Supreme Court-2013-Du-24310 ( October 13, 2014)

Accumulation of allowances for severance benefits shall not constitute personnel expenses subject to tax credit for research and development expenses.

The following wages paid on a lump sum taking into account the long-term continuous service period, such as retirement allowances, cannot be deemed as expenses directly connected to research and human resources development for the pertinent taxable year. The allowance for severance benefits reasonably estimated the amount of expenses for the purpose of calculating profit and loss for a reasonable period, and thus cannot be deemed as constituting labor expenses subject to tax credit for political purposes.

Article 10 of the Restriction of Special Taxation Act

Seoul High Court 2014Nu3565 Revocation of Disposition Rejecting Corporate Tax Correction

Hyundai Automobile Corporation

Head of Seocho Tax Office

Seoul Administrative Court Decision 2012Guhap4058 decided April 12, 2013

Seoul High Court Decision 2013Nu13534 Decided October 23, 2013

Supreme Court Decision 2013Du24310 Decided March 13, 2014

June 27, 2014

September 5, 2014

1. Revocation of a judgment of the first instance;

2. The plaintiff's request is dismissed.

3. All costs of the lawsuit shall be borne by the Plaintiff.

1. Purport of claim

For the business year of 2008 that the Defendant issued to the Plaintiff on October 00, 2012, revocation of each disposition rejecting correction of KRW*,***,***,***, and Corporate Tax for the business year of 2009,****,**,***,**,**,**,***, and**, respectively;

2. The purport of appeal is the same;

1. Details of the disposition;

This part of the reasoning of the judgment of the court of first instance is the same as the period of the second to third to 11 out of the grounds of the judgment of the court of first instance. Thus, Article 8-2 of the Administrative Litigation Act and the main sentence of Article 420 of the Civil Procedure Act are applied.

2. Whether the instant disposition is lawful

The personnel expenses of the researchers recognized as eligible for tax credit under the Restriction of Special Taxation Act include retirement benefits appropriation funds, and the instant disposition made on the premise different from this is unlawful.

Even if allowances for severance and retirement benefits are not included in the bonus of a researcher recognized as eligible for tax credit under the Restriction of Special Taxation Act, the portion corresponding to the period of continuous service in the instant research institute out of the amount of retirement allowances actually paid to employees belonging to the retired research institute during the instant business period from 2008 to 2010 shall be included in the amount of personnel expenses eligible for tax credit for research and human resources development expenses.

(b) Related statutes;

It is as shown in the attached Table related statutes.

C. Determination

(1) Article 10(1) of the former Restriction of Special Taxation Act (amended by Act No. 9272 of Dec. 26, 2008 and Article 10(1) of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Act No. 9921 of Jan. 1, 2010; hereinafter referred to as the "former Restriction of Special Taxation Act") provides that where a national has expenses prescribed by Presidential Decree (hereinafter referred to as "research - human resources development expenses") among expenses for research and human resources development for each taxable year, the amount prescribed in each of the following subparagraphs shall be deducted from the income tax or corporate tax for each taxable year. Accordingly, Article 9(2)6 of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 21307 of Feb. 4, 2009) and Article 8(1)6 of the former Enforcement Decree of the Restriction of Special Taxation Act (amended by Presidential Decree No. 23590 of Feb. 2, 2012).

The purpose of the tax credit system for research and manpower development expenses under the Restriction of Special Taxation Act is to deduct a certain amount from the income tax or corporate tax for the pertinent taxable year in cases where there are personnel expenses within a certain scope required by the department exclusively in charge of research and development of a company (see Supreme Court Decision 9Du8718, Jan. 19, 2001). Accordingly, only the expenses directly corresponding to research and human resources development in the pertinent taxable year should be eligible for tax credit. However, it cannot be deemed that the amount of subsequent unpaid wages arising from the duty to pay after the termination of a labor contract, such as retirement allowances, is the expenses directly corresponding to research and human resources development in the pertinent taxable year, and even if retirement allowances are included in deductible expenses because the amount of income for the pertinent taxable year under the Corporate Tax Act, it is nothing more than the calculation of the amount of expenses for a reasonable period of time for the purpose of calculating profit and loss, and thus, it does not constitute a tax credit for retirement expenses under Article 10(1) of the former Restriction of Special Taxation Act.

3) Retirement pay portion

As seen above, the duty to pay is created only when the contract is terminated.

“The retirement allowance, which is a later-paid wage, cannot be deemed to be “expenses directly corresponding to the research and human resources development for the pertinent taxable year”, and thus, even if the Plaintiff actually paid retirement allowances to the employees of the retired research institute during the pertinent business period, the portion corresponding to the period of continuous service in the instant research institute out of the total one-time amount can not be included in the labor expenses subject to deduction of the amount of research and human resources development expenses tax under Article 10(1) of the former Restriction of Special Taxation Act by estimating the proportion corresponding to the period of continuous service in the instant research institute (the Plaintiff did not submit the materials related to the retirement allowances actually paid to the employees of the retired research institute during the pertinent business period, and the amount of the retirement allowances actually paid to the employees of the retired research institute during

3. Conclusion

Therefore, the plaintiff's claim shall be dismissed as it is without merit, and the judgment of the court of first instance shall be revoked and the plaintiff's claim shall be dismissed. It is so decided as per Disposition.