Open Decision Ledger · Tax & international taxation
Foreign-registered, domestically unregistered patented technology used in Korea
Supreme Court, Dec. 11, 2025, 2021Du61390 (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: 법인세경정거부처분취소
Official text on the National Law Information Center
Question
Where manufacturing methods, technologies or information that are the subject of a patent registered abroad but not registered in Korea are used in Korea, is the royalty paid for them domestic-source income, and must 'use' in the latter part of the proviso to Article 93(viii) of the former Corporate Tax Act be read as use of that patented technology rather than use of the patent right itself?
Holding
It is. The Korea-US tax treaty fixes the place of use as its criterion and defines no meaning for 'use', so under Article 2(2) the meaning falls to Korean law, and under the latter part of the proviso to Article 93(viii) of the former Corporate Tax Act it means using the manufacturing method, technology or information that is the subject of the patent, not using the patent right itself. Where that patented technology is in fact used in Korea for manufacturing, sales and the like, the royalty paid for it is domestic-source income under Article 6(3) and Article 14(4)(a) of the treaty together with that latter part of the proviso.
Points at issue, verbatim
이때 적용되는 법규(=구 법인세법 제93조 제8호 단서 후문) 및 여기서 ‘사용’은 독점적 효력을 가지는 특허권 자체를 사용하는 것이 아니라 그 특허권의 대상이 되는 제조방법·기술·정보 등을 사용한다는 의미로 보아야 하는지 여부(적극)
Unofficial English translation
Whether the applicable statute in this case (= the latter part of the proviso to Article 93, subparagraph 8 of the former Corporate Tax Act) and whether the term 'use' herein must be understood as meaning not the use of the patent right itself, which has exclusive effect, but the use of the manufacturing method, technology, information, or the like that is the subject of that patent right (affirmative)
Disposition
Partly reversed and remanded Stated in the decision
원심판결 중 피고 패소 부분을 파기하고, 이 부분 사건을 수원고등법원에 환송한다.
Unofficial English translation
The judgment of the court below is reversed in the portion where the defendant lost, and this part of the case is remanded to the Suwon High Court.
Form of the test
Elements stated Stated in the decision
따라서 국내 미등록 특허권의 특허기술이 국내에서 사용되었다면 그 대가인 사용료소득은 국내원천소득에 해당한다
Unofficial English translation
Accordingly, if the patented technology of a patent right not registered in Korea is used in Korea, the royalty income, which is the consideration therefor, constitutes Korean-source income
Factors
- 국외에 등록되었으나 국내에 등록되지 아니한 특허권의 대상이 되는 제조방법·기술·정보 등이 국내에서 사용된 경우
- 그 대가인 사용료소득이 국내원천소득에 해당하는지 여부(적극)
- 여기서 ‘사용’은 독점적 효력을 가지는 특허권 자체를 사용하는 것이 아니라 그 특허권의 대상이 되는 제조방법·기술·정보 등을 사용한다는 의미로 보아야 하는지 여부(적극)
Unofficial English translation
• Where a manufacturing method, technology, information, or the like that is the subject of a patent right registered abroad but not registered in Korea is used in Korea
• Whether the royalty income, which is the consideration therefor, constitutes Korean-source income (affirmative)
• Whether the term 'use' herein must be understood as meaning not the use of the patent right itself, which has exclusive effect, but the use of the manufacturing method, technology, information, or the like that is the subject of that patent right (affirmative)
Relation to precedent
Follows earlier decisions Stated in the decision
대법원 2025. 9. 18. 선고 2021두59908 전원합의체 판결 참조
Unofficial English translation
See Supreme Court en banc judgment 2021Du59908 decided September 18, 2025
Decisions referred to
대법원 2025. 9. 18. 선고 2021두59908 전원합의체 판결(공2025하, 1938)
Burden of proof
Not addressed Not in the decision
Open question and revisit condition
When one licence contract covers patents registered in Korea, patents registered only abroad and know-how with no registration at all, how is a single royalty payment to be apportioned between the part that is domestic-source income and the part that is not?
The remand judgment of the Suwon High Court, once it decides whether the patented technology was in fact used in Korea, will show how the actual-use test works in practice. Any amendment to Article 93(viii) of the Corporate Tax Act beyond the amendment of 24 December 2018 (Law No. 16008), or a later decision departing from the en banc decision of 18 September 2025 (2021Du59908), would require this entry to be read again.
