Whether the transfer of a building by a real estate sales businessman who has contributed to a rental business constitutes a comprehensive transfer;

It does not correspond to the comprehensive acquisition of business that a real estate sales broker transfers a building for a short time to a real estate sales broker until the time of transfer of the building.

Article 1 of the Value-Added Tax Act

Article 6 (Supply of Goods)

[Seoul High Court 2007Nu4744 (Law No. 11, 2007)]

1. The plaintiffs' appeal is dismissed.

2. The costs of appeal are assessed against the Plaintiffs.

The judgment of the first instance shall be revoked. The defendant revoked the disposition of imposition of value-added tax of KRW 370,375,780 for the first taxable year of 2003, which was imposed by the defendant against the plaintiffs on June 16, 2005 (the plaintiff reduced the purport of the claim in the trial).

1. Quotation of judgment of the first instance;

The reasoning of the judgment of this court is as follows: "No. 385,583,380 won of value-added tax for the first half of the year 2003 was imposed and notified" among the judgment of the court of first instance; "No. 385,583,380 won of value-added tax for the first half of the year 2003 shall be imposed and notified. On the other hand, the defendant, on July 23, 2007, where the lawsuit of this case was pending, reduced 15,207,60 won of value-added tax for the reason that value-added tax is included in the building of this case among the purchase price of this case, 385,583,380 won of value-added tax for the second half of the judgment of the court of first instance, 370,375,780 won of value-added tax for the first half of the year 203 (hereinafter "370,375,780 won of the judgment of this case") and 214th of the pleadings.

2. Additional matters to be determined;

Although the plaintiffs asserted that the defendant had not received value-added tax separately from the purchase price of the real estate in this case, the defendant was separately paid the value-added tax. However, as seen above, since the defendant accepted the plaintiffs' assertion on July 23, 2007 and reduced value-added tax, the plaintiffs' assertion against this is without merit.

3. Conclusion

Therefore, the judgment of the first instance court as to this conclusion is justifiable, and the plaintiffs' appeal is dismissed as it is without merit. It is so decided as per Disposition.

[Seoul Administrative Court 2006Guhap15172, Dec. 29, 2006]

1. The plaintiffs' claims are dismissed.

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

The Defendant’s imposition of value-added tax of KRW 385,583,380 for the first taxable year of 2003 against the Plaintiffs on June 16, 2005 shall be revoked.

1. Details of the disposition;

A. On March 22, 2002, the Plaintiff 00, 000, 00, 000, 000, 000,000 square meters of land, and the Plaintiff 200,000,000 square meters of land and 349.3 square meters of land, respectively, were newly constructed on each of the above sites (hereinafter “instant site”). On January 25, 200, the Plaintiff 200 newly constructed a residential facility with the first floor, 5 stories of ground, 2,360.92 square meters of the total floor area on each of the instant sites (hereinafter “instant site”); and the Plaintiff 200,000 registered the ownership of the Plaintiffs on January 25, 2003.

B. On September 12, 2002, the Plaintiffs registered the business with the trade name of ○○○○○○, a primary business as a new real estate sales business, and the location of the business place as ○○-dong, Seoul, ○○-dong.

C. On April 23, 2003, the Plaintiffs entered into a real estate sales contract that sells the instant real estate in KRW 6,680,000,000 with Kim○○○, the Plaintiffs agreed to acquire the rental deposit of KRW 580,000 and the bank loans of KRW 3.4 billion with respect to the instant real estate and deduct them from the balance. On May 28, 2003, the Plaintiffs completed the registration of ownership transfer with Kim○○ on May 28, 2003.

D. The plaintiffs did not report the value-added tax for 2003 on the ground that the transfer of the real estate in this case constitutes a comprehensive transfer of business. Meanwhile, the head of ○○ Tax Office, the head of the tax office having jurisdiction over the plaintiffs’ domicile, upon conducting a tax investigation on the transfer of the real estate in this case, reported the transfer value of the real estate in this case to KRW 5 billion, but the plaintiffs confirmed that the actual transaction value was KRW 6.8 billion and imposed the comprehensive income tax on the plaintiffs about KRW 1.68 billion. The transfer of the real estate in this case does not constitute a comprehensive transfer of business, but is a supply of goods under a real estate sales contract, subject to value-added tax, and thus, notified the defendant who is the head of the tax office having jurisdiction over the place of business to collect the value-added tax. On June 16, 2005, the defendant issued the disposition in this case imposing and notifying the plaintiffs of KRW 385,583,380 for the first

[Reasons for Recognition] Facts without dispute, Gap evidence 3, Gap evidence 8-1, 2, Eul evidence 1, Eul evidence 2-3, Eul evidence 3, Eul evidence 4-1, 2, the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

The Plaintiffs comprehensively transferred all rights and obligations relating to real estate leasing business to Kim ○, a transferee, including the lease deposit, etc. on the instant real estate, and such transfer constitutes a transfer of business not deemed the supply of goods under the Value-Added Tax Act, but the instant disposition imposing and notifying value-added tax by deeming it as the supply of goods is unlawful.

