Tax avoidance
Tax avoidance (also known as tax optimization or tax structuring ) describes the legal use of opportunities and procedures to reduce the tax burden on companies and private individuals. Tax avoidance is basically possible for all types of tax, but the focus is regularly on income taxes. A distinction must be made between tax avoidance and non-legal tax evasion . In colloquial terms, the term tax loophole is often used in connection with tax avoidance .
Tax amounts to be paid are generally the product of the tax base and the tax rate . Consequently, tax avoidance strategies aim to minimize one of these calculation factors or both (within the scope of the respective tax regulation).
In addition to absolute tax savings, tax avoidance strategies often only aim for a positive interest effect by shifting positive tax income into the future. This applies in particular to many tax accounting structures at companies.
Tax avoidance for natural persons
Tax avoidance is any legal behavior that leads to a reduction in tax payments. A long-term tax avoidance strategy exists z. B. in the choice of a country with a favorable tax framework as a place of residence / location (see also tax evasion ).
Further examples of tax avoidance in Germany are:
- Marriage to take advantage of spouse splitting
- Claiming tax breaks (e.g. claiming the mileage allowance , expenses for household help or craftsmen's wages or other special expenses )
- Deduction of the costs for tax-subsidized measures (such as heating renewal, procurement of living space)
- Acquisition of a diesel car to reduce the petroleum tax burden
- the assertion of losses from media funds
- targeted realizing tax losses to offset losses with gains ( Tax Loss harvesting , crop loss control ' )
- Shifting investment income into the basic allowances for children
- Deferral of profits via zero coupon bonds until a time with a more favorable tax rate, for example in retirement age; (see also bond stripping )
Basically, any kind of consumption or spending waiver leads to a reduction (avoidance) of tax payments, since the indirect taxes actually contained (in the price not paid) are eliminated. Examples: reducing or giving up smoking or alcohol consumption saves tobacco or z. B. Sekt tax; the sales tax for all types of products. However, this does not apply to the direct taxes of the taxpayer and in this respect does not apply, or only in the broadest sense, as a tax avoidance measure.
In many tax jurisdictions there are different tax rates depending on the type of income. In Germany, this concerns the final withholding tax on investment income, which is no longer part of the synthetic income tax system. Here, through a corresponding asset allocation (e.g. investments in shares instead of in one's own sole proprietorship), taxes can be avoided by choosing the types of income.
Corporate tax avoidance
In corporate tax law, there are a number of options for tax avoidance. A distinction must be made between tax avoidance in a national and an international context.
National tax law
There are many ways for companies to minimize the tax base. In the case of companies that are required to report, this can be done by minimizing gross assets (assets) and / or maximizing debt capital (liabilities). For this purpose, possible activation options in the tax balance sheet are to be used more negatively and passivation options more positively. In German tax accounting law, however, there are no option rights whatsoever. Furthermore, the valuations of assets are to be minimized as far as possible and the valuations of liabilities to be maximized. There are various options for this in German tax accounting law within the framework of open valuation options and discretion.
A classic means of tax avoidance is the choice of a tax-optimized depreciation method (minimization of gross assets). In Germany, the degressive depreciation for wear and tear (depreciation) with a change to the linear method was predominant for a long time, which led to a positive interest effect. As part of the 2008 corporate tax reform in Germany , the option of degressive depreciation in the tax balance sheet was abolished.
Considerable leeway for tax avoidance results from the possibilities of horizontal and vertical loss offsetting. In this way, losses can be carried forward in profitable years in order to take advantage of the effects of tax progression.
An example of avoiding sales tax payments is maintaining the status as a sales tax-exempt small business by limiting annual sales to the corresponding limit (currently 22,000 euros).
If local (community) taxes are levied in a country, such as trade tax in Germany, tax optimization can take place within the framework of the national choice of location, provided that the tax rates vary from community to community. In Germany, the rates of business tax in the individual municipalities fluctuate considerably, so that considerable tax savings may be possible here through a clever choice of location.
