On 6 October 2020, the Court of Justice of the European Union ("CJEU") ruled in joined cases C-245/19 and C-246/19 that the Luxembourg Law dated 25 November 2014 laying down the procedure applicable to the exchange of information on request in tax matters, as in force prior to the amendments introduced by the Law of 1 March 2019 following the landmark Berlioz case, partially violated the Charter of Fundamental Rights of the European Union ("EU Charter").

The CJEU did not completely follow Advocate General Kokott's Opinion ("AG Kokott") released on 2 July 2020 and considered that whether national legislations must guarantee or may exclude the right to an effective judicial remedy within the context of an exchange of information in tax matters depends on the person involved:

  • The absence of the right to an effective judicial remedy of the person holding information and to which an order is addressed by the Luxembourg tax authorities following the request of tax authorities of another Member State is contrary to Article 47 (right to a fair trial) of the EU Charter.
  • Contrary to AG Kokott, the CJEU ruled that the right to an effective judicial remedy of the taxpayer concerned by the investigation of the tax authorities of another Member State, against the information order, may be limited given that the taxpayer concerned is neither subject to any legal obligation by the information order, nor exposed to the risk of receiving a penalty in case of non-compliance. The CJEU decided that it is sufficient for national law to be compliant with Article 47 of the EU Charter that the taxpayer concerned has the possibility to file an action against any corrected or adjusted tax assessments issued as a result of the investigations.
  • For the same reasons, the right to an effective judicial remedy of any third party concerned by the information at issue against the information order may also be limited to the extent that such a third party has access to a court to obtain compensation for the harm suffered as a result of the infringement of EU Law and where that court has the possibility to review the act or measure that has given rise to that infringement or harm. The CJEU thus ruled that Luxembourg law was not contrary to Article 7 (respect for private and family life), Article 8 (protection of personal data) and Article 47 of the EU Charter.

The CJEU has further clarified the condition of "foreseeable relevance" of the information requested by the relevant tax authorities for the purposes of the relevant investigation, which was already at issue in the Berlioz case mentioned above. The information order and initial information request are manifestly not devoid of any foreseeable relevance insofar as they state (i) the identity of the taxpayer concerned by the investigation, (ii) the period covered by that investigation and (iii) the identity of the person who holds information concerning contracts, invoices and payments concluded or carried out during that period and connected with that taxpayer.

The Luxembourg Administrative Court which had referred the preliminary ruling request to the CJEU rendered its final decision on 12 January 2021 (No. 41486Ca and No. 41487Ca) by adopting the CJEU solution.

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