Transfer of business is a comprehensive transfer of physical and human facilities, rights and duties, etc. to replace only the main body of business while maintaining the identity of the business.

The term "transfer of business not deemed the supply of goods" refers to the comprehensive transfer of physical and human facilities, rights, and duties, etc. including business property, and the replacement of only the management body while maintaining the identity of the business. Therefore, the business should be separated from the management body as an organic combination of human and physical facilities so that the social independence can be recognized, and the burden of proof is the taxpayer.

Article 6 [Supply of Goods] of the former Value-Added Tax Act

2013Guhap21180 Disposition of revocation of the imposition of value-added tax

GuAA

BB Director of the Tax Office

May 20, 2014

June 17, 2014

1. The plaintiff's claim is dismissed.

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

Cheong-gu Office

The imposition of value-added tax for the second period of July 1, 2013 imposed by the Defendant on the Plaintiff on July 1, 2013 is revoked.

1. Details of the disposition;

A. On July 28, 2003, the Plaintiff completed the registration of ownership transfer with respect to OO-gu O-dong Nos. 701 and 801 (hereinafter “instant building”) of O-dong Nos. 22-8 O-dong Nos. 701 and 801 (hereinafter “O-dong Nos. 701”) which is an aggregate building. After that, the Plaintiff was registered as a real estate rental business on October 28, 2008, and carried out real estate rental business in the instant building.

B. On November 18, 2009, the Plaintiff leased the instant building to SungCC as security deposit OO, OO, OO, tea, OO, OO, OO, OO, and the lease period from December 10, 2009 to December 9, 2010. GenderCC operated the instant building with the trade name of DMoel in the instant building.

C. On December 14, 2010, the Plaintiff sold the instant building to SungCC for the purchase price, OO, OO, and OO. The sales contract stated that “the value-added tax on the building is a comprehensive transfer and acquisition” as a special stipulation.

D. On December 22, 2010, the Plaintiff completed the registration of ownership transfer for 1/2 shares of each of the instant building to SungCC and ParkE. Even thereafter, SungCC continued to operate the instant building.

E. On December 21, 2010, the Plaintiff filed a report on closure of real estate rental business, and did not file a value-added tax on the transfer of the instant building upon filing a report on the value-added tax for a period of two years in 2010.

F. On July 1, 2013, the Defendant issued a correction and notification of the value-added tax amounting to KRW OO,OO, andOO (including additional tax KRW O,O, andOO) (hereinafter “instant disposition”). The reason was that the transfer of the instant building does not constitute a transfer of business that was excluded from the object of taxation as stipulated under Article 6(6)2 of the former Value-Added Tax Act (amended by Act No. 10409, Dec. 27, 2010; hereinafter the same shall apply) and Article 17(2) of the Enforcement Decree of the same Act (amended by Presidential Decree No. 22395, Sept. 20, 2010; hereinafter the same).

G. On August 19, 2013, the Plaintiff filed a petition for review seeking revocation of the instant disposition with the Commissioner of the National Tax Service, but the petition was dismissed on October 29, 2013.

[Reasons for Recognition] Facts without dispute, Gap evidence Nos. 1, 2, 3, 5 (including each number, if any; hereinafter the same shall apply), Eul evidence No. 1, and the purport of the whole pleadings

2. Whether the instant disposition is lawful

A. The plaintiff's assertion

1) Article 17(2) of the former Enforcement Decree of the Value-Added Tax Act provides for the transfer of a business that is excluded from value-added tax, even in cases where the transferee changes the type of business other than the business succeeded, and expands the scope of recognition. The continued operation of the instant building without real estate leasing business constitutes a change in the type of business, and thus does not constitute a supply of goods subject to taxation. Accordingly, the instant disposition is unlawful.

