법인세법상 해외통신사업자가 받은 통신매체 이용대가의 소득구분 — 대법원 2008.1.18. 선고 2005두16475판결을 중심으로 —

Abstract

Under Korean Tax Law, basically, business income derived by a foreign company is taxable in Korea only if attributable to a Korean permanent establishment. On the contrary, generally, a foreign company's, royalty income is taxable if arising in or paid in Korea, even if the income is not attributable to a Korean permanent establishment. Owing to the different tax burden between business income and royalty income, whether income derived is to be characterized as royalty income or business income is a very important matter for foreign company. The Supreme Court Decision rendered on January 18, 2008. Case No. 2005Du16375(the “Decision”) held that the income of a foreign transmission medium operator such as a satellite operator and a cable operator(the “Foreign Operator”) from transponder use agreement or cable capacity use agreement with a Korean user was not subject to taxation in Korea, since the income was not royalty income but business income. The case involved contracts between the foreign operators of satellite systems or cable systems and a Korean user. Under the contracts, the operators agreed to transmit data through the satellite, cable, or internet backbone network. For example, Hongkong-based operator of AsiaSat agreed to transmit signals from AsiaSat using one of the transponders installed on the satellite. The Korean tax authorities argued that the agreement involved the grant of a right to use equipments such as the transponder and the submarine cable and that the income derived was therefore taxable as royalty income under the Korean Corporate Income Act. The Supreme Court rejected the argument of tax authorities, stating that the contracts required the foreign operators to render continued business services to the Korean user, and did not involve the grant of rights or the rental of equipments. Accordingly the Court held the income earned by the foreign operators was business income. The decision is to be justified by not only the proper interpretation of Art. 99. of Korean Corporate Income Tax Act and Art. 662. of Korean Civil Act but also the international criteria. The commentary of OECD Model Tax Convention on Income and on Capital states that royalty, in respect of licence to use equipments, is income to the recipient from letting or leasing the equipments. In addition, OECD TAG set criteria for determining 'equipment use'. To be equipment use, the criteria required ‘customer have physical possession and control over the equipments', ’Provider do not bear any risk of substantially diminished receipts or substantially increased expenditures’, etc. None of the conditions were fulfilled in the case. Therefore, according to the OECD's criteria, the operator's income shall not be characterized as royalty income.