Orde van Vlaamse Balies vs Belgium: CASE SUMMARY
Case Information
- Court: Court of Justice of the European Union (Grand Chamber)
- Case No: C-694/20
- Applicant: Orde van Vlaamse Balies, IG, Belgian Association of Tax Lawyers, CD, JU
- Defendant: Vlaamse Regering (Flemish Government, Belgium)
- Judgment Date: 8 December 2022
- Download the FULL JUDGMENT
Judgment Summary
In Case C-694/20, the European Court of Justice (ECJ) examined the legality of certain reporting obligationsReporting obligations refer to the mandatory requirements imposed by tax authorities on entities or individuals to disclose specific financial and operational information. These obligations are designed to ensure transparency in taxation, help detect and prevent tax evasion, and support compliance with national and international tax standards. Such requirements can vary widely in scope, depending on jurisdiction and the nature of... imposed on lawyers under Council Directive 2011/16/EUCouncil Directive 2011/16/EU, often referred to as the "Directive on Administrative Cooperation" (DAC), establishes a comprehensive framework for the exchange of tax information among EU Member States. Its primary objective is to promote transparency and combat tax evasion, ensuring all EU countries have access to information on taxpayers' cross-border income, assets, and activities. This directive mandates administrative cooperation among national... (as amended by Directive 2018/822Directive 2018/822, also known as DAC6, is an amendment to the European Union's Directive on Administrative Cooperation in the field of taxation (DAC). Effective from June 25, 2018, DAC6 mandates the reporting of certain cross-border tax arrangements to ensure transparency, combat aggressive tax planning, and prevent tax avoidance. This directive focuses on specific arrangements that may present potential tax risks,...). This directive, commonly referred to as DAC6Directive 2018/822, also known as DAC6, is an amendment to the European Union's Directive on Administrative Cooperation in the field of taxation (DAC). Effective from June 25, 2018, DAC6 mandates the reporting of certain cross-border tax arrangements to ensure transparency, combat aggressive tax planning, and prevent tax avoidance. This directive focuses on specific arrangements that may present potential tax risks,..., requires intermediariesTax intermediaries are entities or individuals who act as facilitators between taxpayers and tax authorities, assisting with various aspects of tax compliance, planning, and dispute resolution. Their role spans from offering advisory services, ensuring compliance with tax regulations, to supporting clients in filing tax returns and navigating complex tax legislation. These intermediaries often include tax advisors, consultants, lawyers, accountants, and... involved in potentially aggressive cross-border tax arrangementsCross-border tax arrangements refer to any financial, operational, or structural plans designed by entities with activities or investments across multiple countries. These arrangements often leverage international tax laws and treaties to optimise tax liabilities and ensure compliance in each jurisdiction. Cross-border tax arrangements are crucial for multinational corporations (MNCs) as they help balance tax efficiencies with regulatory adherence across diverse... to report these transactions to the relevant tax authorities within 30 days. However, a critical issue arises with intermediariesTax intermediaries are entities or individuals who act as facilitators between taxpayers and tax authorities, assisting with various aspects of tax compliance, planning, and dispute resolution. Their role spans from offering advisory services, ensuring compliance with tax regulations, to supporting clients in filing tax returns and navigating complex tax legislation. These intermediaries often include tax advisors, consultants, lawyers, accountants, and... who are lawyers, as they are bound by legal professional privilegeWhat is Lawyer-Client Confidentiality? Lawyer-client confidentiality is a fundamental principle in legal practice that safeguards the privacy of communications between a lawyer and their client. This principle ensures clients can openly share critical information, secure in the knowledge that it remains protected from public disclosure. In tax law, where discussions often involve sensitive financial and strategic decisions, lawyer-client confidentiality is.... DAC6Directive 2018/822, also known as DAC6, is an amendment to the European Union's Directive on Administrative Cooperation in the field of taxation (DAC). Effective from June 25, 2018, DAC6 mandates the reporting of certain cross-border tax arrangements to ensure transparency, combat aggressive tax planning, and prevent tax avoidance. This directive focuses on specific arrangements that may present potential tax risks,... provides an exemption allowing lawyer-intermediaries to abstain from reporting arrangements if doing so would infringe upon this privilege. The directive further mandates that these lawyer-intermediaries notify other involved intermediariesTax intermediaries are entities or individuals who act as facilitators between taxpayers and tax authorities, assisting with various aspects of tax compliance, planning, and dispute resolution. Their role spans from offering advisory services, ensuring compliance with tax regulations, to supporting clients in filing tax returns and navigating complex tax legislation. These intermediaries often include tax advisors, consultants, lawyers, accountants, and... of their reporting obligationsReporting obligations refer to the mandatory requirements imposed by tax authorities on entities or individuals to disclose specific financial and operational information. These obligations are designed to ensure transparency in taxation, help detect and prevent tax evasion, and support compliance with national and international tax standards. Such requirements can vary widely in scope, depending on jurisdiction and the nature of.... This requirement to notify other intermediariesTax intermediaries are entities or individuals who act as facilitators between taxpayers and tax authorities, assisting with various aspects of tax compliance, planning, and dispute resolution. Their role spans from offering advisory services, ensuring compliance with tax regulations, to supporting clients in filing tax returns and navigating complex tax legislation. These intermediaries often include tax advisors, consultants, lawyers, accountants, and... was contested in the Belgian Constitutional Court by the Flemish Bar Association and several tax lawyers, who argued that it infringed on the right to private life (Article 7) and the right to a fair trial (Article 47) under the Charter of Fundamental Rights of the European Union (Charter).
