In 2018, the Directive amending the EU Mutual Assistance Directive (Directive (EU) 2018/22) – DAC-6 for short – introduced reporting obligations for intermediaries for potentially aggressive cross-border tax arrangements. Such intermediaries can also be lawyers. The Directive provides that they can be exempted from their reporting obligation if they violate an existing confidentiality obligation under national law. However, they must then inform other intermediaries or the taxpayers themselves of their reporting obligation.
As early as December 2022, in Case C-694/20, the ECJ had highlighted the importance of lawyer-client confidentiality in conjunction with the DAC-6 reporting obligations and ruled that a lawyer’s obligation to inform other intermediaries of their reporting obligations when exempted from the reporting obligation due to his position as a lawyer violates professional secrecy. The current case concerns the Belgian implementation of the directive. Several associations of tax advisors and lawyers had filed a complaint against this with regard to the EU Charter of Fundamental Rights and general principles of Union law.
The Court of Justice has now ruled that the December 2022 ruling only applies to lawyers within the meaning of Directive 98/5/EC and not to other professionals authorized to represent clients in court. This is due to the special protection that results from the lawyer’s unique position within the judicial organization of the Member States and the fundamental tasks assigned to him, which are recognized by all Member States. This protection cannot be extended to other liberal professions.
The Court further states with regard to the first question that the extension to taxes beyond corporate tax, with the exception of VAT, customs duties and consumer taxes, does not constitute a violation of the principles of equal treatment and non-discrimination or of Articles 20 and 21 of the Charter, since the reference criterion is the risk of aggressive tax planning and tax avoidance, which cannot only be implemented in the area of corporate tax. The Court also answered the second question on the sufficient clarity of the directive with regard to legal certainty, legality in criminal matters and the right to respect for private life in accordance with Article 7 of the Charter in the affirmative. The ECJ also answered the last question, which concerns an interference with private life due to the obligation to report an arrangement that seeks to obtain a tax advantage in a legal and non-abusive manner, without finding any violation.
The decision in case C-432/23 is still pending. There, too, the ECJ is dealing with lawyer-client confidentiality in the face of tax reporting obligations.
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