조세조약상 사용료소득과 사업소득 조항 적용의 충돌

The Supreme Court of Korea overruled both Trial and Appellate Courts’ decisions as to whether or not the income derived from use of the digital products of video programs for broadcasting, developed by its parent company, shall be attributed to the branch under paragraphs 2 and 3 of Article 8 of the Korea-US Tax Treaty (“the Treaty”). This is the first case that deals with qualification conflicts in tax treaties. The decision, however, seems to be controversial in categorizing royalty income as business profits by applying incorrect treaty provisions. According to the internationally accepted source rules, the income arising from digital products, royalty paid by the user of the intangibles, shall be treated as income of the owner or the developer. When the beneficial owner of the right of property is the permanent establishment (“PE”), the right or property giving rise to the royalties that is effectively connected with the PE shall be applied to the paragraph 6(a) of Article 8 (business profits) of the Treaty. Otherwise, the source rule described in paragraph 3 of Article 6 of the Treaty shall be applied. In this case, as the parent company is the developer and owner of the digital product, the PE is nothing but a user who shall pay royalty to the owner of the intangibles, the parent company. Thus, the applicable attribution principle of income to the PE in this case shall be related with Article 14, instead of Article 8, of the Treaty.