The ECJ ruled that Article 8ab(5) of Directive 2011/16/EUCouncil Directive 2011/16/EU, often referred to as the "Directive on Administrative Cooperation" (DAC), establishes a comprehensive framework for the exchange of tax information among EU Member States. Its primary objective is to promote transparency and combat tax evasion, ensuring all EU countries have access to information on taxpayers' cross-border income, assets, and activities. This directive mandates administrative cooperation among national... is invalid in situations where lawyers are required to inform non-client intermediariesTax intermediaries are entities or individuals who act as facilitators between taxpayers and tax authorities, assisting with various aspects of tax compliance, planning, and dispute resolution. Their role spans from offering advisory services, ensuring compliance with tax regulations, to supporting clients in filing tax returns and navigating complex tax legislation. These intermediaries often include tax advisors, consultants, lawyers, accountants, and... of their reporting obligationsReporting obligations refer to the mandatory requirements imposed by tax authorities on entities or individuals to disclose specific financial and operational information. These obligations are designed to ensure transparency in taxation, help detect and prevent tax evasion, and support compliance with national and international tax standards. Such requirements can vary widely in scope, depending on jurisdiction and the nature of.... It concluded that such requirements infringe upon the confidentiality of lawyer-client communications, which is a fundamental aspect of legal professional privilegeWhat is Lawyer-Client Confidentiality? Lawyer-client confidentiality is a fundamental principle in legal practice that safeguards the privacy of communications between a lawyer and their client. This principle ensures clients can openly share critical information, secure in the knowledge that it remains protected from public disclosure. In tax law, where discussions often involve sensitive financial and strategic decisions, lawyer-client confidentiality is.... The court’s decision emphasized that the directive’s transparency goals must be balanced against fundamental rights, especially in relation to the privacy of legal consultations. However, the court also clarified that this requirement does not impact the right to a fair trial as outlined in Article 47, given that this reporting obligation pertains to advisory functions, not litigation.
This decision has substantial implications for both multinationals and tax authorities, as it reinforces the boundaries of legal professional privilegeWhat is Lawyer-Client Confidentiality? Lawyer-client confidentiality is a fundamental principle in legal practice that safeguards the privacy of communications between a lawyer and their client. This principle ensures clients can openly share critical information, secure in the knowledge that it remains protected from public disclosure. In tax law, where discussions often involve sensitive financial and strategic decisions, lawyer-client confidentiality is... in tax matters. While revenue authorities are keen to gather information on cross-border tax arrangementsCross-border tax arrangements refer to any financial, operational, or structural plans designed by entities with activities or investments across multiple countries. These arrangements often leverage international tax laws and treaties to optimise tax liabilities and ensure compliance in each jurisdiction. Cross-border tax arrangements are crucial for multinational corporations (MNCs) as they help balance tax efficiencies with regulatory adherence across diverse... to curb aggressive tax planningAggressive tax planning (ATP) refers to strategies employed by individuals or corporations to minimise their tax liabilities, often by exploiting legal loopholes, discrepancies between tax jurisdictions, or complex structures in tax law. While not always illegal, ATP can push the boundaries of acceptable tax behaviour, as it may compromise the intent of the law. ATP is commonly characterised by arrangements..., this judgment clarifies that legal professional privilegeWhat is Lawyer-Client Confidentiality? Lawyer-client confidentiality is a fundamental principle in legal practice that safeguards the privacy of communications between a lawyer and their client. This principle ensures clients can openly share critical information, secure in the knowledge that it remains protected from public disclosure. In tax law, where discussions often involve sensitive financial and strategic decisions, lawyer-client confidentiality is... must be protected. Multinationals engaging in tax planningTax planning is the process of organising and structuring one’s financial affairs in a manner that legally minimises tax liabilities while ensuring compliance with relevant tax laws. The primary objective of tax planning is to reduce the amount of taxes paid, optimise the use of available tax benefits, and preserve wealth. It can be applied at various levels, including personal... with legal advisers benefit from the assurance that confidential discussions remain protected, allowing them to seek advice on complex tax matters without concern for unwarranted disclosure.
