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Legal Terms - Abus de droit
The concept of civil law, which originated in Roman times, was incorporated into English law.
The European Court of Justice (ECJ) applies it. If an individual engages in transactions exclusively for the purpose of gaining the advantages of EU legislation, their EU rights may be denied (EMU Tabac Case C-296/95 [1998] ECR I-1605). In the case of Halifax plc v Customs and Excise Comrs (Case C-255/02 [2006] ECR I-1609), the European Court of Justice (ECJ) determined that it is considered an abuse of rights when transactions lead to a tax benefit that goes against the intended aim of the relevant law. Abus de droit does not occur when the action is motivated by reasons other than obtaining tax advantages. The challenge for English law lies in reconciling the concept of abus de droit, which considers the taxpayer's motive, with a fundamental principle of English law that states: "If an action is inherently unlawful, a good motive will not absolve the defendant, and if an action is lawful regardless of motive, a bad motive will not render the defendant liable" (as stated by Lord Steyn in Three Rivers DC v Bank of England [2000] 2 WLR 1220 at 1230). The UK General Anti-Abuse Rule shares the same emphasis on intent as the European concept of abus de droit.
The concept of civil law, which originated in Roman times, was incorporated into English law.
The European Court of Justice (ECJ) applies it. If an individual engages in transactions exclusively for the purpose of gaining the advantages of EU legislation, their EU rights may be denied (EMU Tabac Case C-296/95 [1998] ECR I-1605). In the case of Halifax plc v Customs and Excise Comrs (Case C-255/02 [2006] ECR I-1609), the European Court of Justice (ECJ) determined that it is considered an abuse of rights when transactions lead to a tax benefit that goes against the intended aim of the relevant law. Abus de droit does not occur when the action is motivated by reasons other than obtaining tax advantages. The challenge for English law lies in reconciling the concept of abus de droit, which considers the taxpayer's motive, with a fundamental principle of English law that states: "If an action is inherently unlawful, a good motive will not absolve the defendant, and if an action is lawful regardless of motive, a bad motive will not render the defendant liable" (as stated by Lord Steyn in Three Rivers DC v Bank of England [2000] 2 WLR 1220 at 1230). The UK General Anti-Abuse Rule shares the same emphasis on intent as the European concept of abus de droit.
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