Malta: Commissioner For Revenue Amends DAC 6 Guidelines Following CJEU Ruling That DAC 6 Obligations Violate Lawyer-client Confidentiality

Commissioner for Revenue has amended the DAC 6 guidelines following the judgement of CJEU Case C-694/20 in particular the provisions in relation to the notification obligation of intermediaries and relevant taxpayers, in certain circumstances, with respect to cross-border arrangements under Council Directive (EU) 2018/822 (referred to as DAC 6).

Background

Under DAC 6 certain intermediaries are required to report cross-border arrangements to the tax authorities. However, because of legal professional privilege, an intermediary is not required to report such cross-border arrangement but must notify other third-party intermediaries, or the relevant taxpayer that the disclosure obligation transfers to those intermediaries or the taxpayer as the case may be in accordance with Article 8ab (5) of the DAC 6 Directive. At issue is whether this notification obligation interferes with the right to a fair trial and right to privacy between lawyers and their clients as included in the Charter of Fundamental Human Rights of the European Union.

CJEU Decision

The CJEU ruled that the DAC 6 notification obligation directly infringes the right to privacy between a lawyer and his client as guaranteed in Article 7 of the Charter. This obligation provides in essence that a lawyer-intermediary who is subject to legal professional privilege, is required to notify other intermediaries who are not their clients of their reporting obligations under DAC 6.

The CJEU ruled that the DAC 6 notification obligation imposed on lawyers subject to legal professional privilege infringes the right to privacy between a lawyer and his client as guaranteed in Article 7 of the Charter of Fundamental Rights of the European Union. As a result, Article 8ab (5) of the DAC 6 Directive is invalid and such lawyers are no longer required to notify third party intermediaries of DAC 6 reporting obligations and other intermediaries are not required to disclose the name(s) of lawyers subject to legal professional privilege involved in providing tax advice.

Amendments to Guideline following judgement

The Commissioner for Revenue has issued a clarification in the light of this judgement. The provisions as set out in regulation 13(7)(e) of the Cooperation with other Jurisdictions on Tax Matters Regulations in relation to the notification obligation do not apply in the case of advocates, notaries and legal procurators affected by the above-mentioned judgement except where the notification is to be made to the client of the said advocates, notaries and legal procurators.

With respect to the annual notification to be made pursuant to regulation 13(7)(e) of the Cooperation with other Jurisdictions on Tax Matters Regulations and Guideline 6.5.1, advocates, notaries and legal procurators affected by the above judgement are not obliged to include the identification details, the Arrangement and Disclosure ID numbers of the relevant taxpayer, or other intermediary on whom the reporting obligation has been waived.

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