Even in tax law, the interpretation of a standard may show that it contains a legal gap. Then the question arises as to whether the legal practitioner may close this gap by way of legal further training or whether an analogy ban applies in tax law. We explain which problems arise and how legal loopholes are closed as a result.

1st interpretation identifies gaps in the law

Tax laws can be understood differently. Standards shall be interpreted. The telos, the systematics, the grammar and the history of the standard must be observed. The extreme limit of the permitted design is the wording of the standard.

2nd legal loophole procedure

2.1. Existence of a legal gap

From the interpretation of a standard, the filling of legal gaps through legal training must be distinguished. A gap in the law only becomes apparent when the legal user has interpreted the standard. After the legal user has found a gap through interpretation, he wonders whether he can fill the recognized legal gap.

The filling of legal gaps thus begins beyond the possible word understanding of the law. The wording of a standard does not necessarily end the legal assessment of the facts. The occurrence of the legal consequence may rather also correspond to the purpose of the law in addition to the cases covered by the wording. The application of the standard must then be considered by analogy or legally judging logic.

The legislature usually has a specific plan in the development of the law. He wanted to clarify certain fundamental principles of taxation by legal orders or to resolve a conflict of aims by a certain legal priority. If he has not succeeded in this completely, there is an unplanned incompleteness of the law. Then the law is incompletely or erroneously formulated in relation to the underlying plan or the underlying evaluations. A legal loophole is defined as an unplanned incompleteness of the law.

2.2. Example of a legal gap

Such a case concerns, for example, the interaction of § 4 (1) sentence 2 EStG with § 6 (1) number 4 sentence 1 EStG. § 4 (1) sentence 2 provides for an off-balance sheet correction also in the case of withdrawal of use and acceptance of services. However, § 6 (1) no. 4 sentence 1 EStG provides for a valuation regulation only in the case of the withdrawal of assets in the narrower sense. However, it is also necessary to evaluate usage withdrawals and service withdrawals. No off-balance sheet adjustment can be made without valuation. Therefore, judicial legal training is necessary for the evaluation of the other extraction variants.

2.3. main application case of filling in legal gaps

The case of loophole closure of a law by legal training is present if, according to the telos of the norm, the incompleteness of the law results. Then the legal user comes to the conclusion that the facts to be assessed are no longer covered by the wording of the standard, but that standard should actually be applicable to the facts according to its legal purpose.

2.4. differentiation of legal gaps in time

In terms of time, the legal gaps can be divided into initial gaps, i.e. gaps recognizable by the legislator, and gaps afterwards. Subsequent gaps can result, on the one hand, from economic or technical developments that are not yet foreseeable when standards are issued. However, they can also stem from legal dogmatic advances in knowledge – such as changes in supreme court jurisprudence – if the legislature has still estimated the need for regulation on the basis of the traditional jurisprudence approach. The same applies to a specific priority for application of EU law.

The legal user may and must in principle close both initial and subsequent, unplanned regulatory gaps through legal training. With regard to initial loopholes already existing at the time of the legislative decision, only the justification effort for the presentation of the non-compliance is higher.

3. unplanned legal loophole required

From what has been said, it follows that a loophole that is accessible to legal training can only exist if it is contrary to plan. Therefore, the unplanned incompleteness must be distinguished separately from the deliberate waiver of regulation. Conscious waiver of regulation exists if the legislature has intentionally excluded certain areas from certain legal consequences. A deliberate waiver of regulation exists, for example, with regard to tax benefits limited to certain investments.

In this case, the legal practitioner may not substitute his own material concept of justice for the legislature. If he thus disregards the will of the legislature, there is an impermissible creation of law contra legem. The desired gap can justify a violation of equality and thus the unconstitutionality of the statutory regulation. However, this may only be determined by the Federal Constitutional Court (BVerfG).

4. comparability of the facts

Required for an analogy is that a legislative evaluation manifests itself in a particular legal norm or in a combination of legal norms. In the light of this legislative assessment, the facts not covered by the wording must appear so similar to the regulated case that the legal consequence provided for by law must also be extended to the unregulated case.

The legislative evaluation can lie in a tax-type-specific basic evaluation of fair burden sharing (i.e. in a fundamental principle of taxation). In the case of social purpose norms, however, a priority evaluation in favour of steering objectives, a priority evaluation between opposing principles or an evaluation due to administrative practicability is also considered as a legislative evaluation.

