Abuse, Proportionality and the Burden of Proof in CJEU's Case Law on Direct Taxation

Abstract

Abuse is one of the core issues in EU direct tax matters. Much has been written over the past years. The discussion on the interpretation and application of the different elements of the anti-abuse clauses appears to be settling. However, an equally fascinating discussion appears to be emerging: in applying anti-abuse provisions, who faces the burden of the proof of abuse: the taxpayer or the tax authority?

Among the different research questions that could be addressed, one of the most interesting ones appears to be the following: what guidance can one extract from the direct tax case law of the Court of Justice of the European Union in what concerns the distribution of the burden of proof in abuse situations?

This study addresses such research question. It solely focuses on direct taxation and the application of anti-abuse provisions. It will purposely adopt a wide concept of burden of proof, comprising all rules that deal "with producing or evaluating evidence as well as the allocation of the respective burden". However, it will focus on the subject that has to provide evidence of the existence of abuse, leaving aside the interesting intertwined questions of determining the object of that proof (i.e. what is abuse and what are its internal elements) and the standard of that proof (i.e. the degree or intensity of the proof that has to be provided.

The discussion can be approached on both administrative and judicial levels. This research will focus on the onus in the framework of administrative proceedings, even if admitting that the discussion is also relevant for the judicial stage.

The article focuses on the guidance that may be extracted from the case law on direct taxation, excluding, at this stage, consideration of other areas. It will interchangeably use the notions of abuse and avoidance and the notions of burden and onus of proof.

Keywords: Taxation, Tax law, International taxation, European taxation