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Don't know about American law, but in French the notion exists and is called "abus de droit"; just because you can do something "in general", you can't do it wi
by bambax 10y ago
Don't know about American law, but in French the notion exists and is called "abus de droit"; just because you can do something "in general", you can't do it with the specific purpose of circumventing another legal obligation.
For example, as an Irish company, you can open a subsidiary in France to do business in France. That's a right.
But if you're doing business in France essentially, you can't make the French company a subsidiary of an Irish one that doesn't have any other activity, in the sole purpose of evading French taxes. That would be abusing the right (of opening subsidiaries). It may conform to the letter of the law but not to its spirit, and can be punished.
Of course, this is all a very grey area and up to the judge to evaluate (and my explanation perhaps lacks clarity); but it's real nonetheless!
- deleted 10y ago[deleted]
- charlesdm 10y agoWho says they don't have activities in Ireland? A lot of Google's employees are actually based in Ireland. > Just because you can do something "in general", you can't do it with the specific purpose of circumventing another legal obligation. Most countries have laws that say you can't do something JUST for tax purposes. You can, however, structure things in a tax friendly way, if there's a commercial motive to do so.
- ucaetano 10y agohttp://www.independent.ie/business/technology/google-hits-5000-employee-level-in-dublin-now-one-of-capitals-biggest-employers-31480103.html http://www.independent.ie/business/technology/google-hits-50... Over 5k employees apparently.
- charlesdm 10y agoIf that's not sufficient substance then I don't know what is. Yes, obviously they structured it like that intentionally and Ireland is happy with them being there. But it seems reasonable for a structure like that to fall within the scope of the law.
- soneil 10y agoFor comparison, the numbers I've seen for the Paris office are 2-300. It's a satellite office, not a headquarters.
- hvalika 10y ago^^^ exactly that. The rule is generally that your "principal purpose" can't be to avoid taxes (in this case). There is also the "economic substance doctrine" which actually codifies the above principle. Basically, you have to have a non-tax reason to do something -- even if the tax reasons are ridiculously great. There are certain things where you are allowed to write into the IRS and get a Private Letter Ruling. "Business Purpose" is not one of them.
- mike_hearn 10y agoFor example, as an Irish company, you can open a subsidiary in France to do business in France. The whole point of the EU single market is that you do not have to do that. You can set up shop in Ireland and sell to the French market until the cows come home. You only owe Irish taxes (modulo the recent completely crazy VAT changes). Laws that say "forget the law, anything we think is unreasonable is illegal" are a growing problem in Europe. It makes the EU look like fools to the rest of the world when something as basic as the rule of law becomes flaky and unpredictable. France is not just causing itself problems with this kind of action, their greed will create a bad impression of the whole of the EU.
- tomp 10y ago> "forget the law, anything we think is unreasonable is illegal" That's basically how all Anglo-Saxon (including the US) law, i.e. case law, looks like.
- ctrlalt_g 10y agoMy moment of epiphany and shock in law school was on realizing that right and wrong don't exist. As my professor used to say, "It's all theater."
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- MengerSponge 10y agoIt's both a little more subtle than that and exactly that simple. You can't legislate "right and wrong" (although we try), but that doesn't mean they can't be defined by and imposed by a society. (the sanctions will generally be different from what the state could impose) For the amount of love Hayek gets in these circles, I'm surprised there isn't more focus on Law, Legislation and Liberty
- eropple 10y agoYup. A lot of people, not limited but often expressed in the tech rule, seem to think that laws are strict-matching constructs. But laws are intended to be fuzzily matched, and the judiciary exists to do that fuzzy matching.
- Bartweiss 10y agoIn America, there's at least one clear example of this - laws against "structuring". Basically, they say that it's criminal to arrange financial transactions with the purpose of avoiding laws about financial transactions. As an example, banks are required to report all deposits of $20,000. It's a right to deposit $19,999 into a bank account, nothing wrong there. But to deposit $19,999 five times in a row, rather than than $100,000 all at once? That's structuring, and it's illegal. I'm not aware of a general "law against circumventing laws" but there are certainly specific ones banning classes of behavior that exist to avoid other regulations.
