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When dealing with real estate transactions, you’ll often hear phrases like “This deal is treated as a comprehensive transfer” or “Since the seller is a general taxpayer, VAT is charged separately.” But what do these terms really mean?

In fact, the three concepts — Comprehensive Business Transfer, Simplified Taxpayer, and General Taxpayer — determine how VAT is applied to a transaction. Even for the same property, the amount of VAT can change significantly depending on whether the seller is a general or simplified taxpayer, or if the transfer qualifies as a comprehensive one.

In this article, we’ll break down these terms clearly with easy examples and comparison charts, so you can understand how they affect your real estate deals — even if you’re not a tax expert. 🏠

A simplified taxpayer is a small business owner who pays VAT using an easier, simplified method. This system was created to reduce the tax burden on small-scale businesses.

Generally, business owners with annual revenue under ₩80 million qualify for this system. They file VAT only once a year, using a simplified formula instead of full calculations.

A general taxpayer is a business owner who files and pays VAT in the standard way. Those with annual sales of ₩80 million or more — or those in specific industries like real estate leasing and wholesale — are automatically classified as general taxpayers.

They calculate VAT using the formula Output VAT – Input VAT = Payable VAT, must issue tax invoices, and can also receive input tax deductions (refunds).

Simplified and general taxpayers differ mainly in their eligibility, VAT rate, refund policy, and reporting frequency. The table below shows a clear side-by-side comparison.

A Comprehensive Business Transfer means that a business is transferred entirely to another owner — including assets, facilities, and even business rights.

In this case, it’s not considered a simple sale of goods but rather a succession of a business, so it is excluded from VAT taxation. Note that this is not “VAT exempt,” but “non-taxable” — VAT does not apply at all.

Since VAT treatment varies by classification (comprehensive transfer, simplified, or general taxpayer), understanding these systems can prevent tax losses and contract disputes. Here are key real-world takeaways.

Ultimately, what matters most in real estate taxation is who the seller is and how the business is structured. Even the same property can have vastly different VAT amounts depending on the taxpayer type and transaction method.

With this post, you now understand how VAT works in property transactions — and can confidently handle “VAT included” or “VAT excluded” clauses in your next deal. 🏢

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