Tax information injunctions in Luxembourg: Berlioz, État luxembourgeois v B, the Luxembourg Bar case and the Cour administrative

The judgments

The question

When another Member State asks Luxembourg for tax information, the procedure is the same each time. The foreign authority sends a request to the Administration des contributions directes (ACD), the Luxembourg direct tax authority; its director, if he does not already hold the information, sends the person who holds it a décision d’injonction, an information order, by registered letter. The addressee must hand over the information “in its entirety, accurately and without alteration” within one month. If it does not, the director may impose an administrative fine of up to €250,000. In the cases reviewed here the addressees were a bank, companies, a law firm and a private individual. The taxpayer under investigation abroad is often not the addressee at all.

Three questions have occupied the Luxembourg courts and the Court of Justice since 2015. First, who may go to court, and when: only the addressee who refuses and is fined, or also an addressee who wants to challenge the order before complying, the foreign taxpayer whose data are sought, and third parties named in the request? Secondly, how far may a Luxembourg court look behind the order: is “foreseeable relevance”, the test in Directive 2011/16/EU, a condition of legality, and how intensively is it checked, including for requests that do not name the taxpayer? Thirdly, what may an addressee withhold, in particular a law firm asked for its client file? This review follows the answers in the order they were given, because each later ruling changed the position the earlier ones had set out, and the Luxembourg legislature amended the 2014 procedural law in between.

The legal framework

Directive 2011/16

Directive 2011/16/EU on administrative cooperation in the field of taxation replaced Directive 77/799/EEC. Article 1(1) defines its subject matter as cooperation “with a view to exchanging information that is foreseeably relevant to the administration and enforcement of the domestic laws of the Member States concerning the taxes referred to in Article 2”. Under Article 5 the requested authority must communicate to the requesting authority “any information referred to in Article 1(1) that it has in its possession or that it obtains as a result of administrative enquiries”. Article 6(3) requires it to follow the same procedures as for its own enquiries, and Article 18(1) requires it to use its information-gathering measures even where it has no domestic interest in the information.

Recital 9 explains the standard: “foreseeable relevance” is intended to provide for exchange of information “to the widest possible extent” while clarifying that Member States “are not at liberty to engage in ‘fishing expeditions’ or to request information that is unlikely to be relevant to the tax affairs of a given taxpayer”. Article 20(2) lists the minimum content of a request: “(a) the identity of the person under examination or investigation; (b) the tax purpose for which the information is sought”. Article 16(1) makes exchanged information subject to official secrecy. Article 17 sets the limits: the requesting authority must have exhausted its usual sources (paragraph 1); there is no obligation to carry out enquiries contrary to the requested State’s legislation (paragraph 2); and the provision of information “may be refused where it would lead to the disclosure of a commercial, industrial or professional secret” (paragraph 4). Article 25 subjects all exchanges to data protection law.

The Law of 29 March 2013

Luxembourg transposed the directive by the Law of 29 March 2013. Article 6 reproduces the duty to communicate foreseeably relevant information; Article 7(1) and (3) reproduce Article 6(1) and (3) of the directive; Article 18(1), (2) and (4) reproduce the limits in Article 17(1), (2) and (4); Article 20(2) reproduces the minimum content of a request (as the Cour administrative noted in 2019). A later Article 6bis, which according to the Cour administrative in 2026 transposes Article 1, point 2, of Directive (EU) 2021/514, now defines foreseeable relevance. In the wording quoted by that court (our translation):

(1) For the purposes of a request referred to in Articles 5 and 6, the information requested is foreseeably relevant where, at the time the request is made, the requesting authority considers that, in accordance with its national law, there is a reasonable possibility that the information requested will be relevant to the tax affairs of one or more taxpayers, identified by name or otherwise, and justified for the purposes of the investigation. (2) In order to demonstrate the foreseeable relevance of the information requested, the requesting authority provides at least the following information to the requested authority: (a) the tax purpose of the information requested; and (b) the specification of the information required for the administration or enforcement of its national law.

