Tax compliance costs from the perspective of the right to property and the freedom to conduct a business

Short Description

The application of tax law produces effects that go far beyond the mere collection of taxes. Indeed, taxpayers and third parties must fulfill numerous administrative tax law obligations. In recent years, the number of these obligations has grown exponentially, partly due to the complex nature of (ever-evolving) tax laws and the (international and European) fight against tax evasion and avoidance.

The (worthwhile) objectives that the legislator pursues with the imposition of administrative tax law requirements stand in sharp contrast to the (adverse) side effects resulting from them. Ultimately, administrative obligations impose compliance costs on the ones that fall within the scope of application of the obligations. In many cases, the imposition of such compliance costs may be perceived as unfair, especially if the underlying administrative obligations seem difficult to justify. This may be the case if, for instance, obligations are duplicative, the objective or application of the obligations is insufficiently clear, or the impression exists that the government is seeking to externalize its responsibilities. Moreover, unsurprisingly, even if an administrative obligation appears justifiable, the cost by itself may cause dissatisfaction. After all, compliance costs may adversely affect the competitiveness and productivity of corporations. Moreover, they adversely affect voluntary compliance with tax obligations and compromise the fairness of the tax system.

The compliance costs of administrative tax obligations and related issues have already been examined from economic, policy and psychosocial perspectives. However, legal research on the subject is scarce. This may come as a surprise because compliance costs have a legal significance, inter alia because they arise from tax regulations. The doctoral research aims to fill this gap in legal scholarship. The objective of this dissertation is to assess the relevant tax laws in light of the right to property and the freedom to conduct a business. The executed analysis, which aims to identify the normative limits of government action, provides an additional frame of reference for future tax policy and legislation.The research project in this dissertation culminates into a framework of abstract parameters that norm-addressees and governments can use for the implementation and evaluation of administrative tax obligations that generate compliance costs. To test the potency of this framework, the dissertation then applies the framework to a number of specific obligations related to the (European-steered) automatic exchange of information. This exercise reveals that the employed framework—and, by extension, the fundamental legal safeguards that shape it—is particularly suitable to demarcate the boundaries of specific obligations, without, however, impinging on the discretion of governments in making complex tax policy choices.

This doctoral research was awarded the European Doctoral Tax Thesis Award, granted by the European Association of Tax Law Professors (EATLP) and the European Commission’s Directorate-General for Taxation and Customs Union (DG TAXUD).

Felix defended his doctorate on December 14, 2022. Read the full text here.

See Research Explorer for all other publications that Felix has contributed to.