Google Korea finally wins tax dispute against Korean tax office

The Supreme Court has dismissed an appeal by Korea's tax authority, effectively upholding a lower court's ruling in favor of Google Korea in a corporate tax cancellation case involving about 154 billion won ($115.3 million), judicial officials said Monday.

The top court left intact the Seoul High Court's ruling siding with Google Korea in its corporate tax cancellation lawsuit against the head of Seoul's Yeoksam Tax Office by dismissing the defendant's appeal without substantive review Thursday, the officials said.

The tax office imposed corporate and local income taxes totaling around 154 billion won on Google Korea in 2020, arguing that the company's transfer of part of its income to Google Asia Pacific based in Singapore was subject to taxation. The office classified the payments as royalty income derived from the use of copyrights and knowhow.

But Google Korea took the case to court, arguing that the payments constituted business income for Google Asia Pacific and were therefore not taxable in Korea.

The Seoul Administrative Court ruled in favor of Google Korea, finding that the payments could not readily be classified as royalty income, and the Seoul High Court subsequently upheld the ruling.