Considering that the sales amount from 2010 to 2014 of the FGF’s 20, the Plaintiffs’ assertion that the Plaintiffs were either the Plaintiffs’ payment of sales allowances to the GGF HF’s employees or the Plaintiffs’ payment of sales allowances to the GGG H’s employees, based on the fact that the sales allowances received from the agents, were not in fact different from the Plaintiffs’ payment of sales allowances to the GF HG’s employees or the Plaintiffs’ payment of information related to the Plaintiffs’ purchase contract.

2) Whether good faith or without fault (preliminary assertion) has been made

A) Unless there are special circumstances, the actual supplier and the supplier on a tax invoice may not deduct or refund the input tax amount unless there is any negligence on the part of the person who received the tax invoice in the name of the actual supplier and that there is no negligence on the part of the person who received the tax invoice, and the person who asserts the deduction or refund of the input tax amount shall prove that there is no negligence on the part of the person who received the tax invoice in the said name. (See, e.g., Supreme Court Decision 2002Du227

B) The facts alleged by the Plaintiffs are that the Plaintiffs are parties to good faith and without fault, who did not know that the details of the instant tax invoice are different from the facts. Rather, when the Plaintiffs were unable to pay sales incentives to the GGG due to the regulatory policy to regulate the payment of sales incentives, the Plaintiffs paid the money equivalent to the sales incentives under the name of sales commission, which was established by HaH upon Ha’s request, in order to avoid this, to the FF established by Ha to receive sales incentives bypassing the sales incentives, and the fact that the Plaintiffs were to receive vehicle purchase information services provided by the FF, was merely a mere receipt of the vehicle purchase scheme from Ha H from the representative director of the GGG’s Ha H H H from receiving the vehicle purchase scheme. Accordingly, the Plaintiffs should be deemed to have been issued the instant tax invoice even though they were unaware of the fact that they were not supplied with services from the FFF. Accordingly, this part of the Plaintiffs’ assertion cannot be accepted.

3. Conclusion

Therefore, the plaintiffs' claims are dismissed in entirety as it is without merit. It is so decided as per Disposition.