Predicting the ‘Unpredictable’ General Anti-Avoidance Rule (GAAR) in EU Tax Law
General Anti-Avoidance Rule (GAAR) is a type of rule designed to combat the tax-avoidance scenarios that in a legal form lawfully but aims to circumvent the legal consequences. GAAR is necessary for a tax system to address unexpected innovative tax avoidance scenarios. In the field of tax law, GAAR has been criticized for being too abstract and thus harmful to legal certainty. In the context of EU integration, the concept of GAAR has been developed and elaborated by Court of Justice of European Union as well as secondary laws, but there are quite a few different formulations. In the existing literature, it is established that, there are the subject test and the objective test cumulatively in the GAAR, which examines the taxpayers’ subjective intension and the objective economic reality. As to the relation between these two tests, scholars have established the theory that, the formulation and the context of the subjective test is actually influenced by the tax rule involved (that is, the purpose of the norm being circumvented). This paper will revisit GAARs in the EU tax law and present that, the theory of GAAR based on the purpose of the violated tax norm is indeed supported by latest case law of CJEU as well new Directives. Furthermore, the intention of the norm reconciles the subject test and the objective test. In this regard, the unpredictability of ‘GAAR’ actually has become more predictable.
|General Anti-Avoidance Rule (GAAR), EU law, Abuse of Law. Common Consolidated Corporate Tax Base (CCCTB), Anti-Tax Avoidance Directive (ATAD), legal certainty|
|The early draft of this paper has been presented in the symposium “The Changing Shape of Tax Avoidance”, organized by Journal of Tax Administration University of Exeter, on 6th May 2016 in London and the conference “Europe and its crises”, organized by Department of Politics and International Studies (POLIS), on 30th June and 1st July 2016, in University of Cambridge.|
Chen, S.-C. (2018). Predicting the ‘Unpredictable’ General Anti-Avoidance Rule (GAAR) in EU Tax Law. doi:10.22598/iele.2018.5.1.5