Early High Court Decision 2013J 4315 (Law No. 17, 2014)

Medical services established and provided by a member jointly with a person who is not a doctor shall not be exempt from tax.

Medical and health services provided after jointly establishing a medical institution by persons who are not doctors under the Medical Service Act and doctors under the Medical Service Act shall not be subject to value-added tax exemption.

Article 12 of the former Value-Added Tax Act

2014Guhap4557 Disposition to revoke the imposition of value-added tax

Gangwon A

○ Head of tax office

o October 10, 2014

November 21, 2014

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The Defendant’s imposition of each value-added tax and additional tax on July 1, 2013 against the Plaintiff is revoked.

1. Details of the disposition;

A. From November 24, 2008 to May 17, 2010, the Plaintiff, a medical doctor, operated “BBmerck Rehabilitation Doctor” (hereinafter “instant Council member”) in collaboration with a regularCC, not a medical practitioner. The Plaintiff, who was issued a summary order of KRW 5,00,000 (○○ District Court ○○○○○○○○ Branch 201 High School 3488), issued a fine for violation of the Medical Service Act that jointly operated the instant Council member, and the said summary order became final and conclusive as it is. However, the Defendant deemed that the Plaintiff’s medical and health services provided by the instant Council member jointly with Jeong-gu, a non-medical person, were exempt from the Value-Added Tax Act (wholly amended by Act No. 11873, Jun. 7, 2013; hereinafter referred to as “the Additional Tax Act”) and the Additional Tax Act’s attached Table 201 to 2012.15.25

C. On September 25, 2013, the Plaintiff filed an appeal with the Tax Tribunal seeking revocation of each of the dispositions of this case, but was dismissed on March 17, 2014.

Facts without any dispute arising from recognition, Gap's 1, 2, Eul's 1 and 2 (including branch numbers), and the purport of the whole pleadings

2. Whether the disposition is lawful;

A. The plaintiff's assertion

Whether the Plaintiff’s act of jointly operating the instant member, a non-medical person, was in violation of the Medical Service Act or not, and thus, the Plaintiff is a medical doctor who provides the medical health services. Therefore, the service itself should be deemed to constitute a medical health service exempt from value-added tax pursuant to the relevant statutes. Therefore, each of the dispositions of the instant case where the Defendant deemed that the medical health service provided by the Plaintiff does not constitute a medical health service exempt from value-added tax

B. Relevant statutes

The statutes related to the instant case shall be as shown in the attached Form.

C. Determination

Article 12 (1) 4 of the former Value-Added Tax Act provides that "medical and health services prescribed by Presidential Decree as one of the objects eligible for the exemption of value-added tax", and Article 29 of the former Enforcement Decree of the Value-Added Tax Act (amended by Presidential Decree No. 22578, Dec. 30, 2010; hereinafter referred to as the "former Enforcement Decree of the Value-Added Tax Act") provides that "medical and health services under Article 12 (1) 5 of the former Enforcement Decree of the Value-Added Tax Act shall be as follows" and subparagraph 1 provides that "services provided by doctors, etc. under the Medical Service Act".

In light of the language, purport, system, etc. of the statutory provisions, it is reasonable to view that medical and health services exempt from value-added tax pursuant to Article 12(1)5 of the former Value-Added Tax Act and Article 29(1) of the former Enforcement Decree of the Value-Added Tax Act refer to medical and health services provided pursuant to the Medical Service Act or the Veterinarians Act as the subject of supply.

Furthermore, in light of the language and purport of Article 33(2)1 of the Medical Service Act that provides that a person who is not a doctor or a doctor shall not establish a medical institution; and the establishment and operation of a medical institution with a person who is not a medical practitioner is punished as a violation of the main sentence of Article 33(2) of the Medical Service Act (see, e.g., Supreme Court Decision 2004Do7245, Feb. 25, 2005), a person who is not a doctor under the Medical Service Act may not establish a medical institution jointly with a doctor under the Medical Service Act; thus, medical and health services provided after a person who is not a doctor under the Medical Service Act and a doctor under the Medical Service Act jointly establish a medical institution shall be deemed not subject to value-added tax exemption under Article 12(1)5 of the former Value-Added Tax Act; Article 29 subparag. 1 of the former Enforcement Decree of the Value-Added Tax Act (see, e.g., Supreme Court Decision 2011Du58

Therefore, the medical and health services provided by the Plaintiff in collaboration with JungCC, which is not a medical personnel, are not subject to value-added tax exemption under Article 12(1)5 of the former Value-Added Tax Act, and it cannot be viewed any different because the Plaintiff, a medical doctor, actually provided medical and health services. Therefore, each of the dispositions of this case on the same ground is lawful.

3. Conclusion

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