Statutory Avoidance and Disclosure Rules in Germany
BEYOND BOUNDARTIES - DEVELOPING APPROACHES TO TAX AVOIDANCE AND TAX RISK MANAGEMENT, Judith Freedman, ed., PP. 47-55, 2008
13 Pages Posted: 4 May 2010
Date Written: June 21, 2008
Abstract
The concept and the consequences of abuse in the area of tax law are regarded as one of the paramount topics in German tax legislation, jurisprudence and doctrine. Germany’s general statutory anti-avoidance rule, § 42 of the Abgabenordnung (the Fiscal Code of Germany), is continuously subject to intensive debate and dividing German tax lawyers into two opposing camps. While one group regards the rule to be of mere declaratory nature, which does not make a difference for the application of substantial tax law, the majority opinion seems to see § 42 of the Abgabenordnung as a meaningful instrument to disregard abusive behaviour, to strengthen the equitable treatment of taxpayers and to enforce an even-handed taxation according to the “ability-to-pay” principle. Against the background of both viewpoints this paper analyses the basic requirements for abusive behaviour under the German anti-avoidance rule and its diverging interpretation by the different senates of the German Federal Tax Court. Finally, it discusses a recent initiative by the German legislator to tighten the anti-avoidance rule and a fruitless attempt to introduce a provision for tax shelter disclosure that follows the U.K. and U.S. model.
Keywords: German tax law, anti avoidance, anti abuse, income tax law, corporate tax law
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