Cross-family AI independent reading & axis check
7 of 8 axes matched GPT-6 Astra (OpenAI, codex CLI) · 2026-10-24
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 “When one licence contract covers patents registered in Korea, patents registered only abroad and know-how with no registration at all, how is a single royalty payment to be apportioned between the part that is domestic-source income and the part that is not?” vs Independent “Were the royalties at issue actually paid for use of the patented technology in domestic manufacturing or sales?”
The primary asks how to apportion a bundled royalty across different rights, while the independent asks whether the royalties in this case actually compensated domestic technology use.
이때 적용되는 법규(=구 법인세법 제93조 제8호 단서 후문) 및 여기서 ‘사용’은 독점적 효력을 가지는 특허권 자체를 사용하는 것이 아니라 그 특허권의 대상이 되는 제조방법·기술·정보 등을 사용한다는 의미로 보아야 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 Suwon High Court, in its judgment of 19 November 2021 (2021Nu10435), treated part of the royalties the plaintiff, a US corporation, had received in the 2016 to 2018 business years as consideration for patents registered abroad but not registered in Korea. On that ground alone it held, without examining whether the patented technology was in fact used in Korea for manufacturing and sales, that this part was not domestic-source income, and so held the defendant's refusal of the correction request wrong as to that part.
Supreme Court standard: The Supreme Court held that the Korea-US tax treaty determines domestic-source status by the place of use, that the meaning of 'use' is therefore taken from Korean law under Article 2(2) of the treaty, and that it means using the manufacturing method, technology or information that is the subject of the patent rather than using the patent right itself. Because the court below, taking the fact that part of the royalty was for domestically unregistered patents as its sole reason, misapprehended that legal principle and failed to hold the necessary fact-finding, with an effect on the judgment, the Supreme Court reversed the part of the judgment in which the defendant lost and remitted that part to the Suwon High Court, setting aside any decision on the remaining appellate grounds.
Distinguishing conditions
- A royalty for a patent that is not registered abroad either, since the deeming rule in the latter part of the proviso presupposes registration abroad.
- A case in which it is not shown that the patented technology was in fact used in Korea for manufacturing, sales and the like.
- A case governed by a tax treaty that does not make the place of use the criterion for domestic-source status, since the latter part of the proviso applies only where the treaty so provides.
Record verification notes
Set the licence contract and the payment records for the USD 22 million paid in the 2016 to 2018 business years against the patents the contract covers, and mark which were registered abroad, which in Korea and which nowhere, because the court below had to sort the payment in that way. Then gather what shows that the patented technology was in fact practised in Korea for manufacturing and sales, since the omission of that examination is the error found. Also confirm the governing version: the Court applied Article 93(viii) of the Corporate Tax Act as it stood before the amendment of 24 December 2018 (Law No. 16008), and followed the en banc decision of 18 September 2025 (2021Du59908).
From the official text
Points at issue
국외에 등록되었으나 국내에 등록되지 아니한 특허권의 대상이 되는 제조방법·기술·정보 등이 국내에서 사용된 경우, 그 대가인 사용료소득이 국내원천소득에 해당하는지 여부(적극) / 이때 적용되는 법규(=구 법인세법 제93조 제8호 단서 후문) 및 여기서 ‘사용’은 독점적 효력을 가지는 특허권 자체를 사용하는 것이 아니라 그 특허권의 대상이 되는 제조방법·기술·정보 등을 사용한다는 의미로 보아야 하는지 여부(적극)
Unofficial English translation
Where a manufacturing method, technology, information, or the like that is the subject of a patent right registered abroad but not registered in Korea is used in Korea, whether the royalty income, which is the consideration therefor, constitutes Korean-source income (affirmative) / Whether the applicable statute in this case (= the latter part of the proviso to Article 93, subparagraph 8 of the former Corporate Tax Act) and whether the term 'use' herein must be understood as meaning not the use of the patent right itself, which has exclusive effect, but the use of the manufacturing method, technology, information, or the like that is the subject of that patent right (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
원심판결 중 피고 패소 부분을 파기하고, 이 부분 사건을 수원고등법원에 환송한다.
Unofficial English translation
The judgment of the court below is reversed in the portion where the defendant lost, and this part of the case is remanded to the Suwon High Court.
Provisions referred to
대한민국과 미합중국간의 소득에 관한 조세의 이중과세 회피와 탈세방지 및 국제무역과 투자의 증진을 위한 협약 제2조 제2항, 제6조 제3항, 제14조 제4항 제a호, 구 법인세법(2018. 12. 24. 법률 제16008호로 개정되기 전의 것) 제93조 제8호
Read 2026-10-24 · Cross-read 2026-10-24. 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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