Where a publicly announced individual land price is transferred immediately after the date it is announced, the publicly announced individual land price shall apply.

Even if the individual land price was immediately announced, the publicly announced individual land price will be applied to the transfer of the same day.

2015Guhap20211 Revocation of Disposition of Imposition of Value-Added Tax

LAA

BB Director of the Tax Office

June 30, 2015

July 21, 2015

1. The plaintiff's claim is dismissed.

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

The Defendant’s disposition of imposition of value-added tax for the first term of 201x 917,xx, 936 won against the Plaintiff on September 1, 201x is revoked.

1. Details of the disposition;

A. On February 1, 200x. 2. 1, 200x. 2. 1, the Plaintiff registered the main issue as 'AAAAA' and 'real estate lease', and then newly built 'AAAAAAA' and 28 out of 86 stores of the commercial building from 200 X to 200 X.

B. On January 27, 201 X. 201, the Plaintiff: (a) disposed of 58 remaining stores (hereinafter referred to as “the instant store”); (b) executed a contract with the content that 56 of the instant store will be transferred to 10, 548,200 won in the name of KimF; and (c) drafted a contract with the content that the remaining 2 stores will be transferred to 1, 550,000 won in their own name (hereinafter referred to as “each of the instant contracts”). The main contents of each of the instant contracts are as follows.

Business Blanket Transfer Agreement

(1) Article 1) A (Plaintiff) intends to transfer all of the assets and liabilities on the company’s account books operated by A (hereinafter referred to as “transferable property”) to B (laF or DoD) and B shall take over them (the amount of establishment on the register as of the date of name, seizure and lease on a deposit basis, etc.).

(Article 3) The value and subject of the transfer shall be determined by mutual agreement on the basis of the balance sheet and inventory as of the date of surrender, and each asset and liability shall be assessed at the book value and assessed by transfer.

(Article 5) A’s regular employees will continue to employ B.

C. The Plaintiff did not file a value-added tax return on the instant transaction on the grounds that the instant transaction constitutes “transfer of business” under Article 6(6)2 of the former Value-Added Tax Act (wholly amended by Act No. 11873, Jun. 7, 2013) and Article 17(2) of the former Enforcement Decree of the Value-Added Tax Act (wholly amended by Presidential Decree No. 24638, Jun. 28, 2013) (hereinafter “each of the instant provisions”).

D. On March 15, 201 X, DoD registered its business with the main issue as "real estate lease" without any separate trade name, and KimF made the registration of its business with the trade name "GGGGG on March 30, 201," as "real estate sale" and "real estate lease".

E. The president of HH had regularly audited the director of the tax office having jurisdiction over the domicile of the plaintiff, and the director of the tax office of III did not succeed to the secured debt of the right to collateral security established in relation to the store of this case by the plaintiff, KimF and DoD, and KimF and DoD did not succeed to the secured debt of the right to collateral security established in relation to the store of this case. The plaintiff transferred the remaining nine stores of this case after the sale by the plaintiff, which was transferred the unsold stock, and thus it cannot be viewed as the "transfer of business" stipulated in each provision of this case. The third director of the tax office notified the defendant of this fact.

F. Accordingly, on September 1, 201, the Defendant deemed the transfer value of the instant store as KRW 11, 098,200 (i.e., 10, 548,200, ＋1, 550,000) in accordance with each of the instant contracts, and corrected and notified the Plaintiff of KRW 1, 364,30 for the first quarter of 201 X.

G. On November 201, 201X, the Plaintiff asserted that “the Plaintiff transferred the business to Docheon,” which does not constitute the supply of goods pursuant to each of the instant provisions, and thus, the Defendant cannot impose value-added tax, and even if it constitutes the supply of goods, the actual transaction amount of the instant store is KRW 8.0 billion, and thus, the value-added tax base should be determined on the basis of KRW 8.0 billion.” However, the Tax Tribunal accepted only the claim that the transaction value of the instant store is KRW 8.0 billion, and decided to correct the tax base and tax amount and dismiss the remaining appeal on November 1, 201 X with the transaction value of the instant store KRW 8.0 billion, and accordingly, the amount of value-added tax was reduced to KRW 917 and value-added tax was reduced to KRW 936 (the first reduction of value-added tax in 201).

