As a result of the increasing exchange of information between the tax administrations of the Member States pursuant to the Administration Cooperation Directive (‘Directive 2011/16’), questions are repeatedly raised as regards the interpretation of that directive and the rights of the persons concerned in the light of the Charter of Fundamental Rights of the European Union (‘the Charter’). The present request for a preliminary ruling is closely linked in that sense to the judgments of the Court in Berlioz Investment Fund (2) and État luxembourgeois (Judicial protection against requests for information in tax law).
The Court has previously ruled in those proceedings that the ‘foreseeable relevance’ of the information requested for the purposes of taxation in the requesting State is a condition which the request for information must satisfy. Now it has occasion to clarify whether a request fulfils that requirement also where information is requested only on a group of taxpayers whose identity is ascertainable but who are not identified individually or by name. Primarily, it has to clarify how specific and precise the request must be in relation to the taxpayers so that the requested tax authority can assess the ‘foreseeable relevance’ of the requested information to the tax proceedings in the other Member State.
It must also specify the legal protection afforded to the person concerned. One question that arises here is whether, based on Article 47 of the Charter, the requested State must set a period of time for the review of the decision requiring the requested information to be provided (also referred to as ‘information order’) before imposing an administrative penalty. This question is particularly pressing where, as here, the addressee of the information order obtains disclosure of the minimum information referred to in Article 20(2) of Directive 2011/16 only during the course of the judicial proceedings.
Context: (Reference for a preliminary ruling – Tax law – Directive 2011/16/EU – Administrative cooperation in the field of taxation – Article 1(1) – Article 5 – Article 20 – Request for information from the financial authority of another Member State – Information order made by the requested financial authority – Foreseeable relevance of the requested information – Group request for information – Identified or identifiable person – Minimum information – Charter of Fundamental Rights of the European Union – Article 47 – Right to an effective remedy before a tribunal – Statement of reasons of the information order – Disclosure of minimum information
- The main proceedings are based on a request for information addressed to the Luxembourg tax administration by the French tax administration, which the French tax administration has based on the tax convention between Luxembourg and France of 1 April 1958 and Directive 2011/16.
- The French authorities indicated in their request for information of 27 April 2017 that they wished to conduct an investigation into F, a company established in France and alleged to be carrying on the activity of leasing a property in a municipality in France. The company L, resident in Luxembourg, was alleged to be not only the indirect parent company of F (via a company incorporated under Dutch law), but also the direct owner of another property situated in the same French municipality. The French authorities explained that individuals directly or indirectly owning immovable property situated in France are required to declare that property for the purposes of a property tax, and that they wished to know who were the shareholders and beneficial owners of the company L.
- By letter of 28 February 2018 (‘decision requiring the requested information to be provided’ or ‘information order’), the Luxembourg tax administration ordered L to provide certain information as follows:
- ‘… The competent French authorities have sent us, dated 27 April 2017, a request for information pursuant to Directive 2011/16 … and to the tax convention between Luxembourg and France …
- The legal person to which the request relates is F, a company established [in France].
- Please provide us with the following information and documents in relation to the period from 1 January 2012 to 31 December 2016 …:
- – Please disclose the names and addresses of L’s shareholders, together with the names and addresses of those beneficially interested, whether directly or indirectly and regardless of the type of intervening structure, in the company and the distribution of capital;
- – Please provide a copy of L’s shareholder registers. …’
- L brought an action against the information order, even though Article 6 of the Law of 25 November 2014 did not provide for any remedy against that decision. By decision of 4 June 2018, that action was dismissed as inadmissible. L brought an action against that decision, which is now pending before the Tribunal administratif (Administrative Court, Luxembourg).
- On 6 August 2018, the Luxembourg tax administration imposed a fine on L for failure to comply with the information order. On 5 September 2018, L lodged an action against that fine with the Tribunal administratif (Administrative Court). L is relying in particular on the fact that the information requested by the French tax administration is not of ‘foreseeable relevance’ and the information order did not state the tax purpose for which the information was requested.
- By judgment of 18 December 2018, the Tribunal administratif (Administrative Court) upheld the action and annulled the decision of 6 August 2018 imposing a fine, as the information order was of itself invalid. The court held, in essence, that the information order was invalid on the basis that there was a conflict between the identity of the taxpayer as stated in that document, dated 28 February 2018, and the explanations given by the French authorities as to the purpose of the request for information, such that doubts persisted as to the identity of the taxpayer to whom the request for information related. More specifically, that court stated that the explanations in the request for information of 27 April 2017 tended to indicate that the investigation that was under way related not to F, even though F was mentioned in the request for exchange of information as the person under investigation in France, or the taxation of F, but to the natural persons who are the beneficial owners of L, who are alleged to be under an obligation, under French law, to declare their ownership of properties situated in France.
- By application lodged on 21 December 2018, the Grand Duchy of Luxembourg lodged an appeal against that judgment with the Cour administrative (Higher Administrative Court, Luxembourg). Luxembourg submits in particular that the information requested by the French tax administration satisfies the condition of ‘foreseeable relevance’; that the French request contains the information required under Article 20(2) of Directive 2011/16; and, moreover, that the requirements of Article 47 of the Charter have been fulfilled, as L has taken legal action against both the information order and the decision imposing the fine.
(1) Must Article 20(2)(a) of Directive 2011/16 be interpreted as meaning that where a request for exchange of information formulated by an authority of a requesting Member State designates the taxpayers to which it relates simply by reference to their status as shareholders and beneficial owners of a company, without those taxpayers having been identified by the requesting authority in advance, individually and by name, the request satisfies the identification requirements laid down by that provision?
(2) If the answer to the first question is in the affirmative: Must Article 1(1) and Article 5 of that directive be interpreted as meaning that the standard of foreseeable relevance may be met, if the requesting Member State, in order to establish that it is not engaged in a fishing expedition, despite the fact that it has not individually identified the taxpayers concerned, provides a clear and sufficient explanation evidencing that it is conducting a targeted investigation into a limited group of persons, and not simply an investigation by way of general fiscal surveillance, and that its investigation is justified by reasonable suspicions of non-compliance with a specific legal obligation?
3. Must Article 47 of the Charter of Fundamental Rights of the European Union be interpreted as meaning that, where
1. a person who has had imposed upon him or her by the competent authority of a Member State an administrative financial penalty for non-compliance with an administrative decision, requiring him or her to provide information in connection with an exchange of information between national tax authorities pursuant to Directive 2011/16, where the national law of the requested Member State does not make provision for an action to be brought against the latter decision, and where the person concerned has challenged the legality of that decision within an action brought against the financial penalty, and
2. has only obtained disclosure of the minimal information referred to in Article 20(2) of Directive 2011/16 in the course of the judicial procedure set in motion by the bringing of that action,
that person is entitled, in the event of a definitive incidental finding upholding the validity of the decision requiring the requested information and of the decision imposing a fine on him or her, to a period of grace for the payment of that fine, so that he or she has an opportunity, having thus been given disclosure of the material supporting the contention – definitively accepted by the competent court – that the test of foreseeable relevance is met, to comply with the decision requiring the requested information?
1. Article 1(1) and Article 5 of Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation and repealing Directive 77/799/EEC, read in conjunction with Article 20(2) thereof, must be interpreted as meaning that where a request for exchange of information made by an authority of a requesting Member State designates the taxpayers to which it relates simply by reference to their status as shareholders and beneficial owners of a company, without those taxpayers having been identified by the requesting authority in advance, individually and by name, the request satisfies the identification requirements laid down in that provision.
However, in order to comply with the standard of foreseeable relevance, the authority of the requesting Member State must, in the request for information, (i) provide as specific and detailed a description of the group of taxpayers as possible; (ii) explain the tax obligations to which the group of taxpayers is subject in the requesting State and the facts on which the request is based; (iii) show why there is reason to believe that the group has not acted in compliance with the law.
2. Article 47 of the Charter of Fundamental Rights of the European Union requires that the addressee of the information order should either be given access to the information stipulated in Article 20(2) of Directive 2011/16 already together with that order or, at the very least, be given an appropriate period of time under procedural law following receipt of that information in which to review and comply with the order without incurring any costs or penalty. In that case, there is no need for an additional period of grace for payment.