Court: Selling 8.4 Billion Won in Art Over 9 Years Makes One a 'Business Operator,' Not a 'Private Collector'

Profits from Consignment Sales Also Attributed to Plaintiff

Court: "Business Conducted Under Plaintiff's Own Calculation and Responsibility"

Yonhap News

A seller who claimed to be a private collector and made tens of billions of won in profit from art sales filed a lawsuit seeking a tax refund, but lost in the first trial.

According to the legal community on April 20, the Administrative Division 4 of the Seoul Administrative Court (Presiding Judge Kim Youngmin) ruled against the plaintiff in February in a lawsuit filed by art seller A against the head of the Jongno Tax Office, seeking to cancel the rejection of a request for tax revision.

In January 2018, A purchased a work by artist Yayoi Kusama, and in January 2022, consigned it to an auction house, earning a capital gain of 4,521,000,000 won. Initially, A reported this income as business income, but later submitted a request for a correction, arguing, "I am not a business operator but a private collector, so this should not be subject to income tax," and sought a refund of 1,536,000,000 won in taxes. When the tax authorities rejected the claim, A ultimately filed a lawsuit.

The court determined that A's pattern of transactions over time indicated that he was a business operator. Since 2009, A has repeatedly registered and deregistered as an art retail business, in effect conducting continuous business operations. In fact, it was found that from 2014 to 2022, A sold a total of 16 works of art created by others, generating approximately 8,400,000,000 won in revenue.

A argued that he was not a business operator because he did not have separate human or material resources and sold the artwork by consignment through an auction house.

In response, the court stated, "Given the nature of the art trade, transactions can take place without dedicated facilities or organizations, and for high-value artworks, it is common to transact through only a few channels. Consignment sales, too, are, in substance, sales conducted under A's calculation and responsibility, as the final proceeds and profits are attributed to the plaintiff."

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