Open Decision Ledger · Tax & international taxation
Input tax related only to non-taxable businesses run alongside a taxable business
Supreme Court, Aug. 31, 2023, 2020Du56384 (judgment)
Case name: 부가가치세부과처분취소[부가가치세 매출세액에서 공제되는 매입세액 해당 여부가 문제된 사안]
Official text on the National Law Information Center
Question
Where the Korea National Railway ran a taxable railway facility lease business alongside non-taxable level-crossing management and national important facility protection businesses, could the input VAT on the supplies received for those two businesses be deducted from output VAT?
Holding
It could not. Article 38(1)(i) of the VAT Act deducts input tax on goods or services supplied for one's own business from output tax, but Article 39(1)(vii) withholds input tax related to a non-taxable business, and Article 40 requires the input tax of a business running taxable and non-taxable businesses together to be computed by actual attribution. The level-crossing management and protection services were supplied free to the public out of government contributions received to carry out duties entrusted by the government, the plaintiff kept accounts separately by contribution project, and the fee for the lease was set independently at about 70% of the maintenance cost under the separate maintenance contract, so those services had no bearing on the consideration for the lease business and their costs were not necessarily incurred to run it. The input tax was therefore related only to the two non-taxable businesses and could be separated by actual attribution, so the reassessment and notice was lawful and the court below misread the law.
Summary of the holding, verbatim
따라서 사업자가 과세사업과 비과세사업을 겸영하는 경우에 과세사업과 비과세사업에 관련된 매입세액은 원칙적으로 실지귀속에 따라 계산하여야 하고, 그 매입세액이 오로지 비과세사업에 관련되는 경우에는 이를 매출세액에서 공제할 수 없다.
Unofficial English translation
Therefore, where a business entity concurrently conducts taxable and exempt businesses, input tax amounts related to the taxable business and the exempt business must in principle be calculated according to the actual attribution, and where those input tax amounts are related solely to the exempt business, they cannot be credited against output tax amounts.
Disposition
Reversed and remanded Stated in the decision
원심판결을 파기하고, 사건을 대전고등법원에 환송한다.
Unofficial English translation
The judgment of the court below is reversed, and the case is remanded to the Daejeon High Court.
Form of the test
Elements stated Stated in the decision
그 매입세액이 오로지 비과세사업에 관련되는 경우에는 이를 매출세액에서 공제할 수 없다
Unofficial English translation
where those input tax amounts are related solely to the exempt business, they cannot be credited against output tax amounts
Factors
- 위 각 용역의 공급은 국가철도공단이 스스로의 설립목적을 달성하기 위하여 행하는 비과세사업에 해당하므로
- 국가철도공단이 정부로부터 위탁받은 사업을 수행하기 위하여 정부 출연금을 재원으로 외부로부터 공급받은 것이고
- 국가철도공단은 출연사업별로 회계를 구분하여 기록하고 있는 등
- 국가철도공단이 철도시설 임대사업을 영위하는 데 건널목 관리용역 및 방호용역 관련 비용이 필수적으로 소요되는 것도 아니므로
- 위 매입세액은 모두 비과세사업인 철도건널목 관리사업과 국가중요시설 방호사업에만 관련된 것으로서 실지귀속을 구분할 수 있는 점을 종합하면
Unofficial English translation
• the supply of each of the foregoing services constitutes an exempt business conducted by the Korea National Railway Corporation in order to achieve its own purpose of establishment, and therefore
• it was supplied from outside in order for the Korea National Railway Corporation to perform the business entrusted to it by the Government, with the Government's contributions as the source of funds, and
• the Korea National Railway Corporation records accounts separately for each contribution business, etc., and
• the costs related to the crossing management service and the protection service are not necessarily required in the Korea National Railway Corporation's conduct of the railway facility leasing business, and therefore
• taken together with the fact that all of the foregoing input tax amounts are related only to the railroad crossing management business and the national important facility protection business, which are exempt businesses, and that the actual attribution can be distinguished,
Relation to precedent
Follows earlier decisions Stated in the decision
대법원 2016. 3. 24. 선고 2013두19875 판결(공2016상, 625)
Unofficial English translation
Supreme Court Decision 2013Du19875 pronounced March 24, 2016 (Gong 2016 Sang, 625)
Decisions referred to
[1] 대법원 2016. 3. 24. 선고 2013두19875 판결(공2016상, 625)
Burden of proof
Not addressed Not in the decision
Open question and revisit condition
If the cost of a service funded by a government contribution is also necessarily incurred to run the taxable lease business, can any part of its input tax still be attributed only to the non-taxable business?
The judgment of the Daejeon High Court on remand, which will re-hear the matter on the same contracts and accounts, will show how actual attribution is applied in practice. Any amendment to Article 29(8), Article 38(1)(i), Article 39(1)(vii) or Article 40 of the VAT Act would also call 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 4 (form of the test).
