Abuse of Law in Hungarian Taxation

Abstract

This paper concerns the effective Hungarian practice on combating tax avoidance. It seeks to explain how the doctrines on the tax law prohibition of simulated contracts and of the abuse of tax law have been developed. The discussion of this subject is extended to a series of problem cases and factual examples to illustrate how legal doctrines operate in real life cases. In a major part of the paper, the judiciary practice will be presented. In this respect, the Constitutional Court activity and the resolutions on the uniformity in public administrative law of the Supreme Court (now called “Curia”) can be highlighted. Even if the decisions of these authorities are related to the law that is not necessarily effective longer, it is yet important to deal with them because they have significantly contributed to the development of the legal doctrines that have been guiding to date. In the last section of the paper, some individual decisions of the Supreme Court (now it is called Curia) are discussed that have been most important in understanding the effective Hungarian practice on combating tax avoidance (notably, there is no system of precedents that would be effective in Hungary).

Keywords: tax avoidance

JEL Classification: K34