The meaning of the transfer of business under Article 6 (6) of the Value-Added Tax Act and whether the credit account receivables or credit purchase obligations are excluded from those subject to transfer, or whether the former employees have not been transferred as they are, thereby hindering the transfer of business (negative)

The transfer of business referred to in Article 6(6) of the Value-Added Tax Act and Article 17(2) of the Enforcement Decree of the same Act, which stipulate that the transfer of business shall not be deemed the supply of goods, refers to the comprehensive transfer of property, human resources, facilities, rights, and duties, etc. including business property, and the replacement of only the managing body while maintaining the identity of the business. The accounts receivable or accounts payable, which are excluded from the rights and duties concerning the business, shall also be included in the main transaction of the business. Thus, if the managing body is replaced by comprehensively transferring physical, human resources, facilities, rights, and duties, etc. including business property, and maintaining the identity of the business, the transfer of business shall not interfere with the recognition of the transfer of the business by excluding the above accounts receivable or accounts payable, or accounts receivable

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

[Plaintiff-Appellant] Plaintiff 1 and 1 other (Law Firm Domin, Attorneys Park Jae-soo and 2 others, Counsel for plaintiff-appellant)

Youngjin Construction Industry Company

Daejeon Head of the tax office

Seoul High Court Decision 90Gu19512 delivered on October 24, 1991

The appeal is dismissed.

The costs of appeal are assessed against the plaintiff.

We examine the Plaintiff’s ground of appeal.

Upon examining the records, the court below's determination is justified in finding the fact that the plaintiff received not only the building and the site of the hotel of this case but also the entire public charges, tax liabilities, and loan obligations arising from the business of the hotel of this case, which occurred before the date of transfer, but also all documents related to the transfer of business rights, such as the change of the name of accommodation permitr, etc., and changed the name of accommodation permitr to the plaintiff, and changed the name of accommodation permitr to the plaintiff and operated the hotel directly in the same trade name, and there is no violation of law of incomplete deliberation

However, Article 6(6) of the Value-Added Tax Act provides that the transfer of business shall not be deemed the supply of goods. Article 17(2) of the Enforcement Decree of the same Act provides that the transfer of business shall comprehensively succeed to all rights (excluding rights related to accounts receivable) and obligations (excluding rights related to accounts receivable) with respect to the business by workplace. Here, the transfer of business refers to the comprehensive transfer of business property and property, human resources, rights and obligations, etc. and replacement of only the managing body while maintaining the identity of the business. The above accounts receivable and accounts payable excluded from the rights and obligations related to the business shall also be included in the main transaction of the business (see Supreme Court Decision 87Nu956, Jan. 19, 198). Thus, if the management body is replaced by transferring physical, human resources, facilities, rights and obligations, etc. including business property, the transfer of accounts receivable or accounts receivable corresponding to the accounts receivable or accounts receivable belonging to the former employees, or the transfer of the business shall not be recognized as a failure to transfer the business.

In the same purport, the court below is just in holding that, based on the above facts, the plaintiff is deemed to have been transferred to the hotel business of this case from the non-party 1, and even if the credit account receivables or credit purchase obligations were excluded or the hotel employees were not taken over as they were, it does not affect the transfer of the business subject to non-taxation of the value-added tax on the transfer of the hotel of this case, and there is no error in the misapprehension of legal principles, such as theory of lawsuit

Therefore, the appeal is dismissed and the costs of appeal are assessed against the losing party. It is so decided as per Disposition by the assent of all participating Justices.

Justices Kim Yong-ju (Presiding Justice)