Legal Transplants, Tax Law Systems and the EU Standard of Tax Good Governance Flashcards
4 reasons to study comparative tax law - from 4 different perspectives
- Practitioner awareness: what type of solutions are out there?
- Policy knowledge: what type of solutions exist for specific problems? What ideas can be borrowed?
- Comparative legal experts: in which cases did countries start with the same system but ended up differently? Or vice versa?
- Convergence: what solutions seem to work? Can they be adopted by other countries?
What do we study when studying comparative tax law? 4 points
Basic structures
Country differences
Influence on each other
How different rules function in different countries to resolve similar problems
What is a legal transplant?
Moving of a rule or system of law from one country to another
Name 2 examples of when legal transplants happened
- Eastern Europe adopting Dutch Civil Code because they wanted a code that wasn’t German or Russian
- Latin America adopted French Civil Code because of Napoleon
What can be transplanted?
Specific rules, institutions, conceps or whole legal systems, codes, or branches of law
Do the legal transplants change when adopted to another country?
Yes, is influenced by the already existing differences in legal system, tax system, and culture of recipient countries
5 reasons why legal transplants take place
- Efficacy
- Prestige/imposition (prestige from adopting certain laws; imposition from EU on prospective member countries)
- Change and necessity
- Politcal, economical, and reputational incentives
- Authority
Intended vs. unintended legal transplantation
Intended: decision by law-maker or imposed by a supranational institution (EU’s acquis communitaire) or international institution
Unintended: globalization causing cross-border transactions to take place, and legal practitioners influence the transplant of one concept into their tax system
How does being a unitary vs. federal state affect taxation?
Can the federal state levy taxes?
How does taxation being centralized vs. decentralized affect taxation?
Are law-making powers concentrated for the central government or decentralized by local governments?
What is a legal system?
A body of tax systematically unfolding, between the parts of which there is coherence and consistency
How does David classify legal systems?
Romano-Germanic (civil law)
Common law
Socialist law
Muslim/Hindu law
Jewish law
Far East law
How does Zweigert and Kotz classify legal systems?
Romanistic
Germanic
Common law
Nordic legal system
Why do we care about classifying countries into different legal systems?
Provides insight to the historical roots of any particular country’s system, thereby providing a better understanding of the underlying legal culture
7 characteristics of a civil law legal system
- Roman roots, later codification
- Distinction between public law (cannot be negotiated between private citizen and state) and private law (law of obligations, contracts)
- Vague terminology, connecting tax law to other branches of law
- General rules given by the legislature based on principles to provide framework for the government to fill out with specific regulation
- Principles interpreted by judiciary within limitations of separation of powers
- Ideas of justice and morality behind the formulation of principles (role of scholars in formulation of principles)
- Cases are not regarded as precedents and can be changed by another court
6 characteristics of a common law system
- English law + US law
- Judge-made law on a case-by-case basis developing precedents (stare decisis doctrine)
- Judiciary has more freedom in law-making and interpretation
- No distinction between public and private law
- Distinction between common law and equity (equity compensating for common law; equity more flexible and concerned with fairness and seeks to provide remedies that are fair in situations where strict application of common law rules might lead to an unjust outcome - in practice limited by procedural rules)
- Rules of common law found in decisions of the judiciary - ratio decidenci
4 sources of law in civil law legal systems (in order of importance)
- Enacted laws or legislation
- Jurisprudence (decided cases)
- Custom
- Legal writing (doctrine)
Sources of law in common law countries (in order of importance)
- Decisions of the courts (Supreme Court, lower courts)
- Statute law (acts of parliament)
- Custom
- Legal writing
- Natural justice (fundamental principles aimed at ensuring fairness and due process)
Classifications of tax systems
Common law tax systems (Commonwealth, American)
Civil law (French, Latin American)
Northern European tax systems (Germany, Nordic, Baltic)
Transition and post-conflict systems (former USSR)
Southern European
Japanese/Korean
5 characteristics of a civil law TAX system
- Formal and systematic definition and categorization of taxes
- Schedular approach to income
- Fairly abstract concepts/principles
- Use of private law concepts for tax law (e.g., ownership)
- Judiciary limited in powers of interpretation - tax statutes have small room for interpretation by judiciary
3 characteristics of a common law TAX system
- Global approach to income applicable to all types of income
- Autonomy of tax law from other branches of law
- Detailed interpretation of the statute made by the judge - courts play important role in development of tax law, esp. in terms of deciding the intention of the law
Definition of taxes in civil law
Taxes are a subset of a more general category of compulsory contributions (monetary contribution paid to public authority that helps raise revenue)
Definition of taxes in common law
No definition on what a tax is; more common to say taxes and fees, looking at the substance instead of formal characterization
What is the EU standard of good governance in tax matters?
The introduction of a certain clause in agreements in exchange of development funds or to avoid being blacklisted for bad tax behavior; committing to transparency, exchange of information, fair tax competition, BEPS etc.
What is the list of non-cooperative jurisdictions?
List of countries not cooperating with EU good governance in tax matters; highly controversial as no EU countries on the list despite meeting the requirements
What EU standard of good governance in tax matters has been criticized as…
Neo-colonialism; hypocritical
How does the EU seen their own EU standard of good governance in tax matters?
As a core instrument of EU external policy and will include it in all relevant future negotiations on international agreements
Why import/export EU standards - 5 reasons
- Authority
- Prestige and imposition
- Change and necessity
- Efficacy
- Political, economical, and reputational incentives
Which parts of the EU standard of good governance in tax matters is an import of norms from other international agreements?
Transparency and exchange of information - developed by G20-OECD + BEPS
Which parts of the EU standard of good governance in tax matters is an export of norms from EU to third countries?
Fair tax competition
