IS THERE A TRULY A NEED FOR A GENEREAL ANTI-AVOIDANCE RULE IN THE CROATIAN TAX LAW SYSTEM?

Abstract

On 6 December 2012 the European Commission adopted the Recommendation on aggressive tax planning C (2012) 8806, which suggests to the Member States to adopt a general anti-avoidance rule (GAAR), adapted to domestic and cross-border situations confined to the Union and situations involving third countries. The Croatian tax system does not have such a rule. Since Croatia joined the European Union in July 2013, it is possible that the Croatian legislator
could decide to introduce such a measure into the national tax law. However, the author considers that it is necessary to first examine whether such a measure is really needed in the tax system, before transposing it “blindly” into national law. Such a measure could potentially become a weapon of mass destruction in the hands of the tax administration, in case that it is wrongly formulated or if taxpayers are not supplied with adequate protection measures.
The measure could impair the legal certainty of the taxpayer, which could have negative consequences not only for domestic taxpayers/investors, but also for the foreign ones, who could then choose to direct their investments into other countries.