Belgium: Mandatory disclosure rules (DAC6) compatible with EU law (CJEU judgment)

The Court of Justice of the European Union (CJEU) on July 29, 2024, confirmed the validity of the mandatory automatic exchange of information for cross-border arrangements (DAC6).

The case identifying information is: Belgian Association of Tax Lawyers and Others (C-623/22). 

Background

This is the second time that the Belgian Constitutional Court raised questions to the CJEU concerning DAC6. In the first case (C-694/20), the CJEU in 2022 held that the obligation of a lawyer-intermediary to notify other non-client intermediaries involved infringed the right to respect for communications with their client under legal professional privilege.

DAC8 (Directive (EU) 2023/2226 of October 17, 2023) already implemented certain changes to DAC6. Under the amended notification rules, an intermediary bound by LPP should notify their client, if that client is an intermediary or, where there is no such intermediary, that client is the relevant taxpayer. These new rules must be transposed into national legislation by December 31, 2025.

Summary

In this case, the Belgian Constitutional Court extended the scope of the above question to other intermediaries with legal professional privilege (e.g., tax advisors .and accountants). In addition, it sought answers to questions of precision and clarity of the DAC6 terminology, as well as the proportionality of the DAC6 measure, in light of general principles and fundamental rights incorporated in EU law.

The CJEU concluded that the questions raised by the Belgian Constitutional Court did not reveal any issues that affected the validity of DAC6. More specifically, the court held:

• Taxes covered by DAC6: The fact that DAC6 does not limit the reporting obligation solely to the area of corporate taxes does not affect its validity in the light of the principles of equal treatment and non-discrimination.
• DAC6 terminology: The criticism with respect to the degree of precision and clarity of the DAC6 terminology (i.e., arrangement, intermediary, associated enterprise, hallmarks, 30-day period) is unfounded in light of the principles of legal certainty and legality in criminal matters.
• Legal professional privilege rules and notification: The conclusion in the first DAC6 case applies only with respect to lawyers within the meaning of the “Directive to facilitate practice of the profession of lawyer on a permanent basis in a Member State other than that in which the qualification was obtained” (Directive 98/5/EC of February 16, 1998.
• Proportionality of DAC6: While the reporting obligation constitutes interference in the right to respect for private life of taxpayers and intermediaries, that interference is proportionate and justified, particularly given that the reporting obligation does not imply a requirement to investigate and seek information, but only covers information that is available.

Read a July 2024 report prepared by the KPMG member firm in Belgium

Read an August 2024 report prepared by the KPMG EU Tax Centre