European Union: Luxembourg Rules On Exchange Of Information Upon Request Amended

Last Updated: 18 March 2019
Article by Romain Tiffon and Samantha Schmitz-Merle


  • In 2017, a decision of the Court of Justice of the European Union made clear that the Luxembourg rules applicable to exchange of information upon request were not in line with EU law.
  • On 14 February 2019, the draft law aiming at bringing Luxembourg rules in line with EU law was passed by the Parliament.
  • Based on the new rules, the Luxembourg tax authorities have to check the foreseeable relevance of the information requested by foreign tax authorities and information holders can contest information requests received from the Luxembourg tax authorities.

Following the decision of the Court of Justice of the European Union ("CJEU") of 16 May 2017 in the Berlioz case (C-682/15), the Luxembourg legislator had to amend the Luxembourg rules on exchange of information upon request so as to bring them in line with EU law.

Following a legislative procedure which took more than one year with several amendments introduced by both the government and the parliament, on 14 February 2019, the draft law was finally voted.

Foreseeably relevance of information requests

Back in December 2013, Luxembourg received criticism from the Global Forum on Transparency and Exchange of Information. The report of the Global Forum highlighted that "the interpretation of the foreseeably relevant standard in Luxembourg is unduly restrictive and prevents it from engaging in effective exchange of information in line with the international standards in certain cases".

Blamed for an unduly restrictive interpretation of the concept of foreseeable relevance, Luxembourg reacted quickly and passed a law that would guarantee an efficient mechanism of exchange of information upon request: the law of 25 November 2014 made sure that the Luxembourg tax authorities were no longer allowed to assess the pertinence of the information requested. In other terms, tax inspectors were no longer allowed to decline a request from a foreign authority on the grounds that the requested information lacked relevance. They were only allowed to verify if the request satisfied the formal conditions, as defined in the relevant tax treaty or law provision.

Less than three years later, the EU conformity of the new Luxembourg rules was assessed by the CJEU which ruled that the "foreseeable relevance of the information requested by one Member State from another Member State is a condition which the request for information must satisfy in order for the requested Member State to be required to comply with that request, and thus a condition of the legality of the information order addressed by that Member State to a relevant person and of the penalty imposed on that person for failure to comply with that information order."

As a consequence of the CJEU decision, an obligation has been reintroduced into the Luxembourg exchange upon request legal framework according to which the tax authorities have to verify that the condition of foreseeable relevance is met prior to sending an information request to the information holder.

Legal remedies against information requests

As a second consequence of the criticism expressed by from the Global Forum on Transparency and Exchange of Information against Luxembourg, since the law of 25 November 2014, there were no longer any legal remedies against information requests sent by the Luxembourg tax authorities to information holders but only remedies against the fine for not having provided the requested information.

The draft law released by the end of 2017 as a reaction to the criticism raised in the Berlioz decision on the lack of an effective judicial remedy initially reintroduced a possibility for any person concerned by the information request to contest the information request (e.g. on the ground that the information request would not meet the foreseeable relevance principle) before Luxembourg courts. However, over the legislative process, the Luxembourg legislator decided to go a step back and to grant this possibility only to the information holder and no longer to any other person concerned (such as the taxpayer itself). This happened as a reaction to the comments made by the State Council on the draft law according to which this would go beyond what the Berlioz case-law requested. In our view, this is unfortunate since it remains to be confirmed whether this really goes beyond what EU rules require (in the Berlioz case, the information holder was not a service provider but it was the taxpayer itself). In addition, the Luxembourg legislator could have considered going beyond what was required according to the Berlioz decision and the additional issues raised by the State Council in this respect could have been solved by means of other amendments to the draft law.

Following this second amendment to the exchange of information procedure, Luxembourg courts will have to rule on both the legality of information request and the fine that may be charged for not providing the information requested.

Implications and next steps

While the changes introduced by the Luxembourg legislator are globally positive, in our view, it would have been wiser to reintroduce for both the information holder and the taxpayer concerned the possibility to challenge information requests (as it was the case under the procedure applicable prior to the law of 25 November 2014). In addition, it would have been advisable to introduce an obligation of the Luxembourg tax authorities to notify their information request not only to the information holder but also to the taxpayer(s) concerned each time the foreign tax authorities are not opposed to it.

Whether the amended procedure of exchange of information upon request is now in line with EU law remains to be confirmed. Luxembourg information holders to which a penalty was applied for not having provided the requested information did not await the amendments of the Luxembourg rules on exchange of information to challenge before the Luxembourg courts the foreseeable relevance of the information injunctions received on the basis of the Berlioz case law.

In this context, in a recent case involving an information request of the Swiss tax authorities, on 10 January 2019, the Luxembourg Tribunal referred 2 questions to the Luxembourg Constitutional Court on the conformity of the law of 25 November 2014 to the Luxembourg Constitution in so far as it provides for a prohibition to challenge an injunction of the Luxembourg tax authorities to provide information. Depending on how the Constitutional Court will conclude, additional changes to the rules applicable to exchanges of information upon request may come in the near future.

In addition, following to a decision of the Administrative Tribunal dated June 20181, if confirmed in future case law, the absence of an appeal for the taxpayer(s) concerned under the new law on exchange of Information could still be found to be contrary to Article 47 of the Charter of Fundamental Rights of the European Union concerning the right to fair trial and an effective remedy.


1 Decision of the Administrative Tribunal of 26 June 2018 n°39888 according to which persons other than the information holder can have a direct and personal interest to act before a court to challenge an information request of the Luxembourg tax authorities to the extent that they are concerned by the request. Therefore, they should be allowed to dispute an information request.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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