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Some of Europe's brightest legal minds look at the tax issues across Europe which could impact multinational businesses.

| 3 minutes read

DAC6 and legal professional privilege - request for a preliminary ruling

On 21 December 2020, the Belgian Constitutional Court (Grondwettelijk Hof) requested a preliminary ruling from the CJEU on the DAC 6 rules, as transposed in Belgium (Case C-694/20), in the context of proceedings brought by the Flemish Bar Association (Orde van Vlaamse Balies) and the Belgian Association of Tax Lawyers, among others. The identity of the appellants is no coincidence, given that the ruling being sought relates to legal professional privilege, a concept of great importance and value to all members of the legal profession.


DAC 6 requires that intermediaries or, in some circumstances, taxpayers report certain information in respect of cross-border arrangements which meet one of a number of criteria to the relevant EU tax authority.

A Member State may, however, exempt intermediaries from this reporting obligation where such reporting would breach legal professional privilege under its national law (see Article 8ab(5) of the consolidated DAC). Most European legislators have made use of this option to exempt lawyers from DAC 6 reporting to the extent that legal professional privilege applies. But the details of that exemption differ between countries: some Member States extend its scope to other professionals and others allow the client/taxpayer to waive legal professional privilege to allow the intermediary to report the arrangement. But practically all Member States require (in accordance with Article 8ab(5)) that intermediaries who are exempted from reporting on the basis of legal professional privilege to notify other intermediaries or, secondarily, taxpayers of the reporting obligation so as to pass it on to them.

Request for the preliminary ruling

The preliminary ruling is being sought precisely on this last point: even where a Member State has exempted an intermediary from the reporting obligation on the basis of legal professional privilege obligation, they must still notify any other intermediary of the reporting obligation. It seems that the Belgian implementing regulations went even further by requiring the privileged intermediary to provide to the other intermediaries all the information necessary so that the other intermediaries can fulfil the reporting obligation. The question that springs to mind is this: would an adviser who is subject to legal professional privilege not breach that privilege by sharing information with someone other than their client (i.e. by sharing it with another intermediary)?

The request for a preliminary ruling asks whether this information obligation is compatible with Articles 7 and 47 of the Charter on Fundamental Rights of the European Union (the Charter), which regulate, respectively, respect for private and family life and the right to an effective remedy and to a fair trial. The request also mentions Articles 6 (right to a fair trial) and 8 (right to respect for private and family life) of the European Convention on Human Rights (ECHR).

Unresolved questions

We will have to wait and see what the CJEU decides. But in my view there are other points in respect of DAC6 and its transposition into Spanish law that raise concerns.

  • Is legislation that limits the general scope of legal professional privilege for the purposes of the DAC 6 reporting obligations compatible with Article 8ab(5) of the DAC, read in connection with Articles 6 (right to a fair trial) and 8 (right to respect for private and family life) of the ECHR?
  • Is the imposition of penalties for the failure to report a cross-border arrangement compatible with Articles 47 (right to an effective remedy and to a fair trial) and 48 (presumption of innocence and right of defence) of the Charter? And how does this fit with Article 6(1), (2) and (3) of the ECHR as regards the right against self-incrimination, in particular, in light of the CJEU decision in Case C-481/19?
  • Article 8ab(3) of the DAC sets out the criteria for deciding where an arrangement should be reported, if the intermediary would otherwise be liable to report in more than one Member State. To what extent is this an interference with the freedom of establishment recognised in Article 49 of the TFEU?
  • Does the imposition of a reporting obligation on intermediaries who merely provided aid, assistance or advice in respect of an arrangement violate the principle of proportionality enshrined in Article 5(4) of the TEU?

I will expand on these questions in a series of posts. Please subscribe to the blog to be notified when the next post is published.


gmarin, uriamenendez, spanish tax, eu tax, eu directives, dac6, cross-border, legal professional privilege