Open Decision Ledger · Tax & international taxation
VAT exemption judged supply by supply
Supreme Court, Mar. 17, 2022, 2017Du69908 (judgment)
Case name: 부가가치세등부과처분취소
Official text on the National Law Information Center
Question
Must the question whether a supply of goods or services is exempt from value-added tax be decided, in principle, by reference to each individual supply of goods or services rather than to a business field as a whole?
Holding
Yes, in principle. Article 1(1)(i) of the former Value-Added Tax Act levies the tax on the supply of goods or services, and Article 12(1) exempts certain supplies of goods or services, while the duty to issue a tax invoice and to collect the tax turns on the exemption and both arise when goods or services are supplied. Whether the goods or services supplied were supplied at cost must therefore be judged on each individual supply, and cannot be judged on each business field as a whole.
Summary of the holding, verbatim
부가가치세 면세 여부는 원칙적으로 ‘개별적인 재화 또는 용역의 공급’을 기준으로 판단하여야 한다.
Unofficial English translation
The question of whether a supply is exempt from Value-Added Tax must, in principle, be determined on the basis of 'the supply of an individual good or service'.
Disposition
Partly reversed and remanded Stated in the decision
원심판결 중 부가가치세(가산세 포함) 부과처분에 관한 부분을 파기하고, 이 부분 사건을 서울고등법원에 환송한다. 원고와 피고 서인천세무서장의 나머지 상고를 모두 기각한다.
Unofficial English translation
The part of the judgment of the court below concerning the disposition imposing Value-Added Tax (including additional tax) is reversed, and the case in that part is remanded to the Seoul High Court. All remaining final appeals of the plaintiff and the defendant, Head of the Seo-Incheon Tax Office, are dismissed.
Form of the test
Elements stated Stated in the decision
위 각 규정의 문언에다가 세금계산서 교부 및 부가가치세 거래징수는 부가가치세 면세 여부에 따라 그 의무의 존부가 달라지는데 이는 모두 재화 또는 용역을 공급할 때 이루어지는 점 등의 사정을 보태어 보면, 부가가치세 면세 여부는 원칙적으로 ‘개별적인 재화 또는 용역의 공급’을 기준으로 판단하여야 한다.
Unofficial English translation
Adding to the language of each of the above provisions the circumstances that the issuance of a tax invoice and the collection of Value-Added Tax at source differ in whether the corresponding obligation exists depending on whether the supply is exempt from Value-Added Tax, and that both take place at the time when a good or service is supplied, the question of whether a supply is exempt from Value-Added Tax must, in principle, be determined on the basis of 'the supply of an individual good or service'.
Factors
- 구 부가가치세법(2010. 1. 1. 법률 제9915호로 개정되기 전의 것, 이하 같다) 제1조 제1항은 부가가치세의 과세 대상에 관하여 “부가가치세는 다음 각호의 거래에 대하여 부과한다.”라고 규정하면서 제1호에서 ‘재화 또는 용역의 공급’을 규정하고
- 구 부가가치세법 제12조 제1항은 일정한 ‘재화 또는 용역의 공급’을 부가가치세 면세 대상으로 규정하고 있다.
- 세금계산서 교부 및 부가가치세 거래징수는 부가가치세 면세 여부에 따라 그 의무의 존부가 달라지는데 이는 모두 재화 또는 용역을 공급할 때 이루어지는 점 등의 사정을 보태어 보면
Unofficial English translation
• Article 1 (1) of the former Value-Added Tax Act (as in effect prior to its amendment by Act No. 9915 on January 1, 2010; hereinafter the same) provides, as to the objects of taxation of Value-Added Tax, "Value-Added Tax shall be imposed on the following transactions.", and subparagraph 1 provides for 'the supply of a good or service', and
• Article 12 (1) of the former Value-Added Tax Act provides that certain 'supplies of goods or services' are subject to exemption from Value-Added Tax.
• the issuance of a tax invoice and the collection of Value-Added Tax at source differ in whether the corresponding obligation exists depending on whether the supply is exempt from Value-Added Tax, and both take place at the time when a good or service is supplied; if these circumstances are added
Relation to precedent
States a new standard Read from the decision
부가가치세 면세 여부는 원칙적으로 ‘개별적인 재화 또는 용역의 공급’을 기준으로 판단하여야 한다.
Unofficial English translation
The question of whether a supply is exempt from Value-Added Tax must, in principle, be determined on the basis of 'the supply of an individual good or service'.
Decisions referred to
해당 본문 참조
Burden of proof
Not addressed Not in the decision
Open question and revisit condition
On what reasonable ground may individual projects within one business field be treated as a single supply of goods or services for the purpose of testing whether they were supplied at cost?
The remand judgment of the Seoul High Court on the value-added tax part will show how the individual-supply test works project by project. A change to Article 4(i) or Article 26(1) of the Value-Added Tax Act as currently in force, which the decision cites for the former provisions, would call for a fresh reading.
Cross-family AI independent reading & axis check
7 of 8 axes matched GPT-6 Astra (OpenAI, codex CLI) · 2026-10-25
A reader from another model family (GPT-6 Astra), given the official text but not the primary reading, agreed on 7 of the 8 axes; the readings differed on axis 6 (relation to precedent).
