Whether a joint businessman is a joint businessman and a violation of the good faith principle

The settlement of this case is not a distribution of profits generated from joint projects, but a cost for providing services, and it cannot be said that there was a non-taxable practice, and it does not violate the principle of good faith.

Article 12 (1) 6 of the Value-Added Tax Act, Article 30 of the Enforcement Decree

2017Guhap83690 Revocation of Disposition of Imposition of Value-Added Tax

AAAAAA

Director of the tax office

June 8, 2018

July 13, 2010

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The defendant's value-added tax (additional tax) stated in the list of disposition (attached Form 1) against the plaintiff on September 6, 2016

(including) fully revoke the disposition of imposition.

1. Details of the disposition;

A. The Plaintiff is a company that runs a private teaching institute business, Internet video business, etc. established on September 8, 2010, and the BB (hereinafter “BB”) is a lifelong educational establishment operation business, e-learning business, digital content development, supply and distribution business, Internet content and product transaction.

It is a company that runs a brokerage business.

B. On April 29, 2011, the Plaintiff and BB entered into an investment and business partnership agreement (hereinafter “the first business partnership agreement”) on July 1, 201, with respect to the business (hereinafter “instant business”), which took the subjects of the subjects of the judicial examination, administrative notice, legal aptitude test (LET), certified public appraiser examination, labor company examination, etc. provided by the Plaintiff, and provides them to students in the same image online.

C. BB paid to the Plaintiff the total amount of KRW 000 in the second half of the year 2010, KRW 000 in the first half of the year 2011, KRW 000 in the second half of the year 2011, KRW 000 in the second half of the year 2012, KRW 000 in the second half of the year 2012, KRW 000 in the second half of the year 2012, KRW 000 in the second half of the year 2013, KRW 000 in the second half of the year 2013, KRW 00 in the second half of the year 2014, KRW 00 in the second half of the year 2014, KRW 00 in the first half of the year 2015, and KRW 00 in the second half of the year 200 in the second half of the year 2016.

D. The Defendant, on September 6, 2016, issued a revised and notified the Plaintiff on the ground that the instant settlement amount constitutes the Plaintiff’s consideration for providing services to BB, and that it does not constitute an education service subject to value-added tax exemption under Article 12(1)6 of the former Value-Added Tax Act (Amended by Act No. 11873, Jun. 7, 2013) or Article 26(1)6 of the former Value-Added Tax Act (Amended by Act No. 15523, Dec. 19, 2017); and that it does not constitute an education service subject to value-added tax exemption under Article 12(1)6 of the former Value-Added Tax Act (Amended by Act No. 11873, Dec. 19, 2017) (hereinafter “instant disposition”).

E. The Plaintiff appealed and filed an appeal with the Tax Tribunal on October 10, 2016, but was dismissed on August 9, 2017.

[Ground of Recognition] Unsatisfy, Gap evidence 1-6, Eul evidence 1 and 2 (including paper numbers), each;

The purport of all pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The Plaintiff and BB jointly run a private teaching institute business that is exempt from value-added tax as an educational service pursuant to the contract for the first and second business partnership, and the settlement amount of the instant settlement amount that BB paid to the Plaintiff by the Plaintiff is not the price for the Plaintiff’s provision of services to BB, and thus, the instant disposition imposing value-added tax on the instant settlement amount is unlawful.

2) Even if the instant settlement amount constitutes the cost for the provision of services subject to value-added tax, (a) the Plaintiff filed a return on the exemption of value-added tax on the settlement amount received from 10 years from the time it was operated as a personal business entity under the trade name, “CC Judicial Public Notification Institute” prior to the conversion into a legal entity, and the tax authorities also pointed out it at the time of the tax investigation into CC Judicial Public Notification Institute and BBB. However, the imposition of value-added tax on the instant settlement amount violates the principle of trust and good faith, and at least, the amount distributed by the Plaintiff to instructors out of the instant settlement amount should be excluded from the tax base of value-added tax under the substance over form principle

B. Relevant statutes

[Attachment 2] The entry is as follows.

