On September 26, 2024, the ECJ issued its judgment in the case C-432/23 (Ordre des avocats du Barreau de Luxembourg).
Context: Reference for a preliminary ruling – Administrative cooperation in the field of taxation – Directive 2011/16/EU – Exchange of information on request – Instruction to a lawyer to provide information – Lawyers’ professional secrecy – Article 7 and Article 52(1) of the Charter of Fundamental Rights of the European Union
Facts
- Request for Information: Spanish tax authorities requested documents from company F regarding services provided to company K related to business acquisitions in Spain, covering 2016-2019.
- Legal Advisor’s Objection: F, acting as legal advisor, refused to provide the information citing professional secrecy, stating that the services were related to company law, not tax matters.
- Tax Authorities’ Enforcement: The tax authorities insisted on compliance, eventually imposing a fine on F for non-compliance with the information request.
- Legal Challenge: F challenged the fine and the injunction in court, arguing that the request violated professional secrecy and the right to respect for communications between a lawyer and their client as protected under EU law.
- Court’s Consideration: The court examined whether the injunction complied with EU law, particularly regarding the confidentiality of lawyer-client communications, and sought clarification on the interpretation of relevant EU directives and the Charter of Fundamental Rights.
Questions
1) Does a legal consultation from a lawyer in corporate law – in this case with a view to setting up a corporate investment structure – fall within the scope of the enhanced protection of exchanges between lawyers and their clients granted by Article 7 of the [Charter]?
2) If the answer to the first question is in the affirmative, does a decision of the competent authority of a requested Member State, issued in response to a request for exchange [of information] upon request from another Member State on the basis of Directive [2011/16], ordering a lawyer to provide it with broadly all available documentation relating to his relationship with his client, a detailed description of the transactions on which he advised, an explanation of his involvement in those processes and the identification of his interlocutors, constitute an interference with the right to respect for communications between a lawyer and his client, guaranteed by Article 7 of the [Charter]?
3) If the answer to the second question is in the affirmative, is Directive 2011/16 consistent with Articles 7 and 52(1) of the Charter in that it does not contain, beyond Article 17(4), any provision formally permitting interference with the confidentiality of exchanges between lawyers and their clients in the context of the regime of exchange [of information] on request and itself defining the scope of the limitation on the exercise of the right concerned?
4) If the answer to the third question is in the affirmative, can the regime governing the duty of cooperation of lawyers (or a law firm) as third-party data holders in the context of the application of the mechanism for the exchange [of information] on request established by Directive 2011/16, in particular the specific limitations designed to take account of the impact of their professional secrecy, be governed by the provisions of the domestic law of each Member State governing the duty of cooperation of lawyers, as third parties, in the tax investigation in the context of the application of domestic tax law, in accordance with the reference made by Article 18(1) of that directive?
5) If the answer to the fourth question is in the affirmative, in order to comply with Article 7 of the [Charter], must a national legal provision establishing the regime of the duty of collaboration of lawyers as third-party holders, such as that applicable in this case, include specific provisions which:
– ensure compliance with the essential content of confidentiality of communications between the lawyer and his client; and
– establish specific conditions to ensure that the obligation of lawyers to cooperate is reduced to what is appropriate and necessary to achieve the objective of Directive 2011/16?
6) If the answer to the fifth question is in the affirmative, must the specific conditions aimed at ensuring that the cooperation of lawyers in the tax investigation is limited to what is appropriate and necessary to achieve the objective of Directive 2011/16 include an obligation for the competent authority of the requested Member State:
– to carry out a reinforced check as to whether the requesting Member State has actually previously exploited the usual sources of information which it can use to obtain the requested information without risking prejudicing the achievement of those objectives, in accordance with Article 17(1) of Directive 2011/16; and/or
– having previously contacted, and in vain, other potential holders of information in order to be able to contact, as a last resort, a lawyer in his capacity as potential holder [of information]; and/or
– to carry out, in each individual case, a balancing between, on the one hand, the objective of general interest and, on the other hand, the rights at stake, in such a way that an injunction decision could validly be issued against a lawyer only if additional conditions, such as the requirement that the financial stakes of the control in progress in the requesting Member State reach or are likely to reach a certain importance or are likely to fall within the scope of criminal law, are met?
AG Opinion
(1) Legal advice provided by a law firm, even on matters of company law – for example on setting up a corporate investment structure – falls within the scope of the protection afforded by legal professional privilege as guaranteed by Article 7 of the Charter of Fundamental Rights of the European Union (‘the Charter’).
(2) A decision of the competent tax authority ordering a law firm to disclose information in the context of an exchange of information on request whereby that authority, broadly speaking, calls for the production of all documentation relating to certain transactions and its involvement in those transactions constitutes interference with the right to respect for communications between lawyers and their clients that is guaranteed by Article 7 of the Charter.
(3) Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation and repealing Directive 77/799/EEC is compatible with Article 7 and Article 52(1) of the Charter, in so far as it does not include, beyond Article 17(4), any provision which formally permits interference with the confidentiality of exchanges between lawyers and their clients in the context of the system of exchange of information on request and which itself defines the scope of the limitation on the exercise of the right in question. This is because Article 17(4) of Directive 2011/16 gives the Member States sufficient discretion to fulfil the requirements of Article 7 of the Charter.
(4) The national legislation of each Member State can and must stipulate the conditions, the scope and the limits of the duty to cooperate incumbent on lawyers, as information holders, in the context of the exchange of information on request under Directive 2011/16. In so doing, national law must, in particular, enable the competent authority to strike a balance on a case-by-case basis between the objectives in the general interest, on the one hand, and the protection afforded by legal professional privilege, on the other. Since Luxembourg law does not allow for such a balance to be struck in matters of tax law, Article 7 of the Charter precludes the application of the national law to that extent.
Decision
1) Article 7 of the Charter of Fundamental Rights of the European Union
should be interpreted as meaning that:
a legal consultation by a lawyer in matters of company law falls within the scope of the enhanced protection of communications between a lawyer and his client, guaranteed by that article, so that a decision ordering a lawyer to provide the administration of the requested Member State, for the purposes of an exchange of information on request provided for by Council Directive 2011/16/EU of 15 February 2011 on administrative cooperation in the field of taxation and repealing Directive 77/799/EEC, with all the documentation and information relating to his relations with his client, relating to such a consultation, constitutes an interference with the right to respect for communications between a lawyer and his client, guaranteed by that article.
2) Examination of the aspects to which the third and fourth questions relate has not revealed any factor capable of affecting the validity of Directive 2011/16 in the light of Article 7 and Article 52 of the Charter of Fundamental Rights.
3) Article 7 and Article 52(1) of the Charter of Fundamental Rights must be interpreted as precluding an injunction such as that described in point 1 of this operative part, based on national legislation under which advice and representation by a lawyer in tax matters do not benefit, except in the event of a risk of criminal prosecution for the client, from the enhanced protection of communications between a lawyer and his client, guaranteed by that Article 7.
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