Seoul Administrative Court-2017-Gu Partnership-69793 ( October 18, 2018)

Whether the transaction constitutes a free supply transaction of services

Comprehensively taking account of the following circumstances, the place of business of this case may be deemed to have supplied the service of this case to AA without receiving any consideration, and thus, value-added tax may not be imposed.

Article 12 of the Value-Added Tax Act (Special Cases for Supply of Services)

2018Nu50620 Revocation of Disposition of Imposition of Value-Added Tax

OOOO Co.

O Head of tax office

Seoul Administrative Court Decision 2017Guhap69793 decided October 18, 2018

November 29, 2018

December 27, 2018

1. The defendant's appeal is dismissed.

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

1. Purport of claim

The period of taxation for the plaintiff on each of the corresponding dates stated in the Schedule of the defendant's Schedule of Disposition means the period of taxation.

The imposition of value-added tax (including additional tax) for each taxable period shall be revoked.

2. Purport of appeal

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

1. Quotation of judgment of the first instance;

The reasoning of the judgment of this court is as follows, since it is the same as the reasoning of the judgment of the court of first instance except to dismiss or add the corresponding parts of the judgment of the court of first instance, it shall be cited in accordance with Article 8(2) of the Administrative Litigation Act and Article 420 of the Civil Procedure Act.

Parts to be removed or added

The 10th 10th 10th 10th 1st 10th 3th 10th 1st 10th 1st 1st 2th 1st 2th 10

○ 4 7 pages, the following shall be added to:

Article 4 subparag. 1 of the Value-Added Tax Act provides that the value-added tax shall be levied on the transaction of supply of services conducted by a business operator. Article 11(1)1 and 2 of the same Act provides that the supply of services is based on all contractual or legal grounds, and the supply of services or the use of goods. Article 12(2) of the same Act provides that the supply of services by a business operator without receiving any consideration shall not be deemed the supply of services. In light of the above provisions, the value-added tax shall not be imposed on the transaction of supply of services where a business operator supplies services without receiving any consideration, notwithstanding the entry of accounting books.

○ 5면 4〜6행의 "라. …… 부족하다." 부분을 다음의 내용으로 고친다.

앞서 본 사실에 갑 제3〜9호증, 을 제2, 3, 6〜9호증의 각 기재에 변론 전체의 취지를 더하여 인정할 수 있는 다음의 사정들을 종합하면, 이 사건 영업소는 AAA와 오퍼거래를 하면서 대가를 받지 아니하고 AAA에 이 사건 용역을 공급하였다고 볼 수 있다.

○ 5. 8. The following shall be added to:

Part VII (Nda Code Title 7 Busi Business), Chapter VII (Chart 78), Section 1, Section 6, Article 13, or Article 15 (d) of the Securities and Exchange Act of 1934 and Article 10-K of the annual report form pursuant to Article 13, or Article 15 (d) of the Securities and Exchange Act of 16 (Chart 16) of Part VII (Idho Code Title 30 Citter 1) of the Act on the Law of the Sea of Sea, a corporation incorporated by AA, and a corporation incorporated by the plaintiff. In full view of Section 1, Article 30-16 (Cpart 16) of the Act on the Law of the Sea of Sea, it is difficult to conclude that the AA and the plaintiff, etc., prepare and make separate financial statements and make separate disclosure of their individual financial statements to their shareholders, and each of them should bear such individual financial statements.

Examining the Plaintiff’s individual financial statements in light of the foregoing standards for the preparation of accounting books under the U.S. law, it seems that AA and the Plaintiff prepared individual financial statements that do not comply with the generally accepted accounting principles for internal management purposes in order to compare the performance of subsidiaries established by country and region.

○ 5, 15 pages 15 shall also add “not to omission of sales from the performance results due to an erroneous trading” in front of the part.

○ 6 pages 12 below, the following shall be added:

Meanwhile, the instant business office is established by the Plaintiff, who is a foreign company, and is obligated to make a public announcement of the balance sheet in Korea pursuant to Articles 614 and 616-2 of the Commercial Act and Article 43 of the Enforcement Decree of the Commercial Act, separate from the accounting books of this case and the Plaintiff’s legal accounting books. Such balance sheet is a document stating the current status of all assets, liabilities, and capital. The audit report prepared as of August 31, 201 with respect to the financial status of the instant business office from September 1, 2011 to August 31, 2013, which includes the taxable period following the instant disposition, stated that “the balance sheet of the instant business office is properly indicated in terms of importance in accordance with the general corporate accounting standards.” However, the balance sheet of the instant business office does not recognize accounts related to the service of this case as assets, and does not support the Plaintiff’s assertion that the payment for the instant business office has been made as profits and losses.

From the 6th bottom to the 7th 1st 7th 1st 1st e.g., “A will not have any case from the AA’s standpoint.”

If the instant business office was actually paid by AA for the instant service, it appears that the business office meeting the requirements for acquisition of foreign currencies and handling the legal relationship between the Plaintiff and the Plaintiff would rather have been able to clearly deal with the instant service. As seen in the instant case, the Plaintiff’s financial statement would have failed to take a round-up and complicated method by including appropriating the relevant accounts receivable against AA in the Plaintiff’s financial statements. Notwithstanding that it is reasonable to select the method of choosing the method of not paying value-added tax by meeting the requirements for the application of the zero tax rate from the beginning, and is economically reasonable, there is no reason to choose any other method at the risk of value-added tax burden. Considering these circumstances, deeming that AA had selected the method of not imposing value-added tax by receiving the instant service supplied without compensation from the instant business office is consistent with this value-added.

○ 7면 14〜16행의 "이처럼 …… 볼 수 없다." 부분을 다음의 내용으로 고친다.

If the business office of this case received actual payment from AA with respect to the service of this case, it would have been expected that the amount equivalent to the price would have been included in the calculation of earnings as it is, and as seen earlier, it would have not been necessary to adjust the profit of the business office of this case due to OE transaction as the profit of the business office of this case. In light of the above, it can be seen that the plaintiff calculated the "normal price of the service of this case concerning OE transaction" in the process of tax adjustment for payment of corporate tax of the business office of this case under the Adjustment of International Taxes Act on OE transaction under the premise that the plaintiff did not pay the price of the service of this case.

○ 8면 4〜7행의 "마. …… 위법하다." 부분을 다음의 내용으로 고친다.

E. Ultimately, so long as the instant business office is deemed to have supplied the instant service to AA without receiving any payment for Oral Transactions, the said transaction is excluded from taxable objects pursuant to Article 12(2) of the Value-Added Tax Act, and thus, the instant disposition taken on the premise that the instant service was supplied at a cost is unlawful.

○ In addition to the attached Form 2(2) of this decision, the addition to the relevant laws and regulations shall be added to the attached Form.

2. Conclusion

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

AAAAAA