Fictitious Interposition in Taxation

Fictitious interposition is a complex financial strategy where an individual or entity is strategically placed between the source of income and its actual recipient. This is often done to obscure the true ownership or control of income, thereby potentially altering the tax implications associated with that income.

In the realm of taxation, fictitious interposition can be understood as the deliberate introduction of a third party (either a natural or legal person) between the party that genuinely conducts an economic transaction and the ultimate beneficiary of that transaction. The primary objective behind this is to modify the tax outcomes linked to the said transaction.

For instance, a company might be set up or used to stand between two parties (like an operating entity and its clients or suppliers) to influence the tax consequences of their transactions. In essence, a facade is created that doesn't align with the actual economic and legal realities of the operations undertaken, all with the aim of gaining undue tax benefits.

Disclaimer: Always speak directly to an attorney; blog posts are not a sufficient source of information to make decisions, may not be appropriate for your situation, may not be well researched, and may not be current at the time you read them, always speak directly with an attorney.

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