The Court of Justice of the EU Expands Protection of Professional Secrecy in Taxation

New CJEU Ruling Clarifies Professional Secrecy in Tax Matters

The new judgment of the Court of Justice of the European Union of 26 September 2024, Case C-432/23 confirms the validity of Directive 2011/16/EU on the exchange of information in tax matters, establishing that any national provision that excludes advice on tax matters from the scope of professional secrecy violates Article 7 of the Charter of Fundamental Rights of the European Union.

The origin of the judgment relates to a dispute between a law firm in Luxembourg and the Luxembourg tax authorities. The Spanish authorities requested the Luxembourg tax authorities to ask the law firm for documentation and information relating to certain transactions carried out by a Spanish company to which they provided services. The firm refused to provide the requested documentation under the professional secrecy rules governing the legal profession, stating that they had not acted as tax advisors to the company but as its lawyers.

The question at issue is whether or not the measures proposed in the Directive exclude tax advice from the scope of the professional secrecy of lawyers. It is also questioned whether the requests for information made to these professionals violate the provisions of Articles 7 and 52 of the European Convention for the Protection of Human Rights and Fundamental Freedoms. What the CJEU establishes is that indeed, the professional secrecy that protects lawyers extends to all the services they provide, including legal advice in tax and commercial matters. However, this does not invalidate the content of Directive 2011/16 on the exchange of information, since what this legislation establishes is that Member States are subject to the obligation to exchange information among themselves, however, it authorizes them not to respond to a request for information when this is contrary to their internal regulations.