(c) Fact of recognition;

1) The main contents of the first and second business partnership agreement are as follows:

A) The primary business partnership agreement

Part I. Acquisition of mutual shares

§ 1.BB. Acquisition of shares in the Plaintiff

"Aa and BB (interested Parties) as the shareholder of the Plaintiff shall be sold to BB in total to the sum of 672,90,032 won (247,696 won per share) of registered common shares 2,717 shares issued by the Plaintiff, and the acquisition of shares in BB by interested parties of Article II.

BB shall issue registered common shares 242,171 shares with capital increase issued by a third party and to Aa

217,954 Shares, b. 24,217 Shares, each of which shall be charged to b. 672,93,209 Won A.a.605,694,166 Won, and b. 67,299,043 Won, each of which shall be charged to b.

Part II Strategic Project Partnership

Article 3 Contents of Business Partnership

With respect to all contents provided by the Plaintiff, such as judicial examination, administrative announcement, external announcement, law school (LET), certified public appraiser, labor company, etc. provided by the Plaintiff, the Plaintiff shall take charge of off-line private teaching institute projects, and BB shall take charge of online projects.

Article 4 Project Suspension Period

The business partnership period shall continue for the period during which BB holds the Plaintiff’s shares.

Article 5 Payment and Return of Project Deposit

For business partnership, BB shall pay to the Plaintiff KRW 2 billion with the business deposit: Provided, That if the advance payment provided by BB to the Plaintiff as of the date of the contract remains, it shall be converted to the deposit and the difference shall be settled and paid only.

Article 6 Functions and Responsibilities

(2) The roles and duties of BB;

(1) BB shall be responsible for the creation, education, operation, operation, maintenance, etc. of online contents, and for the relevant expenses.

(2) BB shall be responsible for the Internet marketing.

(3) The plaintiff's roles and duties

① The Plaintiff shall cooperate to the maximum extent possible with respect to matters necessary for BB to produce online contents.

② The Plaintiff shall cooperate to the maximum extent possible with respect to matters necessary for the operation of education, such as lectures, teaching information, learning inquiries, etc.

③ The Plaintiff shall cooperate to the maximum extent with respect to the marketing activities of BB.

④ The Plaintiff is actively exposed to the Plaintiff’s website, back of time table, publication teaching materials, and other advertising or publicity materials to publicize the online site operated by BB.

⑤ The Plaintiff shall respect all Internet-related policies determined by BB.

6. The plaintiff shall bear all the tuition fees.

(4) Special terms on the production and sale of contents

1. At the time of conclusion of the contract, the Plaintiff confirmed that the Plaintiff’s motion to take photographs for the online service at the time of the conclusion of the contract was obtained from both the Plaintiff’s employees and the future gifted instructors, and the BB may take photographs without any further consent. However, the BB may take photographs selectively depending on the degree of the Plaintiff’s participation in the sales of the instructors. The Plaintiff is responsible not to make legal claims regarding the online service conducted by BB from the Plaintiff’s instructors in accordance with the above and other present contracts.

② In principle, BB may photograph all of the Plaintiff’s lectures opened, but may photograph the Plaintiff’s lectures separately.

③ The Plaintiff guarantees the autonomy of BB in online price policies and product composition; however, BB, considering the Plaintiff’s price policies, the online short-term tuition fees are 65-80% of off-line tuition fees, and the integrated class is 80-90% of online short-term tuition fees.

④ Collective businesses, such as the university announcement team, shall guarantee the above-mentioned autonomy of 5-10% in addition to the above-mentioned price. However, in the past*******, in the event that the collective business value of the △△△△△△△△△△△△△△△△△△△ operated by the website deviates from the scope of the price, the Plaintiff shall

⑤ The Plaintiff shall actively cooperate with BB when it provides various services using the Internet lectures, such as mobile learning outside the Internet.

Article 8 Sales Distribution and Settlement

(1) BB and the Plaintiff shall distribute the generated sales from April 201 to December 2012, including value added taxes, as follows, but from January 2013, all content shall be distributed to 45:55.

(1) Certified public appraisers, labor workers, and law school contents shall be allocated to 40:60.

2. The remainder of the contents other than certified public appraisers, labor workers, and law school contents shall be allocated to 50:50 above.

