Review Division 2013-0163 ( November 25, 2013)

A businessman under the Value-Added Tax Act refers to a person who continuously and repeatedly supplies goods or services.

The former Value-Added Tax Act provides that a person who independently supplies goods or services for a business purpose is a person liable for value added tax, regardless of whether it is for profit-making purpose, and this means a person who continuously and repeatedly supplies goods or services in the form of a business to the extent that he/she can create a value added tax.

Article 2 of the Value-Added Tax Act

2014 disposition of revocation of imposition of value-added tax and global income tax

KimA

〇〇세무서장

March 31, 2015

April 28, 2015

1. Each disposition taken by the Defendant against the Plaintiff on July 16, 2013, the second value-added tax base for the year 2006, and the global income tax base for the year 2006, shall be revoked.

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

Cheong-gu Office

The same shall apply to the order.

1. Details of the disposition;

A. On October 00, 000, the Plaintiff purchased an O-dong O-dong O-dong ○00 square meters (hereinafter “instant land”) from OOO-dong O-dong ○, and completed the registration of ownership transfer on the instant land on October 00, 00, and newly constructed a detached house with a total floor area of 000 square meters (hereinafter “instant house”) on the ground. On October 00, 2000, the Plaintiff sold the instant land and the instant house to OOO-dong ○○, O-dong ○, O-dong ○, and sold it to OO-ship on the instant land in total before obtaining approval for use (approval date: September 1, 2006) of the instant house.

B. The Plaintiff sold the instant land and housing as above, but around October 000, reported and paid only the transfer income tax on the instant land transfer.

C. From Oct. 0, 00 to Oct. 00, 2000, the Defendant conducted an individual integrated investigation with the Plaintiff and the Plaintiff’s husband B, etc., on the following grounds: (a) the Plaintiff newly constructed the instant house on the instant land while operating the Housing Construction and Sales Business without registration; and (b) sold it to thisCC before approval for the use of the building; and (c) sold it to it; and (d) evaded income tax, value-added tax, etc. on the ground that the 10-year exclusion period under Article 26-2(1)1 of the Framework Act on National Taxes was applied to the Plaintiff on Oct. 0, 200, on the ground that the income tax and value-added tax were evaded; (b) the Plaintiff’s imposition period of KRW 206 for the transfer of the instant house was reduced to 00,000,000 for the total amount of KRW 20,000,000 for 0,000 for 20,000.

D. As to this, the Plaintiff filed a request for examination with the Commissioner of the National Tax Service on October 00, 000, but the Commissioner of the National Tax Service dismissed the said request on October 00, 000.

[Ground of recognition] Facts without dispute, Gap evidence Nos. 1 through 5, Eul evidence Nos. 1, 2, 5, and 6 (including each number), the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiff, as a member of the family registry of the Plaintiff, only constructed the instant house to reside in the Plaintiff’s family, and does not operate the Housing Construction and Sales Business. Thus, the Plaintiff is not a “business operator liable to pay value-added tax with respect to the transfer of the instant house,” but for the same reason, the income accrued from the sale of the instant house is not a business income. Therefore, the instant disposition that imposed value-added tax and the

B. Relevant statutes

The entries in the attached Table-related statutes are as follows.

(c) Fact of recognition;

The following facts can be acknowledged in full view of the above evidence, Eul evidence No. 8 and the purport of the whole pleadings.

1) Around October 00, 000, the Plaintiff purchased the instant land from OOOwon and completed the registration of ownership transfer under the Plaintiff’s name on October 00, 000. Around October 00, 000, the Plaintiff newly constructed the instant housing upon obtaining a construction permit to construct the instant housing on the instant land as the owner of the building around October 00.

2) On October 00, 000, the Plaintiff, along with an OOO (OOO, OOO, for the instant land purchase price, and for the instant housing purchase price), sold the instant land to thisCC along with the sales contract and the sales contract for the instant land separately.

3) As above, the Plaintiff: (a) sold the instant land and housing to CC; (b) concluded a special agreement with the Plaintiff stating that “(i) repair of the instant housing without compensation for one year; (ii) construction of steel gate after completion; (iii) completion of construction; and (iv) acquisition of the responsibility and completion of construction; and (v) the Plaintiff bears the penalty and penalty due to the occupancy before completion of construction.”