Axis 6 (Relation to precedent): Primary “States a new standard” vs Independent “Cannot be determined”
The primary treats the ruling as setting a new standard for exemption, while the independent cannot confirm from the text whether it is new, so it records the precedent relation as unconfirmed.
부가가치세 면세 여부는 원칙적으로 ‘개별적인 재화 또는 용역의 공급’을 기준으로 판단하여야 한다.Raw responses and comparison record: Protocol · Blind readings (JSONL) · Axis comparison (JSONL) · SHA-256 (JSON)
Lower-court contrast & scope of application
Lower-court reading vs. Supreme Court holding
Lower-court context: The Seoul High Court, in its judgment of 21 September 2017 (2017Nu40565), premised that ‘at cost’ means that the consideration received from the recipient does not exceed the cost of the supply. It divided the transactions into four business fields, namely government agency projects, government commissioned projects, environmental facility installation support projects and other service projects, and decided the exemption field by field, holding that the government agency projects, the government commissioned projects and the other service projects were exempt while the environmental facility installation support projects were taxable.
Supreme Court standard: The Supreme Court held that the court below had misapprehended the law on the unit of the supply whose cost character is to be tested, with an effect on the outcome. The individual projects within each field differ in their specific contract terms and in their period and content, and there was no reasonable ground for treating them as one supply unit; the main reason for the field-wide approach, that the fee calculation methods were similar, was itself unsupported, since within the environmental facility installation support projects alone losses arose in many individual projects while profits were concentrated in a few. It reversed the value-added tax part of the judgment and remanded it to the Seoul High Court, while finding no error in the corporate tax holdings on the government grants used in profit-making projects and on the substantial owner of the interest income, and dismissed the remaining appeals.
Distinguishing conditions
- A supply that is not made at cost or without charge for the organisation's own business purpose, since the exemption in Article 12(1)(xvi) of the former Value-Added Tax Act covers only supplies of that kind.
- A case in which the individual projects within a business field can be treated as one supply unit on a reasonable ground, since the Court ruled only that the field-wide approach had no such ground on these facts.
- Corporate tax issues, such as whether government grants used in profit-making projects are income of that business or who substantially owns interest income, since the Court left the holdings below on those points undisturbed.
Record verification notes
Confirm first that the supplier was a non-profit corporation permitted or approved by the competent authority or registered with it, carrying on a business for a public interest purpose, and that each supply was made at cost for its own business purpose. Then assemble each individual project with its own contract terms, period and revenue and cost, since the exemption turns on the individual supply. Set any grouping of projects offered by either side against the Court's point that losses in many individual projects and profits concentrated in a few show that the fee calculation methods are not simply similar.
From the official text
Points at issue
부가가치세 면세 여부는 ‘개별적인 재화 또는 용역의 공급’을 기준으로 판단해야 하는지 여부(원칙적 적극)
Unofficial English translation
Whether the question of whether a supply is exempt from Value-Added Tax must be determined on the basis of 'the supply of an individual good or service' (in principle, affirmative)
Summary of the holding
구 부가가치세법(2010. 1. 1. 법률 제9915호로 개정되기 전의 것, 이하 같다) 제1조 제1항은 부가가치세의 과세 대상에 관하여 “부가가치세는 다음 각호의 거래에 대하여 부과한다.”라고 규정하면서 제1호에서 ‘재화 또는 용역의 공급’을 규정하고, 구 부가가치세법 제12조 제1항은 일정한 ‘재화 또는 용역의 공급’을 부가가치세 면세 대상으로 규정하고 있다. 위 각 규정의 문언에다가 세금계산서 교부 및 부가가치세 거래징수는 부가가치세 면세 여부에 따라 그 의무의 존부가 달라지는데 이는 모두 재화 또는 용역을 공급할 때 이루어지는 점 등의 사정을 보태어 보면, 부가가치세 면세 여부는 원칙적으로 ‘개별적인 재화 또는 용역의 공급’을 기준으로 판단하여야 한다.
Order
원심판결 중 부가가치세(가산세 포함) 부과처분에 관한 부분을 파기하고, 이 부분 사건을 서울고등법원에 환송한다. 원고와 피고 서인천세무서장의 나머지 상고를 모두 기각한다.
Unofficial English translation
The part of the judgment of the court below concerning the disposition imposing Value-Added Tax (including additional tax) is reversed, and the case in that part is remanded to the Seoul High Court. All remaining final appeals of the plaintiff and the defendant, Head of the Seo-Incheon Tax Office, are dismissed.
Provisions referred to
구 부가가치세법(2010. 1. 1. 법률 제9915호로 개정되기 전의 것) 제1조 제1항 제1호(현행 제4조 제1호 참조), 제12조 제1항(현행 제26조 제1항 참조)
Read 2026-10-25 · Cross-read 2026-10-25. All quotes matched against the official text. The Chinese-character placeholders the court used for anonymised parties are given in their Korean readings, and parenthetical Chinese-character glosses are omitted.
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