(b) Related statutes;

Value-Added Tax Act

Article 1 (Taxable Objects) (1) Value-added tax shall be imposed on the following transactions:

1. Supply of goods or services; and

Article 6 (Supply of Goods)

(1) The supply of goods shall be a delivery or transfer of goods pursuant to all contractual and legal grounds.

(6) The goods falling under any of the following subparagraphs shall not be deemed the supply of goods:

2. Transfer of business as prescribed by the Presidential Decree, but if an entrepreneur delivers a tax invoice under Article 16, excluding such cases as prescribed by the Presidential Decree; and

Enforcement Decree

Article 2 (Scope of Services) (1) Services referred to in Article 1 (3) of the Act shall be all of the services and activities falling under each of the following subparagraphs:

6. Real estate business and leasing business: Provided, That this shall exclude rice paddy, field field, orchard, stock farm site, forest land, or salt farm lease business;

(2) Notwithstanding paragraph (1), any business prescribed by the Ordinance of the Ministry of Finance and Economy among construction business and real estate business shall be deemed a business supplying goods.

Article 17 (Provision of Security, Transfer of Business and Payment of Taxes in Kind)

(2) Notwithstanding paragraph (1), any business prescribed by the Ordinance of the Ministry of Finance and Economy among construction business and real estate business shall be deemed a business supplying goods.

Article 17 (Provision of Security, Transfer of Business and Payment of Taxes in Kind)

(2) "Those prescribed by Presidential Decree" in the main sentence of Article 6 (6) 2 of the Act shall be deemed as comprehensively succeeded to the business concerned even if each place of business (including cases of transfer by business division in cases of division or merger after division under the Commercial Act) succeeds to the business concerned without including those falling under any of the following subparagraphs:

1. The amount receivable;

2. A document concerning accounts payable;

3. Land, buildings, etc. not directly related to the relevant business as prescribed by the Ordinance of the Ministry of Finance and Economy.

(3) The term “cases as prescribed by the Presidential Decree” in the proviso of Article 6 (6) 2 of the Act means the case where the tax amount collected by the transferor of business under Article 15 of the Act is returned and paid under Article 18 or 19 of the Act.

Enforcement Rule of the Value-Added Tax Act

Article 1 (Scope of Business) (2) The term "business prescribed by the Ordinance of the Ministry of Finance and Economy" in Article 2 (2) of the Decree means the sale or purchase of real estate (including the sale or purchase by self-construction and construction of a residential or non-residential building and other buildings) or the sale or purchase of real estate at least once during one taxable period for the purpose of business, and the sale or purchase of real estate at least twice for the purpose of business.

(c) Fact of recognition;

(1) On September 12, 2002, the Plaintiffs: (a) registered the business of the Defendant on the main place of business, (b) the building construction and sale, and (c) the location of the main place of business as ○○○-dong, Seoul, ○○○-dong; (b) leased part of the instant real estate to 12 persons, including Gamb○, etc.; (c) sold the instant real estate to Kim○○ on April 23, 2004; and (d) closed on May 31, 2005.

(2) At the time of the acquisition of the instant land, the Plaintiffs received a loan of KRW 2,292,00,000 from the ○○○○○○○○ branch, and subsequently received an additional loan in the process of constructing the instant building, and at the time of transferring the instant real estate, the amount of debt to the financial institution was KRW 3.4 billion. Meanwhile, the Plaintiffs’ real estate lease income from January 21, 2003 to May 28, 2003 was the amount of deposit deposit KRW 5.88 million, monthly rent revenue was the amount of KRW 2.2 million.

(3) With respect to the new construction of the instant building, the Plaintiffs received a refund for facility investment refund amounting to KRW 125,080,000 from February 2, 2002 to the first period of 2003, and calculated the amount of income by applying the simple expense rate of the new construction and sale business to the transfer of the instant real property when filing a global income tax return for the global income tax for 2003.

(4) According to the instant real estate sales contract drawn up on April 23, 2003 between the Plaintiffs and Kim ○○, the sales price of the instant real estate shall be KRW 6.68 billion, and the down payment shall be KRW 6.8 billion, and the remainder KRW 6 billion shall be paid at the time of the contract, and the remainder shall be KRW 3.4 billion, the sum of the financial right loan obligations related to the instant real estate and the deposit deposit shall be succeeded by the purchaser and the remainder shall be paid on May 28, 2003.

