Open Decision Ledger · Tax & international taxation
The place of supply of services and the recipient's cooperation
Supreme Court, July 28, 2022, 2019Du34913 (judgment)
No holding summary · checked against points at issue. The official text publishes no summary of the holding for this decision. The quotation and factors in this record are copied verbatim from the points at issue; the evidence for each axis is taken from the points at issue, the order and the reasons.
Case name: 부가가치세부과처분등취소
Official text on the National Law Information Center
Question
Where services consist of a role service supplied by a foreign corporation, is the place where that role service is provided the basis for deciding whether the transaction falls within the reach of the VAT taxing power, and where the recipient's cooperation is needed for the role service, must the place of that cooperation also be considered?
Holding
It is. Under Article 10(2)(i) of the former Value-Added Tax Act the place where services are supplied is where the role service is provided or the goods, facilities or rights are used, and where the important and essential part of a role service supplied by a foreign corporation was performed in Korea, the place is Korea even if part of it was performed abroad. Where the recipient's cooperation is needed for the role service to be provided, the place of that cooperation must also be taken into account when deciding where the essential part was performed. On these facts, because the payment network equipment and software installed at the plaintiffs' domestic offices carried the approval, settlement and payment information, the essential part was performed in Korea, and the Supreme Court dismissed all appeals.
Points at issue, verbatim
역무가 제공되기 위하여 이를 제공받는 자의 협력행위가 필요한 경우, 그 협력행위가 어디에서 이루어졌는지도 아울러 고려하여야 하는지 여부(적극)
Unofficial English translation
Where the cooperation of the recipient of the services is required for the acts of service to be provided, whether the place where such cooperation takes place must also be taken into consideration (affirmative)
Disposition
Dismissed Stated in the decision
상고를 모두 기각한다. 상고비용 중 보조참가로 인한 부분은 원고들보조참가인이, 나머지는 원고들이 각 부담한다.
Unofficial English translation
All appeals are dismissed. Of the costs of appeal, the portion attributable to the intervention in support shall be borne by the intervenors in support of the plaintiffs, and the remainder shall be borne by the plaintiffs, respectively.
Form of the test
Elements stated Stated in the decision
역무가 제공되기 위하여 이를 제공받는 자의 협력행위가 필요한 경우에는 역무의 중요하고도 본질적인 부분이 어디에서 이루어졌는지를 판단할 때 그 협력행위가 어디에서 이루어졌는지도 아울러 고려하여야 한다.
Unofficial English translation
Where the cooperation of the recipient of the services is required for the acts of service to be provided, in determining where the important and essential part of the acts of service was performed, the place where such cooperation takes place must also be taken into consideration.
Factors
- 역무를 제공하는 용역의 경우 부가가치세 과세권이 미치는 거래인지 판단하는 기준
- 역무가 제공되기 위하여 이를 제공받는 자의 협력행위가 필요한 경우, 그 협력행위가 어디에서 이루어졌는지도 아울러 고려하여야 하는지 여부(적극)
Unofficial English translation
• Criteria for determining whether a transaction involving services in which acts of service are provided falls within the taxing power for value-added tax
• Where the cooperation of the recipient of the services is required for the acts of service to be provided, whether the place where such cooperation takes place must also be taken into consideration (affirmative)
Relation to precedent
Follows earlier decisions Stated in the decision
대법원 2006. 6. 16. 선고 2004두7528, 7535 판결(공2006하, 1375)
Unofficial English translation
Supreme Court Decision 2004Du7528, 7535 decided June 16, 2006 (Gong 2006 Ha, 1375)
Decisions referred to
대법원 2006. 6. 16. 선고 2004두7528, 7535 판결(공2006하, 1375)
Burden of proof
Not addressed Not in the decision
Open question and revisit condition
How substantial must the recipient's cooperation performed in Korea be before it can be said that the important and essential part of the role service was performed there?
A later decision weighing a small amount of domestic cooperation against services performed mainly abroad would unsettle this reading. Any further amendment to Article 10(2)(i) of the former Value-Added Tax Act, now Article 20(1)(i), or a case in which the payment network equipment sits outside Korea, calls for this entry to be read again.
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 8 (open question and revisit condition).