(2) The subject matter of sale and settlement shall be limited to online sales, excluding basic expenses, such as settlement fees (i.e., sales in the distribution of the above sales refers to the amount excluding basic expenses, such as settlement fees).

(3) The sales distribution shall be settled monthly, and BB shall send the settlement details to the Plaintiff by the 10th day of the following month from the following month, and the Plaintiff shall issue (tax) account statements to BB by the 15th day of the following month, and BB shall transfer the settlement amount to the Plaintiff on the 15th day of the following month.

Article 10 Termination and Rescission

(2) If one party breaches the contractual terms, fails to faithfully perform the above roles and duties, or if one party is unable to proceed with the business due to business suspension, default, default, default, etc., any person may terminate the contract and terminate the contract with the maximum period of two weeks. However, in the event that the Plaintiff terminates the contract, BB may pay for a fee for three months from the date on which termination of the contract is notified.

(3) In the event this contract is terminated, interested persons shall re-purchase the Plaintiff’s shares transferred to BB under Article 1 of this contract at the transfer price, and BB shall acquire the BB shares acquired by interested persons under Article 2 of this contract at the acquisition price.

B) the second business partnership agreement

Article 2 Period

The contract period shall be five years from the date of conclusion of the contract, and shall be automatically extended every two years if the intention of termination of the contract is not notified in writing six months before the expiration of the contract period: Provided, That this contract shall be maintained until the completion of all obligations, such as online business deposit, is conditional, and the obligations of the plaintiff with respect to BB are fully paid.

Article 3 Contents of Business Partnership

With respect to all contents serviced by the plaintiff, such as judicial examination, administrative announcement, external announcement, law school (LET), certified public appraiser, labor company, etc. provided by the plaintiff, the plaintiff shall take charge of off-line private teaching institute business, and BB shall take charge of online business separately.

Article 4 Payment and Return of Project Deposit

(1) For business alliance, BB shall pay to the Plaintiff KRW 2,893,721,520 as business deposit, provided that the Plaintiff’s existing debt to BB shall be converted to business deposit, and KRW 144,68,932, the difference in the amount of the Plaintiff’s debt, such as the attempted proceeds as of the date of conclusion of the investment contract and the loan, shall be changed to the loan to which the interest rate recognized under tax law is paid. The maturity of the loan shall be June 30, 2016 and the interest shall be paid at the end of each quarter on the 15th of the following month.

(2) The amount of the project deposit shall be reduced by 13,721,520 won in April 2015, and KRW 10,000 per month in May 2015, and shall maintain KRW 2 billion from the time of reaching KRW 2 billion. The method of reduction or redemption shall be set-off or deduction of online distributed amount.

(3) In the case of sale or transfer of business rights of a company, the Plaintiff must obtain the written consent of BB for the five-year period during which the business partnership is held. After the five-year period of business guarantee, the Plaintiff may sell or transfer business rights without the written consent of BB on the premise that all obligations, such as business deposits, are repaid.

(4) To secure a business deposit, the Plaintiff’s shares held by BB and shares held by interested parties to provide a security for 34% of the total amount of shares offered by BB, and for this purpose, enter into a stock pledge agreement and deliver the collateral. The obligation to provide security must maintain 34% of the total amount of shares, regardless of changes in the number of shares.

(5) If the business partnership contract is terminated or terminated, the Plaintiff must refund the business deposit to BB on the pertinent day, and when delay in return, the interest for delay shall be 10% per annum.

Article 5 Functions and Responsibilities

(2) The roles and duties of BB;

(1) BB shall be responsible for the creation, education, operation, operation, maintenance, etc. of online contents, and for the relevant expenses.

(2) BB shall be responsible for the Internet marketing.

(3) The plaintiff's roles and duties

① The Plaintiff shall cooperate to the maximum extent possible with respect to matters necessary for BB to produce online contents.

(2) The plaintiff shall cooperate to the maximum extent possible with matters necessary for the operation of education, such as lectures, examination information, study questions, etc.

③ The Plaintiff shall cooperate to the maximum extent with respect to the marketing activities of BB.

④ The Plaintiff is actively exposed to the Plaintiff’s website, back of time table, publication teaching materials, and other advertising or publicity materials to publicize the online site operated by BB.

