The German Austrian Experience

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The German - Austrian Experience

• Marco Koschier
• 31th May 2005

2
General

• No need for a "Bona Fide Taxpayer" concept at all
• however in "Dubio pro Fisco" approach for tax
  law cases
• versus in "Dubio pro Reo" approach in civil law
  cases
• Every taxpayer is deemed to be a "Bona Fide
  Taxpayer" as long as he is legally announced
  guilty of tax fraud by a court decision

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Applicable Legislation (I)

• Art. 41 and 42 Abgabenordnung (Germany)
• Art. 21 - 23 Bundesabgabenordnung (Austria)

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Applicable Legislation (II)

• Invalidity of a transaction (Article 41 of the
  Law on Charges)
• - If a transaction is invalid or shall be deemed
  invalid, then this circumstance is not taken
  into account for purposes of taxation if or
  until the parties disclaim the economic effect
  of the performed invalid transaction
  notwithstanding such circumstance. This
  provision is not valid if otherwise provided by
  tax legislation
• - Conclusion of simulated transactions and
  fulfillment of simulated actions are not taken
  into account for purposes of taxation. If a
  performed transaction is aimed to shelter
  another transaction then the sheltered
  transaction is considered for purposes of
  taxation
• Abuse while performing transactions (Article 42
  of the Law on Charges)
• - The tax legislation may not be evaded by way
  of abuse while performing various transactions.
  In case of any abuse such tax obligation shall
  arise which may have arisen when performing a
  transaction which complies with the economic
  purposes of the parties.

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Additional Limitation of Legislation on Benefits

• Außensteuergesetz (Germany)
• - low tax jurisdictions
• - no active trade or business
• - related parties (substance over form).
• Double tax treaties (i.e. Austrian - Lichtenstein
  treaty excludes Stiftungen)
• Abuse of law legislation of the EC

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Court Cases, Tax Practice

• "Substance versus Form" or "Form versus
  Substance"
• A taxpayer is free to decide which kind of legal
  framework he wants to exploit
• The optimisation of the tax base is a legitimate
  goal for a taxpayer
• - as long as a chosen solution is not unusual
  under the civil law
• - has other economic implications rather then
  minimisation of the tax base
• - then the form succeeds over the substance.
• A tax fraud has to be proven by the tax
  authorities ("nulla poena sine culpa")

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Haarmann Hemmelrath in Europe
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Haarmann Hemmelrath im Internet
www.haarmannhemmelrath.com