A long-term tax avoidance strategy can already begin with the choice of legal form when setting up or transforming companies if different legal forms are taxed differently. In Germany, as in many other countries, corporations are taxed in a non-transparent way, while partnerships are taxed transparently. With high top tax rates for personal income tax, corporations can therefore be more tax-advantageous than partnerships (with high profits). If the income of corporations is not reinvested , partnerships are usually advantageous because there is no economic double taxation .
International tax law
For companies with activities in two or more tax jurisdictions, tax optimization for purely domestic matters is supplemented by the tax-optimized design of international activities. The aim here is to minimize the group tax burden, i. H. the sum of the tax payments of the individual group companies. International tax planning basically affects activities along the entire value chain, from procurement to sales ( Tax Efficient Supply Chain Management ).
In international companies, highly complex tax structures are sometimes used with the aim of minimizing the group tax burden, whereby the advantages of individual tax jurisdictions are used in a targeted manner. An example of such complex arrangements is the Double Irish With a Dutch Sandwich strategy (allowed until the beginning of 2015; transition period until 2020 in Ireland). Another example is corporate patent tax exemption , as the UK made possible and as the Irish government plans to do in 2014.
Avoidance of double taxation
A key goal of tax planning in the international group is to avoid double taxation of income. Since the Federal Republic of Germany has double taxation agreements with almost all economically important countries , this is basically guaranteed for most internationally active German companies.
International tax differential
International tax planning starts with the fact that the corporate tax law of the individual tax jurisdictions differs considerably from one another. In this context, one speaks of an international tax differential . The classic industrialized countries (countries of the First World) tend to be characterized as high-tax countries, whereas emerging countries tend to be characterized as low-tax countries . In recent years, however, an alignment has been observed, with the international trend towards a reduction in the corporate tax burden (competition between locations , race to the bottom ). With an effective average corporate tax rate of around 30%, Germany is currently in the midfield internationally. Tax havens often play a major role in international tax planning . In addition to the classic tax havens such as the Channel Islands , the Cayman Islands or the Bahamas , industrialized countries such as the Netherlands and Ireland have also been offering certain tax advantages for international companies for many years, e.g. tax advantages for (intra-group) finance companies.
Choice of location and relocation of functions
The international tax gap is exploited as part of international tax planning by relocating value-added activities to low-tax countries. This can be done through the choice of location (subsidiaries, operating facilities) as well as the relocation of individual activities (relocation of functions ).
Intra-group transfer pricing and financing companies
In-house transfer prices play a very important role in international tax planning . When services are exchanged between group companies in different countries, these are chosen in such a way that the profit is increased in the country with the lower tax burden and reduced in the country with the higher tax burden.
Example: If the Volkswagen plant in Wolfsburg supplies platforms to the Škoda subsidiary in the Czech Republic (lower tax burden than Germany), the transfer prices to be paid by Skoda to VW for the platforms are to be set as low as possible.
It is still common practice to set up intragroup finance companies in countries with low effective tax rates. Through the granting of loans within the group and the associated interest payments, profits can then be shifted to the low-tax country.
Loss utilization
In the international group there are also more extensive possibilities of utilizing losses than in purely national companies. A special form of the international use of losses is the so-called double dipping . One and the same losses are offset twice in two tax jurisdictions to reduce taxes.
Abuse of design
The offense of abusive tax avoidance is codified in Germany in § 42 of the tax code. According to this, there is abuse of structure if the taxpayer chooses a legal structure for the purpose of tax avoidance that is economically inadequate. In such a case, the tax office will set the tax as it would have arisen if an economically appropriate structure had been chosen. Misuse of design is not punishable.
Significance in tax increases
Empirical studies show that tax increases lead to adjustment reactions on the part of taxpayers. Taxpayers with higher incomes hardly react to taxation with their basic real economic performance, for example with regard to working hours and scope or educational and career decisions. In return, they respond with tax avoidance.
