Legal English – Peter’s Pills – Lesson 32 – Tax evasion, tax mitigation and tax avoidance

Legal English for Notaries - By Federnotizie

Tax evasion, tax mitigation and tax avoidance



Today we look at the differences in meaning of tax evasion, tax mitigation, and tax avoidance.

Tax Evasion is an illegal way of escaping (sottrarsi al) tax payment. It is the deliberate hiding (occultamento) or non declaration of information from the tax authority. It is unlawful and usually a criminal offense (reato) in most jurisdictions. The verb is “to evade taxes” and it has a criminal connotation.

Tax Mitigation is a lawful situation where the taxpayer uses a fiscal incentive available to the person in the tax legislation by submitting to (sottoponendosi al) the conditions and economic consequences that the particular tax legislation entails (comporta) and as intended by the legislator.

Fundamentally it is a way to reduce your tax bill (il conto fiscale). Tax mitigation can be achieved through the use of financial schemes including pensions, Inheritance tax and succession planning, Capital gains (plusvalenze) tax allowances, or when you move assets (beni) to your spouse in order to minimise your personal tax bill and make use of their tax allowances (sfruttare le sue detrazioni fiscali). The verb is “to mitigate taxes” and it has a positive connotation.

Tax Avoidance is the way to reduce taxes by making use of loopholes (scappatoie/falle) in the law and gaining a tax benefit or reduction in a manner unintended by the law or not provided by law. Tax avoidance is the unacceptable manipulation of the law and it is no way similar to tax mitigation which uses advantages embedded in the law. The verb is “to avoid taxes” and it has an immoral connotation.

Thank you very much and see you next time for more Peter’s Pills to improve your Legal English!

See more about tax avoidance and its consequences here: “Introduction to tax avoidance“.

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