Countries: Korea

Korea vs “Semicon-sales”, June 2022, Tax Court, Case No 2020-서-2311

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A Korean subsidiary (“Semicon-sales”) of a foreign group was active in distribution and sales of semiconductors for the automotive and industrial industry. Following an audit, the tax authorities found that the subsidiary had purchased semiconductors from a foreign affiliated company at a higher price than the arm’s length price. An assessment was issued where the […]

Korea vs Microsoft, February 2022, Supreme Court, Case no. 2019두50946

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In 2011 Samsung signed the contract with Microsoft for use of software-patent in Android-based smartphone and tablets, and for the years 2012-2015 Samsung paid royalties to a Microsoft subsidiary, MS Licensing GP, while saving 15 percent for withholding tax. The royalties paid by Samsung to Microsoft during these years amounted to 4.35 trillion won, of […]

Korea vs “K-GAS Corp”, November 2021, Daegu District Court, Case No 2019구합22561

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K-GAS Corp had issued loans and performance guarantees to overseas subsidiaries but received no remuneration in return. The tax authorities issued an assessment where additional taxable income was determined by application of the arm’s length principle. An appeal was filed by K-GAS with the district court. Decision of the Court The court upheld the decision […]

Korea vs “Semicon-Distributor”, May 2021, Seoul High Court, Case No 2020누61166

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A Korean subsidiary in the “Semiconductor-group” was active in distribution and sales services. At issue was which transfer pricing method was the most appropriate for determining the arm’s length remuneration for these activities in FY 2013. Judgement of the Court The Court dismissed the claims of the company and upheld the decision of the tax […]

Korea vs “Lux corp”, 16 January 2020, Supreme Court Case no. 2016두35854

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In this case the Korean Supreme Court held that Luxembourg SICAV and SICAF are entitled to reduced withholding tax rate on interest and dividend income under the Korea–Luxembourg Tax Treaty.   Meaning of “residents of Luxembourg,” which is subject to the “Convention between the Government of the Republic of Korea and the Government of the […]

Korea vs Company A, November 29, 2018, Supreme Court Case no. 2018Du38376

The issue in this case was the meaning of and standard for determining what constitutes “beneficial owner” as prescribed by Article 10(2)(a) of the Convention between the Government of the Republic of Korea and the Government of the Hungarian People’s Republic for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect […]

Korea vs CJ E&M Co., Ltd. , November 2018, Supreme Court Case no. 2017두33008

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In 2011, a Korean company, CJ E&M Co., Ltd concluded a license agreement relating to the domestic distribution of Paramount films, etc. with Hungary-based entity Viacom International Hungary Kft (hereinafter “VIH”), which is affiliated with the global entertainment content group Viacom that owns the film producing company Paramount and music channel MTV. From around that […]

Korea vs Korean Finance PE, February 2018, Supreme Court, Case No 2015Du2710

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In cases where a domestic corporation that operates a financial business (including a domestic place of business of a foreign corporation) borrowed money from a foreign controlling shareholder and such borrowed amount exceeds six times the amount invested in shares or equity interests by the foreign controlling shareholder, a certain amount of the interest paid […]

Korean vs Guarantee fees Corp, October 2015, Korean Court, Case No 2014구합65806

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Up until 2015 it had been the practice of the Korean tax authorities to issue tax assessments to Korean parent companies for providing guarantees to foreign subsidiaries without receiving appropriate arm’s-length guarantee fees. To that end, the Korean tax authorities had developed a credit assessment model. In this case the court ruled on the appropriatenes […]

Korea vs Pharma Equipment Corp, September 2009, Corean Court, Case No 2008서1588

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The Korean company was active as a domestic wholesaler of hospitals and pharmaceutical equipment imported acquired from foreign related parties. The taxation authorities have calculated the normal price by applying the TNM method for controlled transactions between the Korean company and it’s foreign related parties. In years where profits in the company was below the […]

Korea vs Pharma Corp, September 2007, Supreme Court, Case No 2007두13913

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A Korean pharma corporation produced and sold finished pharmaceuticals. Active ingredients were imported from foreign related parties in the United States and Ireland. The Korean pharma corporation produced and sold the original finished products by importing the five original patented raw materials that had expired from the patent period in each business period from December […]

Korea vs MedImpo Corp, August 2004, Tax Tribunal, Case No 심사법인 2003-0076

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The Korean company (hereinafter ‘MedImpo Corp’) imported medicines from foreign related parties and sold them locally. The tax authorities issued an assessment based on transfer prices between two unrelated comparable companies and then applied the resale price method to calculate the “normal price” on the imported medicines. MedImpo Corp argued that the selection of a […]

Korea vs Corp May 2004, Case No 2003중3619

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In this case a Korean company was providing services (sales agent, equipment installation and maintenance service) to a foreign related party and remunerated on a cost plus basis. The remuneration had been calculated as cost plus 5-8 % based on six comparable domestic service providers. The Judgement If there is a significant difference between the […]