(5) Meanwhile, in relation to the instant real estate, the sales contract includes the following: (a) the seller succeeds to the amount of KRW 4.3 million received by the seller in advance from the buyer; and (b) the seller’s monthly rent is based on the balance date; and (c) subsequent profits are attributed to the buyer; and (d) the buyer cooperates in establishing a right to lease on a deposit basis in the name of the lessee when the private teaching institute moves into the third and fourth floors of the instant real estate.

(6) On April 15, 2003, Plaintiff 00 established a new real estate sales corporation under the name of “○○○○○○○○○○○○○○○,” among the instant real estate, at the location of its business place, and the Plaintiff ○○○ was running the construction/construction business with the trade name of “○○○○○○○○” from October 8, 201 to March 31, 2002.

[Reasons for Recognition] A-4 Evidence No. 1-14, A5-7 Evidence No. 5-1-4, Eul evidence No. 6-1-2, Eul evidence No. 7, Eul evidence No. 8, and the purport of the whole pleadings

D. Determination

(1) The transfer of a business not deemed the supply of goods under Article 6(6) of the Value-Added Tax Act and Article 17(2) of its Enforcement Decree refers to the comprehensive transfer of physical and human facilities, rights, and duties, etc. including business property, to replace only the management body while maintaining the identity of the business. Thus, the business must be deemed as an organic combination of human and physical facilities, which can be separated from the management body and be recognized as social independence (see, e.g., Supreme Court Decisions 97Nu1278, Jul. 10, 1998; 2002Du8800, Jan. 10, 2003).

According to the above facts, although the plaintiffs paid the price by taking over all financial rights arising in connection with the purchase of the real estate of this case and the construction of new buildings and the rental deposit obligations for lessees in a way of deducting the amount equivalent to the purchase price from the sale price as stipulated in the sales contract at the time when the plaintiffs sell the building of this case, the appraisal of assets and liabilities as well as the appraisal of business rights (personal relation, business secret, business organization, etc.) are very important factors. In the case of the transfer of business, the appraisal of assets and liabilities and the appraisal of business rights (business secret, business organization, etc.) are very important factors. In the case of the sales contract of this case, there seems to be no circumstance to deem that there was the transfer of factual relations, such as large customer relations, business secret, management organization, etc. related to the sale and purchase of the building of this case, in light of the fact that the transaction related to the building of this case was made by the plaintiffs, rather than that it was done by the plaintiffs, it is in accord with the transaction norms or rules.

(2) Meanwhile, whether the transaction of real estate was conducted as part of real estate trading and constitutes supply of goods subject to taxation under the Value-Added Tax Act ought to be determined in light of ordinary social norms by taking into account whether the transaction was conducted for profit and whether the transaction was conducted with continuity and repetition to the extent that it can be seen as a business activity in light of its scale, frequency, mode, etc. (see, e.g., Supreme Court Decision 96Nu8758, Oct. 11, 1996). Furthermore, it cannot be said that the lease of the goods from a newly constructed building during the period of possession for a real estate trading as a business activity would affect the business feasibility of the real estate sales businessman (see, e.g., Supreme Court Decision 9Du7609, Oct. 24, 200).

In light of the above facts, even if the plaintiffs actually engaged in real estate rental business in the real estate of this case and sold it, the period until the time the plaintiffs acquired the land of this case and newly built the building of this case and transferred it is about 12-13 won, and in particular, the real estate rental business period is about 4 months, and the plaintiffs did not gain profits from the lease of this case compared to the amount invested in the financial institution to purchase the real estate of this case and to newly build the real estate of this case, the plaintiffs claimed that the real estate sales business for the purpose of the real estate sales business of this case was estimated by applying the simple expense rate of the new construction sale business of this case to the return of global income tax for 203 global income tax, and the plaintiffs' act of selling the building of this case constitutes an act of real estate sales businessman where the plaintiffs sold the real estate of this case by expressing the purpose of the sale and purchase of the real estate of this case.

(3) Therefore, the instant disposition that deemed the transfer of the instant building as the supply of goods under the Value-Added Tax Act is lawful, and the Plaintiff’s assertion premised on the premise that the transfer of the instant real estate constitutes the comprehensive transfer of real estate rental business is without merit.

3. Conclusion

Therefore, the plaintiffs' claim seeking the cancellation of the disposition of this case is dismissed as it is without merit, and it is so decided as per Disposition.