Tax evasion vs. Tax avoidance

Tax evasion is escaping payment of taxes by illegal means, for example by hiding the true state of one’s finances from tax authorities.

“It is likely that he will go to prison if he is convicted of tax evasion.”

Tax avoidance is escaping payment of taxes by legal means, such as by changing tax residence to a tax haven or by making use of pension plans that postpone tax until retirement.

“The law firm set up a scheme that was aimed primarily at tax avoidance.”