4) On October 00, 000,CC completed the registration of ownership transfer on the instant land, and completed the registration of ownership transfer on October 0, 000 with approval for use of the instant housing on October 0, 000 after filing a report on the change of construction participants (owner) on October 0 of the same year.

5) On October 1, 000, the Plaintiff reported to the Defendant the tax base of capital gains tax and reported only the capital gains tax on the instant land as if only the instant land was transferred without excluding the part on the instant land.

6) On October 00, 000, this BB, the husband of the Plaintiff, purchased 00 00,000 OO-dong No. 000,000 O-dong No. 0000 (O-dong and O-O-village) from around that time.

D. Determination

1) Article 2(1) of the former Value-Added Tax Act (amended by Act No. 9915, Jan. 1, 2010) provides that a person who independently supplies goods or services for a business purpose is a person liable for value-added tax regardless of the existence of profit-making profit. Here, “a person who independently supplies goods or services for a business purpose” refers to a person who supplies goods or services in the form of business to the extent that he/she can create a value-added and continuously and repeatedly. Moreover, business income subject to income tax refers to the income generated from a business that continues to and repeatedly is an independent entity for profit-making purposes.

In addition, according to Article 19(1)6 of the former Income Tax Act (amended by Act No. 8825 of Dec. 31, 2007) and Article 32(1)1 of the Enforcement Decree of the same Act (amended by Presidential Decree No. 22034 of Feb. 18, 2010), business income includes income generated from a housing construction and sales business that sells a house. In such cases, whether a real estate is a business income or a transfer income under the Income Tax Act shall be determined according to ordinary social norms, considering the transferor’s acquisition and possession of real estate, whether the transfer is for profit, whether the transfer is made, whether the transfer is for profit, and the continuity and repetition of business activities to the extent that the transfer is deemed as business activity. In such judgment, not only is it related to the relevant transferred real estate, but also all the circumstances before and after the time the transfer took place throughout the entire real estate owned by the transferor.

2) According to the above evidence, the plaintiff and the plaintiff's husband purchased 00,000 OO-Gu 00,000 and 0000 O-si 0,000 (O-dong and O-O-dong) from the time when the plaintiff and the plaintiff's husband purchased O-dong 00,000 square meters from the time when they purchased O-si O-dong 00,000 square meters from the time when they purchased O-dong 00,000 square meters of O-dong 00,000 square meters of O-dong 0,000 and before the approval for use of O-dong 205, and the plaintiff purchased O-dong 200,000 square meters of O-dong O-dong 00,000 square meters from the time when they were living in the above O-si O-dong O-dong 200, and it can be acknowledged in light of the following facts.

① However, the Plaintiff newly constructed a house and sold it to a third party before obtaining approval for its use, and allowed it to make a registration of ownership preservation on the house more than once. ② The Defendant, the Plaintiff’s husband, sold the house several times through the above method, and the Plaintiff’s sale of the house is the same as that of the Plaintiff, so it is alleged that the Plaintiff can be recognized as a business operator of the Housing Construction and Sales Business Operator. However, there is no evidence to acknowledge that the Plaintiff and the above BB jointly operated the above business, it is difficult to view that the above BB should be determined as the Plaintiff’s business operator, including the circumstances in which the Plaintiff and the above BB jointly sold the house to a third party. ③ Therefore, even if the Plaintiff and the above BB were in a special relationship with the Plaintiff, it seems reasonable to determine the Plaintiff’s business operator based on only the real estate acquired by the Plaintiff and the current status, and the number, etc. of each disposition of value-added tax and global income tax are imposed separately from the above BB, the evidence submitted by the Defendant alone is insufficient to deem that the Plaintiff’s sale of the house in question.

Therefore, the disposition of this case, which is based on the premise that the plaintiff is a business operator who is liable to pay taxes under the Value-Added Tax Act, and that the plaintiff has income generated from the housing construction and sales business

3. Conclusion

Therefore, the plaintiff's claim of this case is justified and it is so decided as per Disposition.