고정사업장과 부가가치세 납세의무

This paper aims at exploring what effects the existence of permanent establishment(hereinafter ‘PE’) in direct taxation has on the value-added-tax(hereinafter ‘VAT’) liabilities of non-resident businesses. This issue relates to whether the PE in direct taxation can be treated as taxable person in VAT context, whether the concept of PE as proxy for the place of supply can be interpreted in the same manner as general fixed establishment(hereinafter ‘FE’) in VAT context and whether the intervention of PE in VAT context can be distinguished from the attribution of PE in direct taxation. The results taken are as follows. The PE in direct taxation may not be constructively treated as taxable person in VAT, the grounds of which are as follows. First, the PE is not treated as person even in direct taxation, that is merely part or parcel of person. A taxable person in VAT is also based on the concept of person, which includes individual, corporation and any body of persons. Second, Dependent agent as PE can not be independent on the perspectives of remuneration and employer’s liability. The economic activities of dependent agents may not be carried on its own name and accounts, which function as another sign of dependency. Third, even branch as typical example of PE can not be counted as independent from headquater in respect of legal-and-economic risks and rewards, unless other special situations exist. Fourth, the subsidiary of foreign parent company in itself can not be treated as PE, but that is not the case only if the subsidiary meets the prescribed requirements thereof through other activities. However, even in this case, it belongs to another issue whether the PE status of subsidiary can be treated as taxable person in VAT context. The Supreme Court of Korea designated the most-important-and-essential-part test(hereinafter ‘MIEP test’) as allocation standard of VAT jurisdiction in case non-resident business carries on its economic activities through the domestic PE in direct taxation context. If the domestic PE fulfills the most important and essential part of supply, the PE shall be counted as intervening FE in VAT and the supply shall be treated as VAT taxable transaction. The MIEP test may well be interpreted in line with EU VAT directives context, the guidelines from which are as follows. A FE of the taxable person shall be taken into consideration only when it is characterized by a sufficient degree of permanence and a suitable structure in terms of human and technical resources to enable it to make the supply of goods or services in which it intervenes. When a foreign taxable person has a domestic fixed establishment where the VAT is due, that establishment shall be considered as not intervening in the supply of goods or services, unless the technical and human resources of that fixed establishment are used by him for transactions inherent in the fulfillment of the taxable supply of those goods or services before or during this fulfillment. Where the resources of the fixed establishment are only used for administrative support tasks such as accounting, invoicing and collection of debt-claims, they shall not be regarded as being used for the fulfillment of the supply of goods or services. However, if an invoice is issued under the VAT identification number of the fixed establishment, that fixed establishment shall be regarded as having intervened in the supply of goods or services, unless there is proof to the contrary. When several domestic PEs involve the specific supply of goods or services, it shall be additionally reviewed whether they function as a single coherent whole. A taxable person has discretion in electing tax-invoices-issuing FE among domestic FEs. And it should be noted that the factors other than MIEP test can determine the place of supply as domestic, even though the domestic PE can not meet MIEP test. The VAT collection issues follow the VAT jurisdiction issue. The former issues can be reviewed only after getting positive answer in the latter issue, so the former can not affect the latter. Reverse charge mechanism may well be applied only when the following conditions are met. First, the place of supply is considered as domestic by the factors other than MIEP test. Second, there is no domestic PE or taxable amount is not attributed to domestic PE in case there is any domestic PE other than intervening domestic PE. Third, the taxable amount shall be withheld at payment by recipient of VAT supply in direct tax context. Fourth, the recipient of supply is non-taxable person or is not entitled to deduction of input VAT. If the taxable amount is attributed to domestic PE, the PE assumes the return and payment obligations in collection procedures of direct taxation and the withholding method can not be applied. Therefore ‘attribution to PE’ in reverse charge mechanism shall be interpreted in the same manner as that in direct taxation to avoid legal uncertainties on the recipient of supply. The OECD Model Convention Commentary may act as authoritative sources in interpreting the ‘attribution to PE’ concept.