Axis 4 (Form of the test): Primary “Elements stated” vs Independent “Existing test applied”
The primary reads the holding as a requirement test drawn from Articles 38 to 40, while the independent reads it as an application to these facts. The form of the standard therefore looks different, though the judgment contains both elements.
위 매입세액은 오로지 비과세사업에 관련되어 이를 매출세액에서 공제할 수 없으므로 위 처분이 적법함에도, 이와 달리 본 원심판단에 법리오해의 잘못이 있다고 한 사례.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 Daejeon High Court, in its judgment of 19 November 2020 (2020Nu10256), held that the level-crossing management and protection services were needed for the plaintiff to perform its obligation under the use contract with Korea Railroad Corporation to provide railway facilities in a condition fit for railway operation, and that they were therefore connected with the taxable lease business. On that basis it held that the input tax of KRW 9,045,318,513, being KRW 4,622,525,094 for the level-crossing management services and KRW 4,422,793,419 for the protection services, had to be deducted from output tax, and that the reassessment and notice of KRW 12,405,115,190 in VAT including penalty surcharges, for the second period of 2012 to the first period of 2017, was unlawful.
Supreme Court standard: The Supreme Court held that the level-crossing management and protection services were not part of what the plaintiff had to supply to Korea Railroad Corporation under the use contract, and that the lease supply could not be said to normally carry the services the plaintiff performed for a public interest purpose. Since those services were supplied free to the public out of government contributions received to carry out duties entrusted under the statutes, they were non-taxable business serving the plaintiff's own establishment purposes. The Court found that the input tax related only to those two non-taxable businesses and could be separated by actual attribution, so the court below had misread the law on input tax deduction where taxable and non-taxable businesses are run together, and that error affected the judgment.
Distinguishing conditions
- Input tax whose actual attribution between the taxable and the non-taxable business cannot be separated, since Article 40 then calls for apportionment on the statutory ratio rather than outright denial of deduction.
- A service that forms part of what the operator must supply to the lessee under the use contract, or that normally accompanies the supply of the leased facilities.
- A service whose cost is necessarily incurred to run the lease business, or whose supply affects the consideration set for that business, so that the input tax is not related only to the non-taxable business.
Record verification notes
Read the use contract with Korea Railroad Corporation to see what the plaintiff must supply and how the fee is set, since the Court relied on the fee being fixed at about 70% of the maintenance cost under the separate maintenance contract, on policy grounds. Then collect the contribution project accounts showing each government contribution booked separately, and match each item of input tax to the service it served, because the outcome turned on the input tax being attributable only to the two non-taxable businesses.
From the official text
Points at issue
[1] 사업자가 과세사업과 비과세사업을 겸영하는 경우, 오로지 비과세사업에 관련되는 매입세액을 매출세액에서 공제할 수 있는지 여부(소극) [2] 국가철도공단이 한국철도공사와 철도시설을 임대하고 사용료를 지급받는 사용계약을 체결하고, 이와 별도로 한국철도공사와 일반철도 건널목 관리업무 위·수탁계약을, 민간업체와 국가중요시설에 대한 방호용역계약을 각각 체결하여 정부로부터 출연금을 받아 건널목 관리용역 및 방호용역에 대한 대가를 지급하였는데, 국가철도공단이 매출세액에서 건널목 관리용역 및 방호용역과 관련된 매입세액을 공제하여 부가가치세를 신고하자, 관할 세무서장이 위 매입세액을 매출세액에서 공제할 수 없다고 보아 국가철도공단에 부가가치세를 경정·고지한 사안에서, 위 매입세액은 오로지 비과세사업에 관련되어 이를 매출세액에서 공제할 수 없어 위 처분이 적법함에도, 이와 달리 본 원심판단에 법리오해의 잘못이 있다고 한 사례