It always depends on whether the facts not covered by the wording are comparable with the statutory regulated value. The analogous application must not lead to a deepening of the equality violation already laid down in the law. Unjustified tax privileges which are not legitimated by adequate public interest considerations are not analogous.

5th Ban on Analogy in Tax Law?

5.1. The problems of the analogy ban in tax law

Whether a partial ban on analogy exists in tax law is considerably controversial. The problem with assessing the analogy in tax law is that tax law is intervention management of the state. Interventions in fundamental rights of the citizen require a legal basis of empowerment. If there is a legal loophole, if the analogy is permissible, it is not the legislator who decides on the scope of a standard. Rather, the scope is determined by the judiciary or executive in the context of legal training. The question is therefore whether this is compatible with the principle of democracy and the rule of law.

On the other hand, the principle of equality (Article 3, paragraph 1, GG) could also require an analogy to treat comparable situations equally and non-comparable situations unequally.

Should an analogy in tax law be permissible, the question arises in a further step whether, in particular, increased requirements must be placed on tax-stricter legal training.

5.2. reasoning for an analogy ban

In part, a ban on tax-stricter legal training is adopted for tax law. According to the representatives of this ban on analogy, the principle of democracy and the rule of law of the separation of powers and legal certainty speak for this. They argue that the criminal law training is an administrative or judicial self-empowerment for freedom-limiting interventions beyond the legal framework.

5.3. reasoning against an analogy ban

Since 1982, however, the prohibition of tax penalty-sharpening legal training is rejected as a misguided special way of tax law compared to other administrative law. The BVerfG has also distanced itself from an analogy ban in tax law. The Bundesfinanzhof (BFH) could not meet uniform standards on this topic until further notice.

Speaking against a prohibition of analogy, the prescriptions of the general principle of equality. Rather, they require that legal training be allowed to close teleological gaps in the text of the standard if there would otherwise be contradictions of assessment. The analogy leads to the fact that cases not actually covered by the scheme are treated equally if and insofar as they are comparable in the light of the ratio legis. Conversely, in the case of teleological reduction, equal treatment of non-comparables is avoided by introducing an exception not provided for in the legal text.

For such a closure of legal loopholes, the administration and the judiciary are sufficiently functionally and personnel democratically legitimized. The factual legitimacy results from the necessary link to recognizable legislative evaluations and objectives. These are only marginal corrections of the written tax law. Therefore, the legal reservation rooted in the principle of democracy and the separation of powers does not preclude correction.

The legislature has expressly expressed such an expectation of further legal training, at least for the highest court case law in tax law, in §§ 11 paragraph 4, 115 paragraph 2 no. 2 FGO. In general, only a law-excessing legal training at the expense of the taxpayer is excluded. It is therefore also forbidden, for example, to invent novel taxes or types of taxes using the performance principle. In this respect, the legislator has to make all the essential findings himself. This includes, for example, the finding that cats are not subject to the dog tax. A corresponding decision by the legislature is also to be seen in the fact that profits from the sale of privately managed gainful assets beyond §§ 20 (2), 23 (1) EStG are not taxable.

Increased requirement for analogy in tax law?

An interference with the fundamental rights of the taxpayer provided for in the wording of the law is typically more foreseeable for the taxpayer and his advisor than an application of the law beyond the wording of the norm. The wording of a standard has an orientation function for the taxable person. Therefore, the question arises as to whether increased requirements must be imposed on a legal education at the expense of the taxpayer – for example, if a tax burden tightening arises for him.

If the incompleteness of the current law already arises on the basis of the legal text, the taxpayer cannot legally confidently trust that the gap would not be closed. In this respect, he can therefore not invoke legal certainty and planning security. The incompleteness of the current law is imperative if the regulation is incomplete in standard logic.

A tax-stricter legal training is also to be waived if the incomplete set of standards is not based on a clearly defined standard purpose supported by the generalizable evaluations. A missing standard purpose exists, for example, if the standard in question is not oriented towards higher-level regulation goals or structural principles. This also applies if the set of standards is ambivalent with regard to the regulatory concern and thus a possible contradiction of assessment cannot be excluded, but also cannot be justified with sufficient conviction.

An analogy to the taxpayer is therefore only possible in summary if