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 7, Eul evidence Nos. 1 through 6 (including numbers; hereinafter the same shall apply), witness's witness's partial testimony, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) The Plaintiff, while running the instant store and selling real estate, comprehensively transferred the entire business including the instant store to DoD through the instant transaction. As such, the Defendant may not impose value-added tax on the instant transaction on the Plaintiff pursuant to each of the instant provisions.

2) Since the Plaintiff newly built and sold a commercial building, the main issue in terms of business registration is the new construction and sale of the newly built real estate, so it is recognized that the main issue is classified as real estate sales business, and that the sale of real estate is the sale of real estate. Even if the identity of the business is not recognized, according to each provision of the instant case, even if the transferee added or changed the type of business after the acquisition of the business, it constitutes a "transfer of the business" as provided in each provision of the instant case, and therefore, it does not interfere with deeming the instant transaction as a "transfer of the business."

In addition, even if DoD did not succeed to part of the Plaintiff's obligations related to the Plaintiff's business properly, it does not hinder the transaction of this case as "transfer of business".

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Each of the instant provisions provides that transferring a business, which comprehensively succeeds to all the rights and obligations pertaining to the business, does not constitute a supply of goods. The term “transfer of a business not deemed a supply of goods” refers to a comprehensive transfer of physical and human facilities, rights and obligations, etc., including a business property, to replace only a business owner while maintaining the identity of the business. As such, the relevant business should be an organic combination of human and physical facilities that can be separated from the business owner and can be recognized as a social independence. The fact that the object of transfer is not a simple physical facility, but such organic combination is not a value-added tax, and the burden of proof for such transfer is the taxpayer (see, e.g., Supreme Court Decision 2005Du17294, Nov. 29, 2007).

2) In light of the above legal principles, in light of the following circumstances, which can be acknowledged by comprehensively taking into account the health stand, the evidence as seen earlier, and the overall purport of the pleadings, the fact acknowledged and the evidence submitted by the Plaintiff alone are merely an organic combination of human and physical facilities, which can be recognized as having been separated from the management body and can be recognized as having been socially independent, or it is insufficient to deem that the instant transaction comprehensively transfers the business and is replaced only by the management body while maintaining the consistency of the business, and there is no other evidence to acknowledge otherwise.

Therefore, the Plaintiff’s assertion is without merit, and the instant transaction constitutes the supply of goods subject to the imposition of value-added tax, and the instant disposition is lawful.

A) Under the title of each contract of this case, the Plaintiff transferred all of its business assets and liabilities and agreed on the value of its business assets and liabilities on the basis of the balance sheet and inventory, and the Plaintiff transferred all of its business operation through the store of this case. However, in each contract of this case and each contract for sale (Evidence A) made between the Plaintiff and DoD and KimF at the time, only determined the transaction price of this case based on the price of the store of this case. There is no evidence that the Plaintiff assessed its assets and liabilities related to the business of this case and its business or transferred its business secrets and management organization, and it is difficult to view that there is no specific data on the balance sheet or list of employees succeeded to the employment relationship of the Plaintiff. However, it is difficult to see that DoD comprehensively transferred the business of this case to the employees of this case without any objective evidence that it did not meet the requirements of the Plaintiff’s employment agreement, in light of the following:

B) The concept of "transfer of business" subject to non-taxation of value-added tax provides that "the transferee shall include the case where the transferee adds a new type of business or changes the type of business other than the succeeded business." However, this is basically based on the premise that a comprehensive business transfer exists, and thus, it is not possible to apply each provision of this case if the comprehensive business transfer itself is not recognized.

3. Conclusion

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