on the undueness or not the operation in question

The primary tool to combat the abuse of tax law is section a/52/l.64 of the book of tax procedures, under which the administration can exclude fictional acts or whose purpose is exclusively tax (1). Although the text date 1941, its scope still included areas of shade. The main difficulty effleurée but unresolved in the famous turbo funds (2) decision related to the application of this text, which aims exclusively the reductions of plate, to the use of tax credits which do not decrease the taxable base sensu stricto but blame for the calculation of the tax. In the case of Janfin (3) the Council of State has had the opportunity to answer this question. This unique solution is a considerable practical scope: it allows the relitigation of arrangements related to the use of tax credits or of optimization strategies sitting on salaries tax and property tax.

What were the facts: Janfin had acquired interests just before the distribution of dividends with tax assets, and had resold the titles after this distribution, noting a loss equal to the amount of the dividends. Attached tax assets had then been used for payment of the tax due on the same fiscal year. Considering that this operation was for exclusive purpose the benefit of the tax credit, the tax administration has questioned the use of these have tax on the basis of article a/52/l.64.

In its judgment, the section of litigation of the Council of State has first sanctioned the decision of the judges of the bottom, and estimated that the administration cannot invoke article a/52/l.64 to challenge the use of a credit tax as a means of payment of tax, because it "only disguises the realization, or the transfer of profits or income". This strict interpretation of the scope of the Act is fully justified, since article a/52/l.64 is a repressive.

A slight taste of unfinished

Beyond the high Assembly decided a matter of principle: it held that when the operation is outside the scope of article a/52/l.64, the administration may nevertheless rely on the general principle of repression of fraud to exclude fictional acts or those "who, looking for the benefit of a literal implementation of the objectives pursued by their authors."", could be inspired by no reason other than to evade or reduce the tax burden" of the taxpayer.

In this case, the administration, which is not taken advantage of this general principle (which seems to indicate that it did not anticipate the solution), has been losing unless the judge decides on the merits, i.e. on the undueness or not the operation in question.

This slight taste of unfinished undercuts not the interest of the decision, which in principle is considerable. The Council of State has to provide the administration of a new tool, an ersatz article a/52/l.64: arrangements involving the use of credits or tax cuts, as the optimization of tax in the tax or taxes on wages, can now be challenged on the grounds of the general principle of suppression of abuse of rights.

This general principle would have an exclusive scope of section a/52/l.64 but the same scope, because abuse is characterized, regardless of the basis, in accordance with the traditional categories fictitious Act and exclusively tax purpose. The similarity ends there: the implementation of the general principle does not entail the automatic application of 80 penalties under the procedure of article a/52/l.64, but could give rise to sanctions for deliberate breach (40) or even for corrupt practices (80); the administration would however shedding of the guarantees provided for in article a/52/l.64 (including referral to the Advisory Committee for the Suppression of the abuse of rights)(, or the tax Rescript) if the abuse is punishable under the general principle.

An equivalent principle

This decision strengthens, finally, the convergence of the national and community authorities for abuse of right: after, in its judgment in Sagal, the coherence of national criteria constituting an abuse of right with the definition given by the ECJ (4), the Council of State recognizes the existence of a principle equivalent to the "general principle of prohibition of abusive practices" recalled by the Community judicature in its Halifax and Cadbury Schweppes decisions in the case of Janfin (5).