⑤ The Plaintiff shall respect all Internet-related policies determined by BB.

(6) The plaintiff shall bear all the instructor fees.

(4) Special terms on the production and sale of contents

1. At the time of conclusion of the contract, the Plaintiff is confirmed to have obtained both the Plaintiff’s consent to take photographs for the online service of BB for the Plaintiff’s employed instructors and the future employed instructors, and BB may take photographs without any further consent procedure: Provided, That BB may take photographs of BB prior to the Plaintiff’s participation in the sales of the instructors. The Plaintiff is liable not to make legal claims regarding the online service operated by BB from the Plaintiff’s instructors in accordance with the above and other this contract.

② In principle, BB may photograph all of the Plaintiff’s lectures opened, but may photograph the Plaintiff’s lectures separately.

③ The Plaintiff guarantees the autonomy of BB in online price policies and product composition; BB, taking into account the Plaintiff’s price policies, is 65-100 per cent of off-line tuition fees;

The comprehensive team shall be 80 to 90% of online short-term tuition fees.

(4) The Government shall guarantee the further autonomy of 10% from the above prices for collective businesses, such as universities and colleges announcement teams.

⑤ The Plaintiff shall actively cooperate with BB when it provides various services using the Internet lectures, such as mobile learning outside the Internet.

Article VIIDistribution and Settlement of Saless

(1) BB and the Plaintiff shall distribute all content from July 1, 2014 to 40:60.

(2) The subject matter of sale and settlement shall be limited to online sales, and the cost of basic occurrence, such as payment commission, shall be excluded (i.e., sales in the distribution of the above sales, excluding basic cost, such as payment commission, etc.).

(3) The sales distribution shall be settled monthly, and BB shall send the settlement details to the Plaintiff by the 10th day of the following month from the following month, and the Plaintiff shall issue (tax) account statements to BB by the 15th day of the following month, and BB shall transfer the settlement amount to the Plaintiff on the last day of the following month.

Article 9 Termination

(2) After the five-year period of business guarantee, where it is difficult for an online business to continue due to the failure of one of the parties to perform the roles and duties described therein, or where one of the parties cannot continue the business due to business suspension, default, default, default, etc., any person may terminate the contract and terminate the contract with a maximum period of two weeks. However, where the Plaintiff terminates the contract, BB may provide paid services for three months from the date of receipt of notice of termination of the contract.

(3) If BB maintains a contract only by the period of business guarantee and notifies termination of the contract, the Plaintiff may request a grace period for the return of the business deposit and the BB agrees for the grace period of up to two years; provided, however, that even in this case, the business partnership agreement shall remain in force until the repayment of the debt, such as the business deposit, is completed.

2) 원고와 BBB은 이 사건 사업과 관련하여 공동사업자로 등록하거나 대표자를 정하지 않았고, 1, 2차 사업제휴계약에서 온라인 강의 매출액에 대한 배분비율을 정하였을 뿐 지분비율이나 사업상 손익분배비율 등을 정한 바 없다.

3) On June 24, 2011, BB completed the report of the remote lifelong educational facilities (facilities that receive education fees from many unspecified people using information and communications media) in accordance with Article 3(2) of the Lifelong Education Act, Article 49(3) of the Enforcement Decree of the same Act, and Article 17(4) of the Enforcement Rule of the same Act, by using the name of the head of the office of education of the Nam-gu Seoul Metropolitan Government Office of Education as the "B-B remote lifelong educational facilities". On the other hand, the Plaintiff did not install the remote lifelong educational facilities or report

4) The main contents of the written opinion on the attribution of online lecture content ownership prepared by the Plaintiff on May 11, 2016 are as follows.

○ At the time of the project partnership agreement, there was no explicit regulation as to where the ownership of lecture content belongs.

In terms of the operation of the online lecture content, the Plaintiff entered into an exclusive contract with the instructor, proceeds with lectures suitable for the examination schedule, provides the students who applied for online lectures with the examination information and data, the marking and lottery of the answer sheet submitted by the online students, and the BB mainly takes charge of the technical aspect of the lecture contents, such as lecture photography, classd, online site operation, etc. based on the technical capabilities of seeking the video lectures. In other words, it is the purpose of the business partnership agreement to expand the Plaintiff’s lecture content and the online technological capabilities of BB to a width through a partnership agreement.