2) Article 17(2) of the former Enforcement Decree of the Value-Added Tax Act provides only a part of the real estate acquired by relaxing the requirements for business transfer for the pertinent business, and the remainder is interpreted as being used directly regardless of the pertinent business. The Plaintiff transferred the relevant lease contract to the SungCC and ParkE along with the instant building, and the SungCC continued to engage in the inn business in the instant building, and ParkE leased one-half shares of the instant building to the SungCC. Accordingly, the instant disposition made on the premise that the part of the instant building is not a transfer of business is unlawful.

The Plaintiff submitted to the public official in charge of the Defendant along with a sales contract stating the purpose of the business transfer when reporting the closure of the real estate rental business. This was the same as the transfer of the business, and the Plaintiff was informed that there was no obligation to report value-added tax. Moreover, the Plaintiff did not receive any objection while reporting the closure of the business following the transfer of the business. Furthermore, the National Tax Service rendered that the real estate rental business operator is not subject to value-added tax in the event that the real estate rental business operator transfers the leased object to the lessee

4) Even if the imposition of the principal tax of value-added tax is lawful, the Plaintiff, who was aware of the fact that the transfer of business was not subject to the taxation by the National Tax Service based on the authoritative interpretation of the National Tax Service, does not have the possibility of expectation to make a return and payment. As such, the imposition of the penalty tax following the nonperformance of the tax return and payment during the instant disposition was unlawful. Moreover, the Defendant issued the instant disposition on July 1, 2013 on the ground that the instant disposition was an audit and inspection cadastral record without scarcity, and at least, the disposition imposing additional tax for unfaithful payment was unlawful in light of the good faith

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) Determination on the assertion on the transfer of business following the change of business type

A) Article 6(6) of the former Value-Added Tax Act and Article 17(2) of the Enforcement Decree of the same Act

The transfer of a business that is not deemed a supply refers to a comprehensive transfer of physical and human facilities, rights, and duties, etc. including business property, and to replace only a management body while maintaining the identity of the business (see, e.g., Supreme Court Decision 2004Du8422, Apr. 28, 2006). In addition, the fact that the subject of transfer is not a simple physical facility, but such organic combination is not a value-added tax, and the burden of proof is liable for the failure of taxation (see, e.g., Supreme Court Decision 97Nu12778, Jul. 10, 198).

B) Based on these legal principles, this case is examined.

In selling the instant building to SungCC on December 14, 2010, the Plaintiff stated the special terms and conditions that “the value-added tax on the portion of the building will be comprehensively transferred and acquired” in the sales contract as seen earlier. However, it is difficult to view that the Plaintiff transferred the instant building to SungCC by itself the real estate rental business itself, which the Plaintiff had been engaged in in in the instant building while transferring the instant building to SungCC solely with the said special terms and conditions alone. Moreover, it is difficult to acknowledge the fact that the Plaintiff transferred the real estate rental itself to SungCC by itself, and there is no other evidence to acknowledge it otherwise.

Rather, in light of the overall purport of each of the above evidence, the Plaintiff’s assertion against SCC

In light of the fact that the contract for the transfer of the instant building is clearly stated as a sales contract, and that the SungCC continues to engage in the business in the instant building after being transferred the instant building that had engaged in the business by leasing the building from the Plaintiff and taking over the said building. In addition, Article 65(1)2 of the former Enforcement Decree of the Value-Added Tax Act requires the submission of a business transfer report in the event that the business is transferred in the course of filing a final return on the value-added tax, the Plaintiff submitted a business transfer report instead of submitting a business transfer report stating specific business transfer details, such as the transfer of physical, human facilities and rights and obligations, such as business property. In light of the fact that the Plaintiff submitted only a sales contract in which the agreement to comprehensively transfer and acquire the value-added tax on the building was added, it is reasonable to deem that the Plaintiff did not transfer the real

C) Furthermore, even if Article 17(2) of the former Enforcement Decree of the Value-Added Tax Act provides for the transfer of business including the case where the transferee changes the type of business other than the business succeeded, it should be deemed that at least at the time of transfer of business, the transferee is premised on the assumption that the transferee succeeds to the legal status of the same degree as the transferor by comprehensively taking over all human and physical facilities and rights

As seen earlier, the SungCC can only recognize the fact that it continues to engage in the inn business in the instant building that was leased from the Plaintiff and engaged in the inn business, and it cannot be deemed that it was intended to engage in a real estate leasing business after taking over the instant building. The reason why the innCC takes over the instant building is right and wrong to deem that it is necessary to acquire the instant building that has been engaged in the inn business and provide it as physical facilities for the operation of the inn business by leasing it to a third party, and there is no evidence to acknowledge it otherwise.

