Today an opinion by the Advocate General of the Court of Justice of the European Union was published, having the cross-border exchange of tax information as a subject. In times that governments are increasingly exchanging information regarding citizens, this opinion might be relevant for the exchange of other types of information between governments.
The Spanish tax authority requested information from the Luxembourg tax authority in regard of an artist residing in Spain. The Luxembourg tax authority did not have the requested information and required a Luxembourg company to provide it with copies of the contracts concluded between that company and other companies concerning the artist’s rights and with other documents. According to Luxembourg law this requirement could not be challenged.
From the press release:
In today’s Opinion, Advocate General Juliane Kokott proposes that the Court rule in answer to the first question that the decision by which an authority requested for support pursuant to Directive 2011/16 requires a person to provide information on a taxpayer or third parties can be challenged by that person, the taxpayer and concerned third parties before the courts of the requested Member State.
According to the Advocate General, the addressee of the order to provide information is automatically entitled, under Article 47 of the Charter, to judicial review of the legality of that decision, because that order constitutes a legal measure adversely affecting the addressee. There is accordingly no need to decide whether or which (other) fundamental rights of the addressee guaranteed by the Charter may have been infringed.
Since the obligation of a third party to transmit a taxpayer’s personal data interferes in any event with the latter’s fundamental right to the protection of such data, the taxpayer concerned can also have the legality of such an order to provide information reviewed by a court under Article 47 of the Charter. The possibility of challenging any subsequent tax assessment does not provide sufficient protection of the taxpayer’s fundamental right to data protection.
As regards concerned third parties (here, several companies), the Advocate General points out that under the case-law the fundamental right to the protection of personal data (Article 8 of the Charter) relates in principle to natural persons. Legal persons may, however, in any event rely on the fundamental right to respect for private and family life (Article 7 of the Charter) where, as here, information concerning bank accounts and assets is demanded. Such third parties too can therefore obtain judicial review of the order to provide information, under Article 47 of the Charter. Consequently, the exclusion of legal protection for the addressee of the order to provide information, for the taxpayer concerned and for concerned third parties infringes Article 47 of the Charter.
With regard to the second question, Advocate General Kokott proposes that the Court answer that the requesting authority must justify the request for information so that the requested authority can examine whether the information sought does not clearly lack foreseeable relevance for the requesting authority’s tax assessment. The request must contain specific indications of the facts and transactions that are relevant for tax purposes, so that impermissible fishing expeditions are precluded.
Thus, the requesting authority must normally include in the request for information the facts that it would like to investigate or at least specific grounds for suspecting those facts and their relevance for tax purposes. This must enable the requested State to justify before its courts interference with the fundamental rights of the addressee, the taxpayer or concerned third parties that is attributable to the administrative cooperation. The requirements imposed by the duty to state reasons increase with the extent and sensitivity of the information sought.