In light of the contents of Article 6 (4) 4 of the first business partnership agreement, in the past, the content of lectures was provided by a company other than BB by the plaintiff, and BB at the time of termination of the contract under Article 10 (2) of the first business partnership agreement, may provide video service only for three months from the date when the termination of the contract is notified.

The ownership of strong content in order to postpone the content, purpose, etc. of the business partnership agreement is the plaintiff.

5) 원고의 홈페이지(http://www.0000.com)에서 '동영상 강의'를 클릭하면 BBB이 운영하는 '####' 홈페이지(http://www.####.com)에 자동으로 링크되어 수강생들은 '####'의 홈페이지에서 동영상 강의를 신청, 수강할 수 있고, BBB의 홈페이지(http://www.000.com)에서도 '####' 홈페이지로 이동할 수 있다. 수강생들은'####' 홈페이지를 통해 수강료를 BBB에게 결제하였다.

6) The Plaintiff appropriated the instant settlement amount received from BB to the Customer Director with BB in the account subject of “Advance payment” which means the money received first when receiving the service payment in installments.

7) The Plaintiff withheld at source 3.3% of the instant settlement amount received from BB, and paid 30% of the business income tax to the instructors who participated in the production of broadcast films.

8) Prior to the Plaintiff’s conversion into a corporation, “CC Judicial Publication Institute” engaged in a business similar to the instant business in collaboration with BB from 2005, and reported the settlement amount received from BB as value-added tax exemption. On June 2005, “CC Judicial Publication Institute” reported the settlement amount received from the Seoul Regional Tax Office, around March 2006, and around March 2006, it was subject to each tax investigation at the Seoul Regional Tax Office, but there was no pointed out or administrative guidance on the report of the settlement amount as value-added tax exemption.

9) Meanwhile, the Plaintiff and BB amended the second business partnership agreement on June 20, 2016 as follows:

The agreement was reached to the effect on June 2016 (hereinafter referred to as the "Agreement on Change of June 20, 2016").

1. (Article V(3)(6)B) shall bear the fee for video instructors;

2. (Paragraph 1 of Article 7) The allocation ratio shall be the sum of 39% of the sales subject to settlement and the fee for video instructors, and the amount calculated by subtracting the fee for video instructors from 61%. The amount to be distributed to the Plaintiff is the amount including the value added tax.

3. The above paragraphs 1 and 2 should apply since April 2016.

4. (Article VII(3) BB shall send the settlement details to the Plaintiff by the fifth day of the following month from the month following the month subject to settlement, and the Plaintiff shall issue (tax) account statements by the tenth day of the following month, and BB shall transfer the settlement amount to the Plaintiff’s deposit account on the 15th day of the following month.

[Grounds for recognition] Gap evidence Nos. 3, 4, 7, Eul evidence Nos. 1, 3-6, and the purport of the whole pleadings

D. Determination

1) Character of the instant settlement amount

In determining whether joint business operators exist between the parties participating in one project, all the circumstances, such as business registration form, details of tax return, joint investment and distribution of profits and losses, whether joint management is jointly managed, and specific operational forms, etc. shall be comprehensively considered.

However, in full view of the following circumstances revealed by the facts acknowledged earlier and the purport of the entire pleadings, the Plaintiff and BB do not constitute joint business operators of the instant business. Therefore, it is reasonable to view the instant settlement amount as a profit distribution based on the joint business, and it constitutes a consideration for the Plaintiff’s service subject to value-added tax, which provides strong content to BB.

가) 원고와 BBB은 독립된 사업자로서 각자 성인고시교육학원과 원격평생교육시설을 운영하고 있을 뿐, 이 사건 사업과 관련하여 공동사업자로 등록하거나 지분비율, 손익분배비율, 대표자 등을 정한바 없다. 1, 2차 사업제휴계약 및 2016. 6. 20.자 변경합의상 매출배분 및 정산은 결제수수료 등의 기본발생비용 외의 공통의 필요경비를 공제하지 않고 단순히 온라인 동영상 강의 매출을 일정 비율로 분배한 것에 불과하며 손실 발생시 분담비율도 정하고 있지 않으므로 손익분배 약정으로 보기 어렵다. 1, 2차 사업제휴계약은 원고가 강의 콘텐츠 제공을, BBB이 위 콘텐츠에 관한 온라인 사업을 각자 독립적으로 담당함을 전제로 서로 협조할 책임만을 정하고 있다.