Therefore, it is difficult to see that the Plaintiff succeeded to the real estate rental business as it is, and since it cannot be deemed that the sexualCC changed the type of the real estate rental business to the inn business, the Plaintiff’s above assertion based on this premise is without merit.

2) Determination as to the assertion on the transfer of business following the partial lease of the instant building

The fact that SungCC was transferred the instant building from the Plaintiff, and the fact that SungCC and ParkE completed the registration of ownership transfer with respect to each of the instant buildings 1/2 shares among the instant buildings is as seen earlier. According to the purport of Gap evidence 5-1 and Gap evidence 5-2 and the entire pleadings, SungCC may recognize the same fact as the registration of its own business in the instant building, and the address of SungCC and Park E-E on the register of Sungwon-gu, Sungwon-dong, Sungwon-dong, 44-1, 104, 101.

In light of these facts, the SungCC independently transfers the instant building from the Plaintiff.

A. It is reasonable to view that a person is engaged in a inn business at the same place. ParkE cannot be deemed as having received the instant building from the Plaintiff or having received the real estate rental business, and there is no other evidence to acknowledge otherwise. GenderCC and ParkE merely have registered only the ownership of the instant building according to the internal relationship with the Plaintiff for each share, and ParkE cannot be deemed as having leased its own share among the instant building by succession to the Plaintiff’s real estate rental business.

Therefore, the plaintiff's above assertion on different premise is without merit.

3) Determination on the assertion of violation of the principle of trust protection or non-taxable practice

A) Relevant legal principles

The principle of trust and good faith, the principle of protection of trust, or the principle of respect for non-taxable practices in tax and legal relations are exceptional legal principles only where there are special circumstances deemed that the protection of taxpayer's trust is consistent with the justice even if they sacrifice the principle of legality. Therefore, in order to apply the principle of trust and good faith or the principle of protection of trust to a tax authority's act, the average taxpayer's trust given by the tax authority through the public opinion list, etc. should have an average taxpayer reasonable and justifiable expectation. Even if the tax authority expressed a certain opinion through a questioning inquiry, if it results in questioning without revealing the important facts and legal issues, it cannot be deemed that there is a trust that can lead to a legitimate expectation by the public opinion list.

In addition, the principle of respect for non-taxation may also be applied to the interpretation of the tax-related Act or the practice of national tax administration, which is generally accepted by the taxpayers with respect to non-taxation. This means, even erroneous interpretation or practice, it means that a taxpayer, not a specific taxpayer, has been accepted as justifiable by the general taxpayer without any objection, and it reaches the extent that it is not unreasonable for the taxpayer to trust such interpretation or practice. The mere fact that the taxpayer has expressed a public opinion on the standard of interpretation of the tax-related Act does not necessarily mean that such interpretation or practice exists, and the burden of proving the existence of such interpretation or practice is the taxpayer (see, e.g., Supreme Court Decision 2011Du5940, Dec. 26, 2013).

B) Determination on the assertion of violation of the principle of trust protection

There is no evidence to acknowledge that the Defendant’s public official informed the Plaintiff that the instant building was transferred to the Plaintiff as the transfer of the business.

Even if the public official in charge of the defendant expressed a certain opinion on the plaintiff's question, if it follows the question without revealing the important facts and legal issues properly, it cannot be viewed as a case where there is a trust to give legitimate expectations by the name of public opinion. However, there is no evidence to acknowledge the fact that the plaintiff made an inquiry to the public official in charge of the defendant, by clarifying such facts and legal issues.

