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GAARs - A Key Element of Tax Systems in the Post-BEPS World - Review

GAARs - A Key Element of Tax Systems in the Post-BEPS World, by Michael Lang, Jeffrey Owens, Pasquale Pistone et al.
Reviewed by Glen Loutzenhiser, British Tax Review B.T.R. 5 (2016), pp. 703-704

This impressive collection, edited by Michael Lang, Jeffrey Owens, Pasquale Pistone, Alexander Rust, Josef Schuch and Claus Staringer, examines the development of general anti-avoidance rules (GAARs) from a global perspective.1 At over 800 pages and with chapters separately covering 37 jurisdictions, the book is certainly very comprehensive in its coverage of the topic. In addition to the highly regarded editors, the individual chapters are written by leading practitioners and well-known academics – including the editor of this Review, Judith Freedman, on the UK. The jurisdiction chapters helpfully follow a consistent structure, beginning first by canvassing the historical context before moving on to requirements to apply GAARs, legal consequences of such application, specific anti-avoidance rules (SAARs), tax treaty and EU considerations and concluding with alternatives to GAARs. This work follows on from a large conference on the subject of GAARs held in Rust, Austria from 3-5 July 2014.

The book begins with a General Report written by Richard Krever, who also contributes to the chapters on Australia and Hungary. Krever starts with an intriguing statement highlighting the challenges of and benefits from undertaking comparative work in this area, in that unlike many other tax concepts "… there appears to be no universal understanding of what constitutes a GAAR or, for that matter, what constitutes ‘tax avoidance’…".2 Further, GAARs differ in their definition, and whether they are statutory or primarily judicial doctrines. Krever also points out that legislators and commentators vary considerably in their views on the merits of, or drawbacks to, relying on GAARs.3 On this note, it does soon become evident to a reader that some chapters in the book have very little to say on GAARs in the strict sense. In the chapter on Russia most of the discussion is focused on a plenary ruling by the Supreme Arbitration Court.4 The US chapter concentrates on a combination of judicial doctrines, including the substance over form doctrine, the sham doctrine, and the recently codified economic substance doctrine, along with a GAAR-like rule that applies in the specific context of transfer pricing.5 

Notwithstanding the diversity of approaches and definitions, however, Krever goes on to identify four general models of GAARs: the classic "acts and benefits" approach found in Anglo jurisdictions such as Australia and the UK; the "economic substance" model as used in the US; a judicial GAAR based on a broad abuse of law doctrine such as that found in the Czech Republic; and a statutory "abuse of law" rule used in civil countries including France.6 Krever concludes his General Report by drawing on the comparative material in the rest of the book to explain how and when GAARs are used, to analyse the divergent treatment of core GAAR elements including taxpayer’s purpose and the importance of a counterfactual to the success of a GAAR, and to highlight other aspects such as EU and tax treaty considerations.

Following on from the General Report, the remaining chapters are dedicated to analysing GAARs on a jurisdiction-by-jurisdiction basis in depth, starting with the EU and then proceeding alphabetically.7 The fact that most chapters include a great deal of non-GAAR material including SAARs reinforces that for many countries anti-avoidance tools other than GAARs are of foremost importance. But some chapters have much fertile ground to explore on GAARs in the traditional sense – including old hands such as Australia, New Zealand, Canada and South Africa and relative newcomers to GAARs including China, the UK and India. As is the way with tax, some chapters unfortunately are already out-of-date, most notably Mitroyanni’s EU chapter in light of the 2016 Anti-Tax Avoidance Directive with its new EU-wide GAAR, which differs in some important respects from earlier proposals discussed therein.8

In a nutshell, this book is a remarkable achievement, and a unique and important addition to the international tax and tax avoidance literature. The comparative material coverage is simply without compare and provides a rich resource for practitioners, students and academics. This reviewer’s only (very minor) criticism is that as one digs deeper into the book the "post-BEPS world" reference in the title seems somewhat superfluous, and if anything is underselling the book, given that so much of the material in it has little to do with BEPS.


Glen Loutzenhiser



1 M. Lang, et al. (eds.), GAARs A Key Element of Tax Systems in the Post-BEPS World (Amsterdam: IBFD, 2016).

2 R. Krever, "General Report" in M. Lang, et al. (eds.), GAARs A Key Element of Tax Systems in the Post-BEPS World (Amsterdam: IBFD, 2016), 1.

3 Id., 2.

4 V. Tyutyuryukov, "Russia" in M. Lang et al. (eds.), GAARs A Key Element of Tax Systems in the Post-BEPS World (Amsterdam: IBFD, 2016), 543.

5 S. Menuchin and Y. Brauner, "United States" in M. Lang et al. (eds.), GAARs A Key Element of Tax Systems in the Post-BEPS World (Amsterdam: IBFD, 2016), 765-788.

6 Krever, supra n. 2, 3-5.

7 The particular jurisdictions covered are the EU, Australia, Austria, Belgium, Brazil, Canada, China, Croatia, Czech Republic, Denmark, Finland, France, Germany, Hungary, India, Ireland, Italy, Liechtenstein, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Romania, Russia, Serbia, Slovak Republic, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Turkey, the UK and, finally, the US.

8 Council Directive (EU) 2016/1164 of 12 July 2016 laying down rules against tax avoidance practices that directly affect the functioning of the internal market.