B) Mutual equity investment under the 1 and 2nd business partnership agreement is merely for the purpose of publicly announcing strategic partnership relations, and the business deposit is merely for securing sales distribution, and the Plaintiff’s sole burden of tuition fees is natural in the nature of the Plaintiff’s strong content provision service with respect to the Plaintiff’s lecture on BB. Therefore, it is difficult to deem that there exists a joint investment between the Plaintiff and BB solely due to the foregoing circumstance (i.e., that the Plaintiff and BB made payment of tuition fees from April 2016 according to the modified agreement on June 20, 2016) (i.e., the agreement to adjust the distribution rate between the Plaintiff and BB to deduct tuition fees from the amount of allocation to the Plaintiff, and thus, the actual burden of lecture feed even after the said agreement is still the Plaintiff. The Plaintiff also knows that ownership of lecture content is owned by the Plaintiff solely.

C) According to the first and second business partnership agreement and the revised agreement on June 20, 2016, the instant settlement amount included a value-added tax, and the Plaintiff is to issue a tax invoice to BB. The Plaintiff appropriated the instant settlement amount as “Advance payment” referring to the service price. Therefore, the Plaintiff and BB recognized the instant settlement amount as the consideration for the service subject to value-added tax on BB.

D) The above provision of educational services is made by BB since it was reported to the competent authority as a remote lifelong educational establishment, and the education was conducted directly by many unspecified students through the website and received tuition fees from them. It is merely a service that the Plaintiff’s instructors conducted questioning, answers, marking, and search guidance for online dynamics through BB’s website, and it is difficult to deem the Plaintiff to directly provide educational services to unspecified students solely by providing such ancillary services.

2) Whether the principles of trust protection are violated

“In order to establish non-taxation practices under Article 18(3) of the Framework Act on National Taxes, the tax authority must have an intention not to impose taxes on not only objective facts that have not been imposed over a considerable period of time, but also on certain special circumstances with the knowledge that the tax authority is able to impose taxes on the matter. Such public view or intent must be expressed explicitly or implicitly. Unlike simple omission of taxation, there must be circumstances to deem that the tax authority has expressed its intent not to impose taxes on the non-taxation status for a considerable period of time, unlike omission of taxation (see, e.g., Supreme Court Decisions 2001Du4795, May 30, 2003; 201Du3913, Dec. 13, 2012). Moreover, “No interpretation of tax-exempt laws or practices of non-taxation administration” under Article 18(3) of the Framework Act on National Taxes should be acknowledged as having violated the duty payer’s trust or good faith in the calculation of the amount of taxes imposed on the taxpayer.”

3) Whether tuition fees should be excluded from value-added tax base

According to Article 13 of the former Value-Added Tax Act (amended by Act No. 11873, Jun. 7, 2013) or Article 29 of the former Value-Added Tax Act (amended by Act No. 15523, Dec. 19, 2017), where the tax base of value-added tax on the supply of services is the sum of the supply values of services supplied in the pertinent taxable period and is paid in cash, the said tax base is the remuneration, but only the amount of discount, discount, etc. can be excluded.

Therefore, the tax base of value-added tax on the supply of the Plaintiff’s lecture content to BB is the instant settlement amount received by the Plaintiff from BB, and the Plaintiff’s and the instructors belonging to the Plaintiff constitute joint business operators in connection with the instant business, barring any circumstance to deem the Plaintiff’s payment to the Plaintiff’s instructors out of the instant settlement amount as the Plaintiff’s internal personnel expenses, which may be included in the deductible expenses in the calculation of corporate tax, shall not be excluded from the tax base of value-added tax (as for the settlement amount paid to the Plaintiff from April 2016 according to the revised agreement of June 20, 2016, the tuition fee was deducted).

3. Conclusion

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

(c)