In addition, even if the Defendant’s public official did not raise any objection while accepting the Plaintiff’s report of business closure following the Plaintiff’s business transfer, it is nothing more than expressing the Plaintiff’s attitude of the taxation authority regarding the Plaintiff’s report of business closure by the investigation until the time of the report. Therefore, it cannot be deemed that the Plaintiff had reasonable and justifiable expectations, and even if the tax disposition was issued later, it cannot be deemed to violate the principle of

C) Determination on the assertion of non-taxable practices

According to Gap evidence No. 4, it is recognized that the National Tax Service interpreted that the lessee, who has conducted a bath business or a restaurant business by leasing all or part of the real estate provided to the lease business through consultation with individual taxpayers on April 13, 2007, February 22, 2008, and October 28, 2009, can be viewed as a transfer of business subject to non-taxation under the former Value-Added Tax Act after comprehensively taking over the rights and obligations of the real estate in question.

However, in light of the following circumstances, it is difficult to deem that the above fact-finding alone cannot be deemed as a interpretation of the tax law or a practice of national tax administration accepted by taxpayers, and it is difficult to deem that the taxpayer’s trust in such interpretation or practice has reached the extent that it is not unreasonable to accept it as justifiable by an unspecified general taxpayer.

① As a result of the National Tax Service’s interpretation based on the above facts, it was conducted through consultation with an individual taxpayer, and its specific factual basis is different, and it is difficult to deem it as a general non-taxation practice regarding the

② Also, the National Tax Service’s interpretation is premised on the comprehensive transfer of all human and material rights and obligations, including the pertinent real estate. In this case, it cannot be deemed that such comprehensive transfer exists as seen earlier.

③ On the contrary, Article 6-17-1 of the base date for the execution of value-added tax in 2009 is regarded as a case falling under a business transfer, while Article 6-1 of the base date for the execution of value-added tax in 2009 is not a case falling under a business transfer.

④ As a result of the National Tax Service’s interpretation, it cannot be deemed that a long period of time has been continuously and repeatedly undertaken throughout the entire national tax administration, and the Defendant, a taxation authority, also did not know the existence of such taxation requirement, and cannot be deemed to have made an explicit or implied speech or behavior to the effect that the Defendant, a taxation

D) Sub-committee

Therefore, the instant disposition cannot be deemed to have violated the principle of trust protection or non-taxation practices, so the Plaintiff’s assertion also is without merit.

4) Determination as to other unlawful grounds for imposition of penalty tax

A) In order to facilitate the exercise of taxation rights and the realization of tax claims, additional tax under tax law is an administrative sanction imposed as prescribed by the Act in cases where a taxpayer violates a return, tax liability, etc. as prescribed by the Act without justifiable grounds, and the taxpayer’s intention or negligence is not considered, and it does not constitute a justifiable cause (see, e.g., Supreme Court Decision 2013Du1829, May 23, 2013).

B) We examine the instant case in accordance with such legal doctrine.

As seen earlier, the transfer of the instant building constitutes the supply of goods subject to taxation under the former Value-Added Tax Act, not the transfer of business, and the subsequent disposition does not contravene the principle of trust protection or non-taxation.

Therefore, the Plaintiff cannot be deemed to have justifiable grounds for not issuing a tax invoice while transferring the instant building, and it cannot be deemed that there was reasonable and justifiable trust that the Plaintiff would not be obliged to return and pay the value-added tax at that time. Furthermore, even if the Plaintiff was unaware of the application of the former Value-Added Tax Act, it does not constitute justifiable grounds for exempting additional tax solely on the land or mistake of such statutes.

Therefore, the Plaintiff cannot be deemed to have justifiable grounds for not filing a value-added tax return and payment or not issuing a tax invoice. Therefore, the Plaintiff’s above assertion is without merit.

3. Conclusion

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