A Case Study on Changes in Tax Burden due to the Ambiguity in the Classification of Trademark Royalty Income and the Implications of IFRS 18

Q: What does this research mean for the field?

The ambiguity in classifying trademark royalty income under current accounting standards leads to conflicting interpretations and tax disputes regarding deemed gift taxation, an issue that the upcoming IFRS 18 is expected to resolve by clarifying operating performance measurement. Novelty: ClaimNovelty.INCREMENTAL. Consensus alignment: ConsensusAlignment.NEUTRAL.

Byung-Hee Lee; Sang-Giun Yim

doi:10.17287/kbr.2026.30.3.1

August 31, 2026Korea Business Review

A Case Study on Changes in Tax Burden due to the Ambiguity in the Classification of Trademark Royalty Income and the Implications of IFRS 18

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Key Points

To examine how ambiguities in classifying trademark royalty income as operating versus non-operating income generate tax disputes under deemed gift tax provisions, and to assess how IFRS 18 resolves these issues.
Conducted a comparative case analysis of conflicting decisions between tax authorities and judicial courts regarding trademark royalty income classification.
Evaluated the differences between economic substance and legal form interpretations under existing standards (IAS 1) versus the forthcoming IFRS 18 presentation framework.
Inconsistent interpretations by tax authorities and courts regarding whether trademark royalties constitute operating or non-operating profit led to diametrically opposed gift tax liabilities.
The residual income framework established in IFRS 18 provides an explicit classification baseline for operating performance, effectively eliminating the regulatory ambiguity that triggers recurring tax litigation.

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Implication

Case study reveals that ambiguous trademark royalty classification alters deemed gift tax liability in corporate disputes, highlighting how IFRS 18 standardizes operating income definitions.

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Cite This Study

Lee et al. (2026) studied this question.

synapsesocial.com/papers/6a993643636c6408cfa7f4a5 https://doi.org/10.17287/kbr.2026.30.3.1

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A Case Study on Changes in Tax Burden due to the Ambiguity in the Classification of Trademark Royalty Income and the Implications of IFRS 18

Key Points

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Implication

Abstract

Discussion

Cite This Study

A Case Study on Changes in Tax Burden due to the Ambiguity in the Classification of Trademark Royalty Income and the Implications of IFRS 18

Key Points

Ask about this paper

Implication

Abstract

Discussion

Cite This Study

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