Background
Our client was the developer of a 534-unit apartment complex in Gyeonggi Province. In September 2017, it signed a sales-agency agreement setting per-unit fees "exclusive of VAT." The agency completed the sale of 522 units, excluding penthouses, in March 2018.
The two companies then litigated over the fees, and in June 2024 a judgment ordering our client to pay the remaining fees of KRW 149.6 million plus delay interest became final. In November 2024, the agency applied for a payment order seeking KRW 14.96 million in VAT on those fees, and the matter proceeded to litigation.
What Was at Stake
The court read "exclusive of VAT" as a separate agreement to pay VAT, so a payment obligation arose. The case turned on the statute of limitations. The agency argued that the earlier fee lawsuit had also interrupted the limitation period for the VAT claim and that our client had acknowledged the debt in a brief in that lawsuit.
How Changchun Helped
Changchun argued that the claim was time-barred, and the court accepted the defense on each point.
The five-year commercial limitation period had run. As a transaction between businesses, the claim was subject to a five-year period that began on April 1, 2018, when the agency could first bill, and expired before the November 2024 application.
The fee suit and the VAT claim were separate. The earlier suit sought only the fees excluding VAT, so it did not interrupt the limitation period for the VAT.
The brief was not an acknowledgment. Our client had disputed the amount and stated its figure only on the condition that no further unlawful sales came to light.
Outcome
In August 2025, the first-instance court dismissed the agency's claim. On appeal, the appellate court dismissed the appeal in August 2026 and ordered the agency to bear the appeal costs.
A party suing on a principal claim should separately manage the limitation period for any VAT agreed to be paid on top, and a party facing such claims should check limitation for each item. (Outcomes depend on the facts of each case.)