tax avoidance
noun · Steuervermeidung
Steuervermeidung, or the more neutral Steuergestaltung, and it is legal: never Steuerhinterziehung, which is the crime, § 370 AO. The limit is § 42 AO, where an abusive arrangement is recharacterised as the appropriate one, though the abuse itself is not a crime, and cross-border schemes must still be reported, § 138d AO.
Which translation, when
Why
The danger in this word runs the opposite way to most: it is not that German is harsher but that a careless translation criminalises a lawful act. Tax avoidance is legal, and its German is Steuervermeidung or, better in tone, Steuergestaltung, because the neutral German term carries none of the pejorative charge the English word has taken on. It must never be rendered Steuerhinterziehung, which is the crime of § 370 AO. The German limit on avoidance is § 42 AO, the Gestaltungsmissbrauch: where a taxpayer chooses an unangemessene rechtliche Gestaltung that produces a gesetzlich nicht vorgesehener Steuervorteil, § 42 Abs. 2 AO, the tax is assessed as though the angemessene structure had been used, § 42 Abs. 1 AO, so the advantage is taken away. Two points keep the boundary honest. Abuse under § 42 AO is not in itself a criminal offence, and the mere wish to save tax does not make a structure inappropriate; recharacterisation is a tax consequence, not a penalty. And legal does not mean invisible: a cross-border arrangement may have to be reported to the authorities under § 138d AO. The English system draws the same line differently, through the General Anti-Abuse Rule of the Finance Act 2013, which counteracts arrangements that are abusive rather than merely tax-driven.
Typical mistakes
- Tax avoidance is lawful and must never be rendered Steuerhinterziehung, § 370 AO, which is the crime; the neutral German is Steuergestaltung or Steuervermeidung, and the wrong word turns a legal act into an accusation of a criminal one.
- Lawful is not limitless: § 42 AO recharacterises an abusive arrangement as the appropriate one and denies the advantage, § 42 Abs. 1 und 2 AO, though this is a tax consequence and not a penalty.
- Legal does not mean unreportable: a cross-border arrangement can fall under the reporting duty of § 138d AO, so advising that avoidance carries no obligations because it is lawful can be wrong.
What matters
Advice and opinion letters that use tax avoidance need the neutral German, Steuergestaltung, so that a lawful plan is not read as Steuerhinterziehung, § 370 AO. Where a structure is aggressive, the German limit is § 42 AO, and a cross-border arrangement may trigger the reporting duty of § 138d AO even though nothing unlawful has been done.
What the machine misses
Tax avoidance is the entry where the machine can do real harm, because it slips towards Steuerhinterziehung, the crime of § 370 AO, when the lawful term is Steuervermeidung or Steuergestaltung. Rendering a legal plan as evasion accuses the client of an offence. The engine also loses the limit: German tax avoidance is bounded by the Gestaltungsmissbrauch of § 42 AO, which recharacterises the abusive structure without making it criminal, and by the cross-border reporting duty of § 138d AO.
Examples
| legitimate tax avoidance | legale Steuergestaltung |
| an aggressive tax avoidance scheme | ein aggressives Steuervermeidungsmodell |
| the arrangement was recharacterised | die Gestaltung wurde umqualifiziert |
| to distinguish avoidance from evasion | Steuervermeidung von Steuerhinterziehung abgrenzen |
More notes on these sections
tax evasion Steuerhinterziehung