The Law of 25 November 2014

The procedure in Luxembourg is governed by the Law of 25 November 2014 laying down the procedure applicable to the exchange of information on request in tax matters. It is not among our translations and is cited here in the wording quoted in the judgments. Article 1(1) applies it to requests made under, among others, the Law of 29 March 2013. Article 2(1) authorises the tax administrations to request information “of any kind” from its holder; Article 2(2) obliges the holder to provide it within one month of notification of the injunction, together with the unaltered documents on which it is based. Article 3(3) provides for the injunction by registered letter, and Article 3(4) provides that the request itself “may not be disclosed” and that the injunction contains only what the holder needs to identify the information requested. Article 3(5) gives the administration its ordinary investigative powers in addition. Article 5(1) provides for the fine of up to €250,000 if the information is not provided within one month.

In its original wording, the law shut the courts out in two ways. Article 3(1) limited the administration’s review to formal regularity: the request was in order if it stated the legal basis, the requesting authority and the other information required by the conventions and laws. And Article 6(1) provided that no appeal lay against the request for exchange of information or against the injunction. The only remedy was the action under Article 6(2) to have the fine varied, brought before the Tribunal administratif (the first-instance administrative court) within one month, with suspensive effect, and with an appeal to the Cour administrative (the administrative court of appeal) within 15 days.

The Law of 1 March 2019, which entered into force on 9 March 2019, changed both points. As quoted by the Court of Justice in État luxembourgeois v B (paras 22 and 23), Article 3(1) now adds that the administration is to ensure “that the requested information is not devoid of any foreseeable relevance in view of the identity of the person concerned by the request …, the identity of the holder of the information, and the requirements of the tax procedure in question”, and Article 6(1) opens an action for annulment of the injunction before the Tribunal administratif to the holder of the information. The Cour administrative in 2026 quoted a further part of Article 6(1): the tribunal has access to the request and to any supplementary requests and replies; the State must set out separately in its reply the information on the identity of the person concerned and the tax purpose; and the tribunal may order the substance of the request to be communicated to the applicant to preserve the rights of the defence, while respecting confidentiality.

Professional secrecy in the General Tax Law

Article 177 of the General Tax Law of 22 May 1931 (Abgabenordnung, AO), as reproduced in the Court of Justice’s judgment in Case C‑432/23 (para. 21), allows lawyers to refuse information “in respect of information entrusted to them in the exercise of their profession” (Article 177(1), point 3). Article 177(2) then excludes that right “in respect of facts of which they became aware in connection with advice or representation in tax matters, unless an affirmative or negative response to questions would put their clients at risk of criminal prosecution”. That exclusion is what the Luxembourg Bar challenged.

Berlioz: the addressee may challenge the order behind the fine (C‑682/15)

Facts and the Luxembourg proceedings

Berlioz Investment Fund SA, a Luxembourg company, received dividends from its French subsidiary Cofima SAS free of French withholding tax. On 3 December 2014 the French tax administration, doubting that the exemption met the conditions of French law, sent a request under Directive 2011/16 (para. 22). On 16 March 2015 the director ordered Berlioz to provide, among other things, information on its place of effective management, its staff, any contract with Cofima, its shareholdings and their financing, the book value of the Cofima shares, and “the names and addresses of its members, the amount of capital held by each member and the percentage of share capital held by each member” (para. 23). On 21 April 2015 Berlioz answered everything except the questions about its members, which it said were not foreseeably relevant to whether Cofima’s dividends were subject to withholding tax (para. 24). A reminder of 22 April 2015 set a deadline of 29 April 2015 (Opinion, point 26). On 18 May 2015 the director imposed the maximum fine of €250,000 (para. 25).