- mike_hearn 10y agoStructuring laws are highly controversial and have caused huge amounts of pain for innocent people who were just legitimately trying to reduce their paperwork burden. They're bad laws.
- Bartweiss 10y agoYeah, I don't mean to endorse them, especially not as-written. Any time you make laws like "it is illegal to circumvent the law" you're inviting exponential amounts of red tape. Add that to laws that were already high-burden on small businesses, and it's a recipe for real trouble (made even worse by the fact that a remarkable amount of banking still isn't digital). I know that the specific case I mentioned has been fairly useful in fighting money laundering and large-scale drug-dealing, though. There's something to be said for making it hard to move large amounts of money through banks without being observed, but as always there's no good way to do that without interfering with legitimate commerce.
- omni 10y agoDo you have any other examples which you think are bad? The $19,999 example seems pretty reasonable to me.
- wl 10y agoThe example he gives is of someone clearly trying to evade the reporting requirements. People get caught up in these laws even when they don't intend to avoid them by virtue of doing business in cash with daily deposits just under the reporting limit[1]. [1] http://reason.com/blog/2016/02/04/after-finally-returning-the-money-they-s http://reason.com/blog/2016/02/04/after-finally-returning-th...
- plandis 10y agoThis seems like an intended grey area that just allows the government to go after whoever they feel like while not being required to go after other businesses.
- threatofrain 10y agoKnowing whether something is illegal ahead of time, and the rejection of retroactive judgment and thus capricious power were supposed to be innovations of western law. But the reality is that government does what government wants, and justifies it post-fact.
- tryitnow 10y agoHonestly, I think "abus de droit" is a very interesting concept. I'm partial to liking it but I'm curious what the downsides are. Sure, some will say that it creates too much of a gray area, but that's life. Sorry. I think there's a lot more "effective" ambiguity when everyone is trying to dodge the spirit of the law and exploit loopholes. It creates chaos that lobbyists, consultants, and others can exploit. Focusing on enforcing the spirit of the law may lead to some abuses, but those abuses have to be weighed against the massive, systemic, abuses that occur when people violate the spirit of the law.
- charlesdm 10y agoThis is not just a problem with tax law, but any law. The problem with the spirit of the law is that it means different things to different people. Both intent (and morality!) differs greatly between various people. Hence we stick to the letter of the law. A simple example: - Let's say one can do A, B, C and D. They all represent similar situations. - For some reason, the government wants to block the above. - They create a new law, blocking A, B and C. They forgot D. Now, they might have wanted to block D as well. But how do you know? What if D gives you a significant advantage over competitors? One thing I've noticed, hanging out with lawyers, is that governments often make a lot of half assed laws. Closing the "loopholes" isn't hard - it just takes time + requires proper work. Also, don't forget, some loopholes are there by design.
- soneil 10y agoIntent is a huge concept in english law too. As an example, 'good samaritan laws' are an incredibly new concept in the UK (eg, the last 12 months). It was eventually enacted not because it's ever been needed - it has never, not once, been needed - but so that people don't have to hesitate to act. Honest intent may defend an action which would otherwise be illegal. Or you can skirt the edges with malintent and be found for it. Carrying a knife may be legal with demonstrable reason. Carrying a screwdriver may be illegal with malintent. And we trust the courts to spot the difference. And in general, they do. America, however, has been raised on "a healthy distrust of government". They simply don't trust, or don't want to trust the courts to straddle such grey lines. They want nice solid black & white line so they can point to the law instead of the courts - and they want to see "the people" (juries) police the gray lines. Personally, I think there's merits to both systems. But it's clear to see that both are very culturally ingrained. I think it's actually very difficult for either side to see the other clearly.
- deleted 10y ago[deleted]