Can someone choose not to pay taxes?

Ideas that promise simple solutions to complex problems appear in society in regular waves. One of these is the belief that an individual can autonomously (and “just because”) decide not to be subject to the rules of the state, especially tax obligations. This view has recently begun to spread among entrepreneurs in Slovakia, often publicly, openly and with reference to various international documents or abstract notions of personal freedom.

At first glance, such a stance may seem like a legitimate criticism of the system. On closer inspection, however, it is a fundamental misunderstanding of the workings of law, the state and the very nature of the social order.

The fundamental problem with this argument is the notion that legal norms operate on the principle of voluntariness. That an individual can choose which rules to respect and which not to respect, according to his or her own beliefs or value-set. However, the legal order does not work this way. Tax, business and criminal laws have a general personal scope. They apply not only to those who agree with them, but to all who meet their statutory characteristics. There is no legal mechanism by which someone can unilaterally ‘opt out of the system’ simply because they consider it unfair or dysfunctional.

One such example is the sale of coffee on the basis of the private informal self-managed community Ónyx, run by the singer Robo Papp. This grouping does not pay taxes. The legal justification is UN Resolution A/RES/53/144.

However, this resolution is not legally binding and thus does not constitute a source of law applicable in the Slovak legal order. Moreover, its content concerns the protection of fundamental human rights and the promotion of activities aimed at their protection, not the legitimisation of business without registration, without taxes and without respect for the basic rules of the market.

When entrepreneurship pretends to be an “alternative to the system”

It is at this level that in practice there are cases where real entrepreneurial activity is presented externally as an “alternative to the system”. The sale of goods or services takes place publicly, consistently and with an economic outcome, but at the same time it is communicated as an activity that is supposedly not subject to tax or regulatory obligations. Such an approach is legally unsustainable, but also extremely dangerous in terms of social effect. If such a model is presented over a long period of time without any apparent response from the state, it creates the illusion of legitimacy and sends the message that compliance with the basic rules of business is a matter of personal choice.

Even more problematic is the very concept of “life outside the system”. Even a person who claims not to use public services is a constant beneficiary of public goods. Legal protection from violence, protection of property, functional criminal law, basic infrastructure, or the very existence of rules that prevent the strong from exercising brute power against the weak are values that everyone benefits from, often without realising it. The idea that it would be possible to exclude anyone from this system altogether would lead to absurd consequences and negate the very reason for the existence of the state as an organised community.

Legal realities and implications for entrepreneurs

In practical terms, the situation is clear. A person who consistently sells goods or provides services for profit fulfils the characteristics of a business, regardless of how he names his activity. If it does so without the appropriate authorisations, without keeping records of income and without paying taxes, it exposes itself not only to administrative sanctions but also to criminal consequences. Arguments about ‘voluntary contributions’, ‘donations’ or a personal decision not to be subject to the system do not stand up in such cases.

The impact of this behaviour on the business environment as a whole is particularly serious. If such conduct is tolerated or left unchecked, it undermines confidence in the rule of law and distorts the competitive environment. Honest businessmen rightly ask why they should follow the rules when others can openly declare violations without visible consequences. In the long term, this is a phenomenon that undermines loyalty to the state and its institutions.

At Highgate Group, we are encountering these issues more and more frequently in practice. Not only in dealing with clients’ specific tax and legal risks, but also in explaining the line between legitimate criticism of the system and behaviour that already poses a serious legal risk. A more complex legal and philosophical perspective on this issue is discussed by Peter Varga in the Highgate Talks podcast, where he places the topic in the broader context of the workings of the rule of law and the social contract.

Full interview Episode 27 of the Highgate Talks podcast can be heard here:

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If you are interested in this topic, please do not hesitate to contact us:

Peter Varga, e-mail: peter.varga@highgate.sk

Alternatively, you can address your specific questions in a consultation with our partner Peter Varga, who specialises in financial regulation and tax law. You can book a consultation here: