Advocate General’s Opinion in “State of the Grand Duchy of Luxembourg v B” (joined cases C-245/19 and C-246/19)


In October 2016, the Spanish tax authorities sent an initial request for information to the Luxembourg tax authorities concerning an artist residing in Spain (“Taxpayer”) based on the Luxembourg-Spain double tax treaty1  and the Directive on administrative cooperation in the field of taxation2. Since the Luxembourg tax authorities did not themselves have the requested information, they addressed an order to a Luxembourg company, in its capacity as a third party information holder (“Requested Company”), to provide it with copies of the contracts concluded between the Requested Company and other companies (“Concerned Third Parties”) concerning the Taxpayer’s rights and other documents, in particular copies of related invoices and bank account details (Case C-245/19 ).

Following a second request for information dated March 2017 concerning the Taxpayer, the Luxembourg tax authorities addressed an order to a Luxembourg bank (the “Requested Bank”) to obtain information concerning the Taxpayer’s accounts, account balances and other assets, including assets the Taxpayer held for other companies controlled by her (“Concerned Third Parties”) (Case C-246/19 ).

In accordance with the Luxembourg law in force at the time3, any judicial remedy against the orders were explicitly precluded. It was possible, however, for the sole information holder to challenge the fine of a maximum of €250,000 for non-compliance with the order within one month, which could be imposed by the Luxembourg tax authorities.

Nevertheless, the Requested Company, the Requested Bank, as well as the Taxpayer and certain Concerned Third Parties challenged the orders before the Luxembourg courts, prior to the notification of the fine.

Request for a preliminary Ruling

The Luxembourg Administrative Court4, before which those legal disputes have been brought on appeal, referred a preliminary ruling request to the CJEU5  on the compatibility of the absence of judicial remedy under Luxembourg law in force at the time, with EU law, mainly in light of Article 47 (right to a fair trial) of the EU Charter6.
Furthermore, the CJEU was invited to further clarify the requirement imposed under the Directive that the requested information must be “foreseeably relevant” for the taxation of the concerned taxpayer, a term already largely interpreted by the CJEU in its landmark Berlioz case .
(Please refer to our article dated 12 July 2007 for more information).  

Opinion of the Advocate General

On 2 July 2020, Advocate General Kokott (“AG”) released her Opinion in both joined cases.

The AG considers that the Requested Company, the Requested Bank, the Taxpayer and the Concerned Third Parties should all have a right to a direct judicial remedy against the orders based on Article 47 of the EU Charter.

In the Berlioz case, the CJEU ruled that the EU Charter is applicable when a Member State makes provision in its legislation for a pecuniary penalty to be imposed on a relevant person who refuses to supply information in the context of an exchange of information between tax authorities. In the case at hand, the AG clarified that the Requested Company and the Requested Bank have a right to challenge the order without having to wait for a fine, because any such order already has adverse effects on the information holder.
The Taxpayer should also have the right to challenge the order, to prevent the communication of personal data by the Requested Bank and/or Requested Company based on Article 8 of the EU Charter (Protection of personal data). The existence of a judicial remedy against a (potential) subsequent tax assessment does not provide sufficient protection.  
For the same reasons related to the protection of personal data or, as the case may be, in order to protect private and family life as guaranteed by Article 7 of the EU Charter, a direct judicial remedy should also be granted to the Concerned Third Parties, both individuals and legal persons, no matter if (a) the requested information is sensitive or not, (b) the exchange of information could have drawbacks or not or (c) they may or may not suffer a financial or moral prejudice in the aftermath.

The AG also considers that in order for the requested tax authorities of a Member State to verify whether the requested information is “foreseeably relevant” for the taxation of the concerned taxpayer, the requesting tax authorities of the other Member State must provide concrete elements of information. This may include, according to the AG, the purpose and current result of the investigation, the former attitude of the taxpayer, the list of infringement(s) of tax obligations by the taxpayer or the current objections raised for tax purposes.

The AG’s Opinion is not binding on the CJEU. However, given the importance of the legal issues at stake, the upcoming judgment of the CJEU could potentially trigger a new amendment to the Luxembourg Law of 1 March 2019 to introduce a judicial remedy against orders for the concerned taxpayer and third parties, should the CJEU decide to follow the Opinion.

1.Tax convention between the Luxembourg and Spain of 3 June 1986 as amended by the Protocol signed on 11 November 2009.
2.Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation implemented into Luxembourg law dated 25 November 2014 (“Directive”).
3.The Law of 1 March 2019 amending Luxembourg Law dated 25 November 2014 and introducing a direct judicial review to the sole requested information holder required to communicate information to Luxembourg direct tax authorities upon request of competent authorities of another Member State, was not adopted at the time of the facts.
4.Administrative Court, 14 March 2019 (n°41486C and n°41487C).
5.Court of Justice of the European Union.
6.Charter of Fundamental Rights of the European Union.