Consequences of tax avoidance
Tax losses
The EU Commission estimates that every year the states in the EU are withheld one trillion euros in taxes through tax evasion and tax avoidance, so that this money is either not available for infrastructure, security and education or other taxpayers have to pay for it (so-called tax base erosion ). The majority of this unpaid sum is attributable to tax avoidance, in particular to large multinational corporations (see offshore leaks , Luxembourg leaks and Swiss leaks ). According to the estimate, the loss for Germany amounts to around 160 billion euros annually.
In 2016, the European Parliament has its own committee to investigate money laundering, tax avoidance and tax evasion. Especially as a result of the Panama Papers and to review the business relationships of banks, politicians and oligarchs. The similar legal situation or interests in the fight against tax evasion, tax avoidance, money laundering , offshore business and corruption therefore requires effective instruments (disclosure, transparent checked registers, contractual security, formal requirements, etc.) and, if necessary, tougher sanctions against those involved.
It is estimated that developing countries alone lose $ 100 billion a year through tax avoidance by multinational corporations. The Nobel laureate in economics, Joseph Stiglitz, and the Basel criminal lawyer, Mark Pieth, point out that the fight against tax avoidance and corruption is not followed consistently due to extensive lobbying work and that this has prevented effective global transparency standards.
Germany
According to information from the Federal Ministry of Finance, the number of company audits by tax auditors is falling for people with an income of over 500,000 euros per year. It fell by almost 30% from 1,630 in 2009 to 1,150 in 2018. The Federal Audit Office had already pointed out in 2006 that the low audit rate led to tax losses averaging 135,000 euros per case.
Wealth inequality
Non- governmental organizations also deal with tax avoidance, especially those of the super-rich and multinational corporations. Well-known organizations include the Tax Justice Network and Oxfam . According to these, tax avoidance is a major cause of the very high and increasing concentration of wealth worldwide (in 2009 the richest percent of the world's population owned over 44 percent of global wealth, in 2014 it was a total of 48 percent).
See also
- Base erosion and profit shifting
- List of tax data leaks
- Panama Papers
- Paradise Papers
- Tax haven
- Tax ruling
Web links
Individual evidence
- ↑ Tax policy: Ireland closes tax loophole for companies. In: Zeit.de .
- ↑ Corporate and Indirect Tax Survey 2012. In: kpmg.com , pp. 6-8.
- ↑ Kolruss, Th .: The hybrid corporation - designs for double utilization of losses (double dipping) in the relationship between Germany and the USA. In: IStR 2004 , pp. 735–741.
- ↑ also BStBl 2000 II 224, 1990 II 113.
- ^ Stefan Bach: Income and wealth distribution in Germany | APuZ. Retrieved June 25, 2020 .
- ↑ a b Much more professional type of tax fraud. In: Deutschlandfunk , November 7, 2014
- ↑ EU warns of a tax shortfall of 1 trillion euros. In: FAZ , December 6, 2014
- ↑ Florian Klenk, Josef Redl: Brussels looks to Panama. In: Der Falter , October 12, 2016, p. 12; on the problem, inter alia. Philip Faigle: We're breaking the rule of law. In: Die Zeit , April 18, 2016.
- ↑ Switzerland among the worst tax havens. In: Der Standard , December 12, 2016.
- ↑ Rene Höltschi: Stiglitz and Pieth call for the isolation of tax havens. In: NZZ , November 15, 2016.
- ↑ Income millionaires are seldom screened by the tax office. Retrieved February 27, 2020 .
- ↑ Oxfam: Tax avoidance is robbery at the expense of the general public. In: Oxfam.de
- ↑ The richest percent has more than the rest of the world. In: FAZ
- ↑ One percent has more than the rest of the world. In: Süddeutsche Zeitung
