I just learned that tax in Denmark is 50% and goes up to 70% for people who relocated and have no treaties (will be double taxed) that's insane - isn't it close to "forced labor" already, where people are slaves to their state/emperor for real?Yes.
If you look at rules like GAAR in Canada (same in most EU countries also) although not the same area as residency issue if you do no have very good lawyer ($$$$$$$) your finished.
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The General Anti-Avoidance Rule essentially states that where a transaction, or a series of transactions results in a reduction, avoidance, or deferral of taxes owing, and the transaction or the series of transactions are only being attempted for the tax benefits, the transaction or transactions themselves may be invalidated.
The Supreme Court of Canada has established a three-point test in determining whether or not to have GAAR applied.
Number one is easily satisfied as nearly all transactions are done with a tax benefit in mind.
- Did a tax benefit arise from the transaction or series of transactions?
- Is/Are the transaction(s) found to be avoidance transactions?
- Is the transaction abusive?
The second question asks whether the primary purpose of the transaction is to obtain a tax benefit.
The third point is the most difficult point to prove for both sides. The question it poses is whether the transaction is inconsistent with the object, purpose, or spirit of the subsection being used by the taxpayer to obtain the tax benefit.
The above test is extremely vague, and both sides can usually be argued extremely well. If the CRA claims that a taxpayer is in violation of the GAAR, it will be up to the taxpayer to prove they are not. On that same note, the CRA must prove that the GAAR applies.
Guarding against the GAAR is extremely complex. If you are planning a transaction, or a series of transactions that might run afoul of the GAAR, you should seek immediate legal assistance.
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