Abuse of legal options

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As abuse of legal design options is called an abuse of tax law for the purpose of tax avoidance or tax reduction. According to Section 42 of the Fiscal Code , in such a case the tax is to be levied as it would be levied if the legal structure was appropriate . According to the wording of the law , a tax arrangement is improper if the following conditions are met:

  • an inappropriate legal structure is chosen
  • the design leads to a tax advantage not provided for by law
  • the taxpayer cannot prove any significant non-tax reasons

scope of application

Structural abuse according to § 42 AO can in principle affect all types of tax . If the individual tax laws contain regulations that are intended to prevent misuse and if the offense of these individual tax regulations is met, the legal consequences are not determined according to Section 42 AO, but according to the individual tax laws .

Constituent elements

Inappropriate legal design

The inappropriateness is to be examined separately for each type of tax according to the respective underlying assessments of the legislature.

It is up to the taxpayer to regulate their tax affairs in such a way that as little tax as possible is to be paid. It should therefore be noted that the will to save taxes through a selected legislative arrangement does not yet mean any abuse of legal arrangement options i. S. v. § 42 AO represents. A design that appears uneconomical, cumbersome, complicated, cumbersome, artificial, superfluous, ineffective or nonsensical, without considering the tax effects, is regularly checked for design abuse by the tax authorities. Indications for the inappropriateness are z. B .:

  • the design would not have been chosen by a knowledgeable third party in view of the economic circumstances and the economic objective without the tax advantage;
  • the involvement of relatives or other related persons or companies was purely tax-motivated;
  • the relocation or transfer of income or assets to other legal entities was purely tax-motivated.

Tax benefit not provided for by law

When examining whether the selected structure leads to tax advantages, the tax effects of the selected structure must be compared with the hypothetical tax effects of an appropriate structure. Such tax advantages must also be taken into account that do not occur for the taxpayer himself, but for relatives or related persons.

The criterion is not met if the tax advantage is provided for by law. Nevertheless, an improper design can also be linked to norms that want to encourage certain behavior from a tax perspective.

Considerable non-tax reasons

Misuse of design only exists if the taxpayer does not provide evidence of significant non-tax reasons. Non-tax reasons arise e.g. B. from real or economically effective dispositions (transfer of ownership, changes in the status of liability) or from the avoidance of non-tax legal consequences. In order to assess the importance of non-tax reasons, a regular individual examination is required.

Legal consequences

If there is a misuse of the structure, the tax claim arises as it would have arisen with an economically appropriate legal structure. The abuse of tax structuring options is not punishable. In connection with an abuse of structure, however, as otherwise, there may be a frivolous reduction in taxes or tax evasion if the taxpayer unlawfully provides incorrect or incomplete information in order to conceal the existence of tax avoidance.

Individual cases

In the following cases - here only reproduced in abbreviated form - the tax courts have affirmed the abuse of design:

  • Loan agreements , if the funds have previously been given to the minor lender.
  • functionless mailbox company without its own economic activity
  • a taxpayer sells his car at book value to his daughter and rents it back on the same day at a rental price that is significantly higher than the relevant mileage allowance.

According to the case law of the tax court, there is basically no design abuse in the following cases:

  • The granting of an interest-free shareholder loan and its subsequent interest-bearing use by the company in order to achieve the consumption of a loss allowance threatened with forfeiture by shifting income to the company.
  • The disproportionate distribution of profits to enable a partner to compensate for losses, even if the partner then pays back the money.
  • The payment of cash maintenance to children while renting the apartment to them and offsetting the cash maintenance with the rent.

Ban on harassment

The abuse of legal structuring options according to § 42 AO is to be distinguished from the civil law ban on harassment in § 226 BGB , according to which the exercise of a right is inadmissible "if it can only have the purpose of causing damage to another".

Individual evidence

  1. ↑ cf. Scope of application of the tax code in § 1 AO
  2. ↑ AEAO to § 42, No. 2.2
  3. ↑ AEAO to § 42, No. 2.3
  4. ^ FG Düsseldorf , judgment of June 18, 2007, Az. 17 K 923/05, EFG 2007, 1696 (in the case of a judgment: transfer of company shares )
  5. ^ Pahlke / Koenig / Koenig: Tax Code § 42 Rn. 26th
  6. ↑ BFH , judgment of December 18, 1996, Az. XI R 12/96, BStBl. II 1997, 374
  7. ↑ AEAO to § 42, No. 3
  8. ↑ BFH, judgment of March 26, 1996, Az. IX R 51/92, BStBl. P. 443
  9. ↑ BFH, judgment of October 23, 2002, Az.IR 39/01, BFH / NV p. 289
  10. ^ FG Munich , judgment of September 17, 1991, EFG 1992, 278.
  11. ↑ BFH, judgment of October 17, 2001, Az.IR 97/00, BFHE 197 p. 63
  12. ↑ BFH, judgment of August 19, 1999, Az. IR 77/96, BStBl. 2001 II p. 43
  13. ↑ BFH, judgment of October 19, 1999, Az. IX R 30/98, BStBl. 2000 II p. 223

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