What defines an abuse of the tax law?

PRACTICE – The abuse of tax law has been modified in recent years in order to be used more by the administration against taxpayers. Focus on this procedure to know.

The abuse of the tax law is a procedure intended to sanction taxpayers who make excessive use of the tax law by the administration, in order to mislead the latter about its level of taxation. When the abuse is proven, the tax authorities may demand the payment of the taxes owed, together with interest on arrears and a . It is necessary to distinguish the traditional procedure of abuse of tax law from the new procedure related to the “mini-abuse of tax law”.

What is an abuse of the tax law?

determines the constitutive acts of tax law abuse as acts that have a “fictitious character”, or acts “that seek the benefit of a literal application of the texts or decisions against the objectives pursued by their authors (…), inspired by no other reason than to evade or mitigate tax burdens”.

Thus, an abuse of tax law concerns the tax procedures of taxpayers considered fictitious, that is, whose legal appearance bears no relation to reality. This is, for example, the case of a sale carried out with the help of a nominee, or a lease management of a goodwill followed by a sale of the equipment to the lessee in order to avoid the taxation of the sale of the fund. The abuse of tax law, therefore, also concerns all tax maneuvers put in place by taxpayers with the sole purpose of reducing or eliminating their taxation: improperly receiving a tax credit, reducing a tax debt, etc.

What is the new procedure for tax law abuse?

He introduced a new element in the tax law abuse procedure. Transcribed in, he extended this procedure to the tax maneuvers of taxpayers carried out with the “main” reason -and no longer just “exclusive”- that of.

In order to clarify what is sometimes called a mini-abuse of the tax law, the General Directorate of Public Finance published at the end of 2020 in Bofip-Impôts[…]

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