1 / 14

Can tax planning be criminal ? Domestic and international perspective

Can tax planning be criminal ? Domestic and international perspective. Daniel Gutmann Sorbonne Law School Daniel.gutmann@cms-bfl.com. Practical relevance of the topic. A relatively new topic

donoma
Download Presentation

Can tax planning be criminal ? Domestic and international perspective

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Can tax planning becriminal?Domestic and international perspective Daniel Gutmann Sorbonne Law School Daniel.gutmann@cms-bfl.com

  2. Practical relevance of the topic • A relatively new topic • Criminallawrarelyinterfereswithtaxlaw, except in extreme situations (absence of tax return, concealment of income, wrongstatements etc.)  tax planning is not concerned • However, seriousconcern for tax managers • Widespread feeling of « criminalization of taxlaw » • Ex 1 : Business restructuring and failure to declare the existence of a PE : a criminalproblem? • Ex 2 : Transfer pricing : criminalconsequences? • Ex 3 : Tax arbitrage : from « abuse of law » to taxfraud in the criminalsense

  3. Theoretical issues • Tax planning, a normal practice : whyshoulditturncriminal? • Cf. controversy about the legitimacy of tax arbitrage • Whereis the borderline betweensoundoptimization and agressive tax planning? • Assumingthatcriminallaw has something to do withtax planning, how to design a proper system of criminallaw in this area?

  4. I- Why should there be a connection between tax planning and criminal law?

  5. A- Becausetax planning is an evilwhich must befought (?) • Tax planning harms equality between taxpayers + it affects significantly tax revenues • Is this enough to make it criminal? • No : no fundamental State interest is at stake • Yes : • New forms of particularly harmful tax planning • In a period of crisis, solidarity is more necessary than ever + effectiveness of the tax system is actually the only way out (cf. Prof. Bouvier yesterday)

  6. B- Because criminal law is an appropriate tool to fight tax planning (?) • Functions of criminallaw • Deter • Punish (bothnatural and legalpersons) • No better instrument? • A behaviouralapproach of criminallaw? • Anti-abuse rules • Non-coercitive instruments (« enhancedrelationship » betweentaxpayers and taxauthorities) • Disclosurerules (administration/stakeholders)

  7. II- How to design a proper criminal legislation to fight tax planning?

  8. A- Define the boundariesof criminallaw • Problem n° 1 : choose between « administrative » penalties and « criminal » penalties • Many different possible models • Limit between « administrative » and « criminal » is not clear  criminal principles apply to administrative sanctions under some conditions

  9. A- Define the boundariesof criminallaw (cont.) • Problem n° 2 : distinguish between a tax and a penalty • Ex 1 : higher withholding taxes for income directed towards certain countries • Ex 2 : specific taxation of offshore trust

  10. B- Distinguishbetween « normal » tax planning and criminaloffence • French example : « abus de droit » vs. « fraude fiscale » • Comp. Brazil (art. 2° Lei 8.137/1990) : « empregaroutra fraude para eximir-se, total ou parcialmente, de pagamento de tributo » • General obs. : • Distinguishbetweensham transactions and tax-driven transactions? • Crucial importance of the intentionalelement for criminalmatters

  11. C- Avoid double jeopardy • Problem whether a criminal sanction may be added to an administrative sanction • // whether a tax GAAR may cumulate with a criminal GAAR • Non bis in idem • Interesting evolution of the ECHR on this topic • Behind the problem : question of independence of tax and criminal proceedings

  12. D- Refrain fromcriminalizingeverything… • Pb n° 1 : an excessivelybroaddefinition of criminallypunishedtax planning infringes the principle of legality • France : question whether the 80% penalty for « abuse of law » is consistent with the Constitution •  need for well-definedcriminaloffences • Pb n° 2 : issue of excessive penalties • Principle of proportionality of penalties • Protection of property (ECHR case law)

  13. E- Think about the international context • Intrinsiclimit of criminallaw : territoriality • Ex : a tax planning schemeisinitiated by a non-residentcompany : whatcanyou do? • Possible paths • Mutual recognition of criminaljudgments • Exists in the EU ; taxfraud situations explicitlydealtwith • International criminallaw as anothertool? • International treatiesproviding for criminaltaxoffences?

  14. Thank you for your kind attention

More Related