'Along with the Gods' Production Company Loses Corporate Tax Lawsuit… Court Rules "Design Costs Not Eligible for Tax Credit"

Photo by Moon Honam munonam@

[Asia Economy Reporter Kim Daehyun] The production company of the movie series 'Along with the Gods' lost the first trial in an administrative lawsuit filed to include special effects production costs in tax credits.

According to the legal community on the 12th, the Seoul Administrative Court Administrative Division 6 (Presiding Judge Lee Jooyoung) recently ruled against the plaintiff in the corporate tax correction refusal cancellation lawsuit filed by Realize Pictures against the Jungbu Tax Office chief.

Earlier, Realize Pictures claimed that approximately 16.2 billion KRW spent on special effects during the production of the 'Along with the Gods' series from 2015 to 2017 qualified as research and development expenses eligible for tax credits and demanded a corporate tax refund.

Article 10 of the Restriction of Special Taxation Act stipulated, before its 2017 revision, that 'costs for the development of unique designs' were among the items eligible for research and development tax credits. When the tax authorities did not accept this, Realize Pictures filed an administrative lawsuit.

During the trial, Realize Pictures stated that "the design development for special effects was outsourced to a specialized company." They also emphasized that "they developed unique and new special effects, costume designs, art designs, makeup and hair designs, lighting designs, etc., which brought groundbreaking progress to the knowledge and technical level of film production," and "received numerous awards at film festivals."

However, the first trial court did not accept these claims. The court judged that even if special effects or designs not previously used in existing films were employed, or new methods of special effects or designs rarely attempted before were used, this merely constituted ordinary film production activities.

The court stated, "Research and development expenses are, in principle, for activities aimed at achieving scientific and technological advancement," and "this applies even if the films in question received multiple awards related to special effects or designs at film festivals." Realize Pictures appealed the first trial ruling.

This content was produced with the assistance of AI translation services.