Unofficial English translation
[1] Whether, where a business entity concurrently conducts taxable and exempt businesses, input tax amounts related solely to the exempt business may be credited against output tax amounts (negative) [2] In a case where the Korea National Railway Corporation concluded a use contract with the Korea Railroad Corporation to lease railway facilities and receive usage fees and, separately, concluded a consignment contract for the management of general railroad crossings with the Korea Railroad Corporation and a protection service contract for national important facilities with a private company, respectively, and paid the consideration for the crossing management service and the protection service out of contributions received from the Government; and where, when the Korea National Railway Corporation filed a value-added tax return crediting input tax amounts related to the crossing management service and the protection service against output tax amounts, the head of the competent tax office, taking the view that the foregoing input tax amounts could not be credited against output tax amounts, reassessed value-added tax against the Korea National Railway Corporation and issued a notice thereof, a case holding that, since the foregoing input tax amounts were related solely to the exempt business and could not be credited against output tax amounts, the foregoing disposition was lawful, yet the reasoning of the court below was erroneous in misapprehension of legal principles by deciding otherwise
Summary of the holding
[1] 부가가치세법 제38조 제1항 제1호는 ‘자기의 사업을 위하여 사용하였거나 사용할 목적으로 공급받은 재화 또는 용역에 대한 부가가치세액’을 매출세액에서 공제하도록 규정하고 있으나, 제39조 제1항 제7호는 매출세액에서 공제하지 아니하는 매입세액의 하나로 ‘면세사업 등에 관련된 매입세액(면세사업 등을 위한 투자에 관련된 매입세액을 포함한다)’을 규정하고 있고, 제29조 제8항은 ‘면세사업과 부가가치세가 과세되지 아니하는 재화 또는 용역을 공급하는 사업’을 ‘면세사업 등’으로 규정하고 있다. 그리고 부가가치세법 제40조는 "사업자가 과세사업과 면세사업 등을 겸영하는 경우에 과세사업과 면세사업 등에 관련된 매입세액의 계산은 실지귀속에 따라 하되, 실지귀속을 구분할 수 없는 매입세액은 총공급가액에 대한 면세공급가액의 비율 등 대통령령으로 정하는 기준을 적용하여 대통령령으로 정하는 바에 따라 안분하여 계산한다."라고 규정하고 있다. 따라서 사업자가 과세사업과 비과세사업을 겸영하는 경우에 과세사업과 비과세사업에 관련된 매입세액은 원칙적으로 실지귀속에 따라 계산하여야 하고, 그 매입세액이 오로지 비과세사업에 관련되는 경우에는 이를 매출세액에서 공제할 수 없다. [2] 국가철도공단이 한국철도공사와 철도시설을 임대하고 사용료를 지급받는 사용계약을 체결하고, 이와 별도로 한국철도공사와 일반철도 건널목 관리업무 위·수탁계약을, 민간업체와 국가중요시설에 대한 방호용역계약을 각각 체결하여 정부로부터 출연금을 받아 건널목 관리용역 및 방호용역에 대한 대가를 지급하였는데, 국가철도공단이 매출세액에서 건널목 관리용역 및 방호용역과 관련된 매입세액을 공제하여 부가가치세를 신고하자, 관할 세무서장이 위 매입세액을 매출세액에서 공제할 수 없다고 보아 국가철도공단에 부가가치세를 경정·고지한 사안에서, ① 위 사용계약에 따른 임대용역의 공급에 국가철도공단이 공익적 목적에서 수행하는 건널목 관리용역과 방호용역이 통상적으로 수반된다고 볼 수 없고, 국가철도공단은 정부가 위탁한 업무를 대행하기 위하여 정부로부터 출연금을 교부받아 건널목 관리용역과 방호용역을 일반 공중에 무상으로 공급하는 등 위 각 용역의 공급은 국가철도공단이 스스로의 설립목적을 달성하기 위하여 행하는 비과세사업에 해당하므로, 국가철도공단은 과세사업인 철도시설 임대사업 이외에 비과세사업인 철도건널목 관리사업과 국가중요시설 방호사업을 겸영하고 있는 것으로 보아야 하는 점, ② 건널목 관리용역 및 방호용역은 국가철도공단이 정부로부터 위탁받은 사업을 수행하기 위하여 정부 출연금을 재원으로 외부로부터 공급받은 것이고, 국가철도공단은 출연사업별로 회계를 구분하여 기록하고 있는 등 건널목 관리용역 및 방호용역의 공급은 철도시설 임대사업의 공급대가에 아무런 영향을 미치지 않고, 국가철도공단이 철도시설 임대사업을 영위하는 데 건널목 관리용역 및 방호용역 관련 비용이 필수적으로 소요되는 것도 아니므로, 위 매입세액은 모두 비과세사업인 철도건널목 관리사업과 국가중요시설 방호사업에만 관련된 것으로서 실지귀속을 구분할 수 있는 점을 종합하면, 위 매입세액은 오로지 비과세사업에 관련되어 이를 매출세액에서 공제할 수 없으므로 위 처분이 적법함에도, 이와 달리 본 원심판단에 법리오해의 잘못이 있다고 한 사례.
Order
원심판결을 파기하고, 사건을 대전고등법원에 환송한다.
Unofficial English translation
The judgment of the court below is reversed, and the case is remanded to the Daejeon High Court.
Provisions referred to
[1] 부가가치세법 제29조 제8항, 제38조 제1항 제1호, 제39조 제1항 제7호, 제40조 [2] 부가가치세법 제29조 제8항, 제38조 제1항 제1호, 제39조 제1항 제7호, 제40조
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