Justice, Equality and Tax Law
1. Aufl. 2022
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S. 4721. Introduction
1.1. The Concept of Abuse of Law
Giving a precise definition to abuse of law is a difficult task. First, it is generally associated with other concepts (i.e. tax avoidance, tax evasion, tax planning) and, sometimes, these are even mixed with each other. Second, each country has developed its own approach resulting in the lack of consistency in the use of the concepts and the measures designed to tackle abusive transactions. However, to distinguish acceptable tax planning from tax avoidance and tax abuse is an even more challenging task.
Some studies establish that tax avoidance is indeed an abuse of law as it includes the exploitation of legislation with the aim to minimize the tax burden which constitutes the indirect violation of tax provisions. On the contrary, the majority of Judges in Alta Energy Luxembourg S.A.R.L. states the following:
First and foremost, tax avoidance is not tax evasion … In addition, tax avoidance should not be conflated with abuse. Even if a transaction was designed for a tax avoidance purpose and not for a bona fide nontax purpose, such as an economic or commercial purpose, it does not mean that it is necessarily abusive within the meaning of...