Axis 8 (Open question and revisit condition): Primary “How substantial must the recipient's cooperation performed in Korea be before it can be said that the important and essential part of the role service was performed there?” vs Independent “How should the place of supply be determined when the recipient's necessary cooperation is divided between domestic and foreign locations?”
The primary reading asks how substantial the domestic cooperation must be for the essential part to count as domestic, while the independent reading asks how to allocate the place of supply when cooperation is split between Korea and abroad.
역무가 제공되기 위하여 이를 제공받는 자의 협력행위가 필요한 경우, 그 협력행위가 어디에서 이루어졌는지도 아울러 고려하여야 하는지 여부(적극)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 15 January 2019 (2018Nu38545), held that the place where the services connected with the payments to the overseas card companies were supplied was Korea, so the plaintiffs had a duty to pay the VAT on them by proxy, and that the refusal of the correction and the assessment were lawful. It held that part of the fees paid to the participant was consideration for the use of its trademark and the rest consideration for comprehensive services, since the plaintiffs used the trademark on cards issued and application forms in Korea, and that the important and essential part of the network services was performed in Korea through the equipment and software installed at the plaintiffs' domestic offices. It also found the services were not VAT-exempt financial services, that no non-taxation practice existed, and that the surtax notice disclosed no defect.
Supreme Court standard: The Supreme Court found no error. Reading the appellate reasons against the statute, the established law and the record, it held that the court below had not misunderstood the law on the place of supply, on the character of the fees, on exempt services, on non-taxation practice or on defects in the tax notice. It added that even if the whole of the fees paid to the participant had been consideration for comprehensive services, the place of supply would still be Korea, so that ground of appeal could not affect the result, and the new argument on issuer reimbursement and foreign-use fees was not a lawful ground of appeal. All appeals by the plaintiffs and by the intervenor were dismissed.
Distinguishing conditions
- A case in which the important and essential part of the role service supplied by the foreign corporation was performed abroad, so that the place of supply is not Korea.
- A role service that can be provided without any cooperation by the recipient, so that there is no place of cooperation to weigh.
- A ground raised for the first time in the Supreme Court, such as the exclusion of issuer reimbursement fees and foreign-use fees from the tax base.
Record verification notes
First check where the payment network equipment and software installed by the foreign corporations sit, and in which direction the approval, settlement and payment information flows, since the Court located the essential part of the service by those facts. Record which items the court below treated as consideration for the use of the trademark and which as consideration for comprehensive services, and note that the character of the fees did not change the outcome. Then confirm which version of the Act governs, because the case applied Article 10(2)(i) of the former Value-Added Tax Act as it stood before its amendment by Act No. 11873 of 7 June 2013, and whether the ground was raised below.
From the official text
Points at issue
역무를 제공하는 용역의 경우 부가가치세 과세권이 미치는 거래인지 판단하는 기준 / 역무가 제공되기 위하여 이를 제공받는 자의 협력행위가 필요한 경우, 그 협력행위가 어디에서 이루어졌는지도 아울러 고려하여야 하는지 여부(적극)
Unofficial English translation
Criteria for determining whether a transaction involving services in which acts of service are provided falls within the taxing power for value-added tax / Where the cooperation of the recipient of the services is required for the acts of service to be provided, whether the place where such cooperation takes place must also be taken into consideration (affirmative)
Summary of the holding
The official text publishes no summary of the holding for this decision. The quotation and factors in this record are copied verbatim from the points at issue; the evidence for each axis is taken from the points at issue, the order and the reasons.
Order
상고를 모두 기각한다. 상고비용 중 보조참가로 인한 부분은 원고들보조참가인이, 나머지는 원고들이 각 부담한다.
Unofficial English translation
All appeals are dismissed. Of the costs of appeal, the portion attributable to the intervention in support shall be borne by the intervenors in support of the plaintiffs, and the remainder shall be borne by the plaintiffs, respectively.
Provisions referred to
구 부가가치세법(2013. 6. 7. 법률 제11873호로 개정되기 전의 것) 제10조 제2항 제1호(현행 제20조 제1항 제1호 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.
Every entry is published only after all quotes have been matched character by character against the official text, and audited by an independent second reading from a different model family across all eight axes. Both agreed axes and text-grounded interpretive divergences are recorded openly. The ledger is a research record, not an assessment of the court or advice on any matter.
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