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12 June 2018
The Luxembourg Administrative Court of Appeal and the European Court of Justice (on referral for a preliminary ruling) recently considered whether the Luxembourg Law of 25 November 2014 laying down the procedure applicable to the exchange of information on request in tax matters complied with:
In particular, the courts examined whether the Luxembourg law complied with the right to an effective remedy set out in the EU directive and the charter.
Previously, under the Law of 25 November 2014, neither the Luxembourg tax authorities nor a requested Luxembourg third party (including a bank, a trust company or similar) could examine, with a view to challenging in court, an information request made by the tax authorities of another EU member state. This made it impossible to verify the foreseeable relevance of requested information to a particular tax case, as well as a request's stated fiscal purpose. However, the condition of foreseeable relevance is provided for by EU Directive 2011/16, and foreign tax authorities (in the present case, the French authorities) have based such demands for information on this condition.
Further to the European Court of Justice's 16 May 2017 decision, the Luxembourg Administrative Court of Appeal delivered its decision on 26 October 2017, adopting the EU court's conclusions and excluding the application of the challenged provisions of the Law of 25 November 2014. The administrative court penalised the Luxembourg tax authorities for failing to verify the foreseeable relevance of the request and annulled the administrative fine which had been imposed on the requested third party.
To support these conclusions, both courts held as follows:
Any taxpayer or requested third party may object to an injunction from the tax authorities if it has good reason to believe that the request is irrelevant. Thus, following the decisions of the European Court of Justice and the Luxembourg Administrative Court of Appeal, the Luxembourg government recently decided to amend the Law of 25 November 2014. However, the bill has yet to be adopted.
For further information on this topic please contact Mathieu Laurent or Maurice Goetschy at Luther SA by telephone (+352 27484 1) or email (firstname.lastname@example.org or email@example.com). The Luther SA website can be accessed at www.luther-lawfirm.com.
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