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Luxembourg / Administrative Court of the Grand Duchy of Luxembourg / Case no. 45064

Mr. … and Mrs …. v. Direct Tax Department (anonymised judgment)

Deciding Body type:
National Court/Tribunal
Deciding Body:
Administrative Court of the Grand Duchy of Luxembourg
Decision date:
Key facts of the case:

In response to a request for exchange of information made by the Belgian tax administration on 29 May 2020 in the context of an investigation concerning Mr X and his wife, the director of Luxembourg’s direct taxation administration issued to company Y a decisions ordering it to provide information regarding certain bank accounts and financial assets, as well as various legal, banking, financial and economic transactions that might have been carried out by Mr X and his wife. On 6 October 2020, Mr X and his wife filed an appeal before the administrative court

seeking the annulment of the injunction. On the same day they filed a request for the stay of execution of the injunction, relying, among others, on Article 47, as well as Articles 7 and 8 of the Charter. (The present case law concerns the request for the stay of execution). In their request, the applicants referred to the recent judgment of the CJEU (joined cases C-245/19 Luxembourg State v B and C-246/19 Luxembourg State v B and Others, 6 October 2020) providing interpretation of the domestic law in the context of Article 47 of the Charter. The judgment puts forward that Member States may deny the taxpayer (subject of the tax investigation) the right to bring a direct action against the injunction, provided that there are other remedies available in the context of the tax investigation enabling him to obtain a review of the injunction. The applicants do not share the conclusions of this judgment arguing that it would be necessary to guarantee an effective direct remedy to the taxpayer against the injunction. On the merits, among others, they argued that the transmission of such sensitive and strictly personal information, namely banking information, would likely to infringe their right to respect for their private life and to the protection of personal data, guaranteed, in particular, by Articles 7 and 8 of the Charter. They also referred in this context to Article 47 of the Charter to assert that it provided legal framework offering effective protection of the rights guaranteed against, in particular, arbitrary acts of the public authorities.

Key legal question raised by the Court:
In terms of the merits of the case, the court took into account the cited judgment of CJEU and recalled that the protection of natural persons against arbitrary or disproportionate interventions by the public authorities in their private sphere constituted a general principle of the EU law, the Charter explicitly enshrining the right to an effective remedy, the right to respect for private life and the right to the protection of personal data. Regarding the communication of information relating to a natural person to a public authority, it constitutes an interference with the right to respect for private life as well as right to the protection of personal data, regardless of whether this information are of a sensitive nature or not and regardless of their subsequent use, unless the said communication takes place in compliance with the provisions of the EU law and, where applicable, the provisions of domestic law. Furthermore, the court recalled that according to the CJEU, respect for these three fundamental rights did not constitute an absolute prerogative, each of them having to be taken into consideration in relation to its function in society and may be the subject of a limitation, “on condition, first, that these limitations are provided for by law, second, that they respect the essential content of the rights and freedoms in question, and, third, that, while respecting the principle of proportionality, they are necessary and effectively meet objectives of general interest recognized by the Union or the need to protect the rights and freedoms of others”. The court recalled that the CJEU had further insisted on the fact that the aim pursued by the exchange of information in tax matters, namely “to contribute to the fight against international tax fraud and evasion, by strengthening cooperation between competent national authorities in this field”, constitutes an objective of general interest recognized by the EU, capable of allowing a limitation to be made to the exercise of the guaranteed rights.
Outcome of the case:
The Court rejected the applicants’ request for a stay of execution of the injunction to provide of information to the Belgian tax administration.