Context
On 5 April 2022, Advocate General Rantos opined in a pending preliminary ruling (i.e., Case C-694/20) submitted by the Belgian Constitutional Court to the European Court of Justice (“ECJ”) on the validity of the provisions of the EU Council’s Directive 2018/822 (“DAC6” or the “Directive”) in application of which intermediaries benefiting from a legal professional privilege (“LPP”) are subject to certain notification obligations, and notably whether such obligations are compatible with Articles 7 and 47 of the EU Charter of Fundamental Rights, related to the right to respect for private life and the right to a fair trial.
Reminder on legal background
The main purpose of DAC6 is to prevent the promotion and use of potentially aggressive tax planning schemes by intermediaries and taxpayers. To achieve this purpose the Directive requires intermediaries to report certain cross-border arrangements to tax authorities of EU Member States (the “Reporting Obligation”). Relevant information is shared between the EU tax authorities on a quarterly basis. Additionally, DAC6 grants a waiver of certain reporting obligations (the “Waiver”) to intermediaries benefiting from the LPP, such as lawyers, chartered accountants and auditors. These intermediaries may only be entitled to a Waiver to the extent that they operate within the limits of the relevant national laws that define their professions.
While released from reporting obligations, intermediaries acting under the LPP still remain under the obligation to notify without delay another intermediary (not entitled to any Waiver) of cross-border arrangements (the “Notification Requirement”) failing within the scope of a Reporting Obligation in application of Article 8, bis ter, §5 of DAC6.
Facts of the case
In the present case, Orde van Vlaamse Balies and the Belgian Association of Tax Lawyers (the “Applicants”), claimed, upon an appeal lodged with the Belgian Constitutional Court on 21 December 2020, for clarification as to whether the mandatory exchange of information required between intermediaries such as lawyers under Article 8bis ter, §5 of DAC6 is compatible with Articles 7 (right to privacy) and 47 (right to a fair trial and to an effective remedy) of the Charter of Fundamental Rights of the European Union (the “EU Charter”), related to the right to respect for private life and the right to a fair trial.
In particular, the Applicants argued that the Notification Requirement as foreseen under DAC6 interferes with the exercise of LPP, even in the absence of legal proceedings, since the lawyer is obliged to share taxpayer’s information with any other intermediary not benefiting from any LPP. Such information being obtained by a lawyer in the course of the essential activities of his profession, namely, representing or defending clients in legal proceedings and giving legal advice, the Applicants concluded that such a Notification Requirement was likely to infringe fundamental rights in that their effectiveness can only be ensured if a taxpayer has a guarantee that his personal information will not be disclosed.
Advocate General Rantos’ conclusions in a nutshell
First, Advocate General Rantos addressed that the Notification Requirement does not arise within the context of a legal proceeding and therefore does not fall within the scope of Article 47 of the EU, so that no infringement to the rights protected by Article 47 of the EU Charter should be considered.
With respect to Article 7 of the EU Charter, Advocate General Rantos specified that disclosure of the name and the data regarding the lawyer-intermediary conflicts with Article 7 of the EU Charter when the lawyer’s identity has been disclosed by another intermediary to the tax authorities.
Advocate General Rantos concluded in his opinion that the ECJ should answer that Article 8 bis ter, § 5 of DAC6, which requires a lawyer acting as a Waived intermediary as per the LPP to notify another intermediary of a Reporting Obligation incumbent on him/her under DAC6, does not violate the right to respect for private life guaranteed by Article 7 of the EU Charter, provided that the name of this lawyer is not disclosed to the tax authorities within the context of a Notification Requirement.
Similar other cases
The French Council of State (Conseil dʼÉtat) lodged on 28 June 2021 a preliminary ruling in Case C-398/21 the Conseil National des Barreaux, the Conférence des bâtonniers and the Ordre des avocats du Barreau de Paris before the ECJ, raising the incompatibility of DAC6 with the right to a fair trial, the right to respect for correspondence and the right to privacy which are guaranteed by the EU Charter.
More particularly, as lawyers acting in judicial assistances are bound in principle, by virtue of their status as intermediaries, to tax information obligations in cross-border arrangements, the Conseil d'Etat has referred a question to the ECJ for a preliminary ruling as to whether the provision is compatible with the right to a fair trial. It also asks whether this provision is compatible with the right to respect for correspondence and privacy, as lawyers are also under these obligations when they assess their clients' legal situation. No preliminary conclusion has been issued so far, any further development on Case C-398/21 shall be closely monitored.
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