Article 78-3 (Special Rules on Non-Inclusion of Business Use Passenger Vehicle Related Expenses as Necessary Expenses)

The "expenses prescribed by Presidential Decree" in Article 33-2 (1) of the Act refer to expenses incurred for the acquisition and maintenance of business use passenger vehicles, such as depreciation expenses, rental fees, fuel costs, insurance premiums, repair expenses, automobile taxes, toll fees, and interest expenses on financial lease liabilities (hereinafter referred to as "business use passenger vehicle related expenses" in this Article).

The "amount of business use prescribed by Presidential Decree" in Article 33-2 (1) of the Act refers to the amount according to the following classifications. <Amended on Feb. 28, 2023, Dec. 30, 2025, Feb. 27, 2026> 1. When automobile insurance that covers compensation only when driven by the business owner, their employees, or other persons prescribed by the Minister of Economy and Finance during the entire period of the relevant tax period (in the case of leased passenger vehicles, the period of lease within the relevant tax period) (hereinafter referred to as "business-exclusive automobile insurance") is subscribed to: The amount obtained by multiplying the business use passenger vehicle related expenses by the ratio of business use mileage to the total mileage confirmed according to driving records, etc., prescribed by the Minister of Economy and Finance (hereinafter referred to as "driving records, etc." in this Article) (hereinafter referred to as the "business use ratio amount" in this Article). 2. When business-exclusive automobile insurance is not subscribed to: The amount calculated according to the number of business use passenger vehicles per business owner (for joint business entities, they are considered as one business owner). a. One vehicle: The business use ratio amount. b. In excess of one vehicle: 0% of the business use ratio amount. However, for business use passenger vehicle related expenses incurred from January 1, 2024, to December 31, 2025, the amount shall be 50% of the business use ratio amount for businesses other than those falling under any of the following: 1) Businesses subject to confirmation of diligent reporting under Article 70-2 (1) of the Act (referring to businesses subject to confirmation of diligent reporting in the preceding tax period). 2) Persons engaged in medical services, veterinary services, pharmacy, and businesses prescribed in Article 109 (2) 7 of the Enforcement Decree of the Value-Added Tax Act. 3. When business-exclusive automobile insurance is subscribed to for only a portion of the entire period of the relevant tax period (in the case of leased passenger vehicles, the period of lease within the relevant tax period): The amount according to the following classifications. a. One vehicle: The business use ratio amount. b. In excess of one vehicle: The amount calculated according to the following classifications. 1) Business use passenger vehicle related expenses to which the proviso of subparagraph 2 (b) applies: The amount calculated using the following formula: <img src="http://www.law.go.kr/flDownload.do?flSeq=161860001" alt="img161860001" > ┌────────────────────────┐ │ │ │ A + (A × B) │ │──────── │ │ 2 │ │ │ │A: Business use ratio amount │ │B: Number of days actually subscribed to business-exclusive automobile insurance during the relevant tax period ÷ Number of days required to subscribe to business-exclusive automobile insurance to be eligible for subparagraph 1 during the relevant tax period │ └────────────────────────┘ </img> 2) Business use passenger vehicle related expenses other than those in 1): The amount calculated using the following formula: <img src="http://www.law.go.kr/flDownload.do?flSeq=161844981" alt="img161844981" > ┌──────────────────────┐ │ │ │A × B │ │ │ A: Business use ratio amount │ B: Number of days actually subscribed to business-exclusive automobile insurance during the relevant tax period ÷ Number of days required to subscribe to business-exclusive automobile insurance to be eligible for subparagraph 1 during the relevant tax period │ └──────────────────────┘ </img>

Businesses intending to apply paragraph 4 shall prepare and keep driving records, etc., for each business use passenger vehicle, and shall submit them immediately upon request by the head of the tax office having jurisdiction over the place of tax payment. <Amended on Feb. 11, 2020>

The "method prescribed by Presidential Decree" in the main clause of Article 33-2 (2) of the Act refers to carrying forward and including in necessary expenses within the limit of the amount calculated by the methods according to the following classifications. <Amended on Feb. 11, 2020> 1. Carryforward amount of depreciation expenses per business use passenger vehicle: In the tax period following the relevant tax period, the insufficient amount shall be recognized as necessary expenses up to the amount by which depreciation expenses among the business use amounts of the relevant business use passenger vehicle are less than 8 million won. 2. Carryforward amount of depreciation equivalent amount of lease payments per business use passenger vehicle: In the tax period following the relevant tax period, the insufficient amount shall be included in necessary expenses up to the amount by which the depreciation equivalent amount among the business use amounts of the relevant business use passenger vehicle is less than 8 million won.

The "method of carryforward, etc., prescribed by Presidential Decree" in Article 33-2 (3) of the Act refers to a method of uniformly including 8 million won in necessary expenses from the tax period following the relevant tax period, and including the remaining balance in necessary expenses when the remaining amount is less than 8 million won in a tax period. <Amended on Feb. 11, 2020>

When calculating necessary expenses for business use passenger vehicle related expenses, etc., if the relevant tax period is less than one year or the vehicle is owned or leased for a portion of the tax period, the number of months shall be calculated according to the calendar, and days less than one month shall be treated as one month. <Newly inserted on Feb. 13, 2018, Amended on Feb. 11, 2020>