Berlioz brought an action against the fine on 18 June 2015 and asked the Tribunal administratif to rule on whether the injunction was well founded. On 13 August 2015 the tribunal reduced the fine to €150,000 but, relying on Article 6(1) of the 2014 Law, refused to examine the injunction (paras 26 to 28). Berlioz appealed on 31 August 2015, invoking Article 6(1) ECHR. The Cour administrative raised Article 47 of the Charter of its own motion and, by a judgment of 17 December 2015, referred six questions: whether the Charter applies; whether Article 47 can be relied on; whether the court must have unlimited jurisdiction to review the injunction; whether foreseeable relevance is a condition of the request; whether a review limited to formal regularity is compatible with EU law; and whether the request must be produced to the court and to the addressee (para. 31).

The Advocate General

Advocate General Wathelet (10 January 2017) found the Charter applicable, pointing out that it was “particularly strange” for Luxembourg to deny that a law applying to requests under the transposing Law of 29 March 2013 implemented EU law (point 46). He considered that Article 47 applies wherever the Charter applies, without a separate subjective right (points 63 to 68), and that the court hearing the fine must be able to examine the legality of the injunction (point 80). The review could be limited: the court should verify “on the basis of a brief examination” that the request shows a link between the information, the taxpayer, any third party and the tax objective, and a deficiency had to be “manifest” (point 111). He agreed with the Commission that this required only a “brief and formal verification, of a factual nature” (point 105) and thought the limits in Article 17 were matters of discretion for the requested authority, not for the court (points 106 and 107). On access, he went further than the Court would: the request had to be communicated to the court and to the addressee, and it was for the administration to prove that disclosure would damage the cooperation or another interest (point 137).

The judgment

The Grand Chamber answered in five steps.

The Charter applies (paras 32 to 42). Articles 5, 18 and 22(1)(c) of the directive require Member States to take the measures needed to obtain requested information; a pecuniary penalty that gives the holder a sufficient incentive to respond is such a measure, even though the directive does not mention penalties and the penalty is laid down in a law not adopted to transpose it (paras 38 to 41).

The addressee may challenge the order (paras 43 to 59). Several governments relied on Sabou (C‑276/12) to argue that the directive confers no rights on individuals. The Court answered that protection against arbitrary or disproportionate intervention by public authorities in the private sphere of any natural or legal person is a general principle of EU law, which an addressee such as Berlioz can invoke against the information order and the penalty (paras 51 and 52). A court reviewing the fine must therefore be able to examine the legality of the order (para. 56, referring to point 80 of the Opinion). Sabou concerned the taxpayer’s right to take part in the exchange between administrations, not a remedy against a penalty imposed on the holder (para. 58).

Foreseeable relevance is a condition of legality (paras 60 to 74). The words describe “a necessary characteristic of the requested information” (para. 63). Drawing on the OECD commentary on Article 26 of the Model Tax Convention, there must be “a reasonable possibility that the requested information will be relevant” (para. 67). It is for the requesting authority, which conducts the investigation, to assess relevance, after exhausting its usual sources under Article 17(1); it has a discretion, but “cannot request information that is of no relevance to the investigation concerned” (paras 70 and 71).

The review is real but limited (paras 75 to 89). The requested authority must in principle trust the requesting authority and cannot substitute its own view of the usefulness of the information (para. 77), but its review “is not limited, therefore, to a brief and formal verification of the regularity of the request” (para. 82). The requesting authority must give an adequate statement of reasons, and the requested authority may ask for more (paras 80 and 81). The same limits apply to the court:

Consequently, the courts must merely verify that the information order is based on a sufficiently reasoned request by the requesting authority concerning information that is not — manifestly — devoid of any foreseeable relevance having regard, on the one hand, to the taxpayer concerned and to any third party who is being asked to provide the information and, on the other hand, to the tax purpose being pursued.

On Article 17, the Court held that some of its limits “could be taken into account in determining the legality of a request”, but that they have no bearing on foreseeable relevance, and Berlioz had not relied on them (para. 88).

Access to the request (paras 90 to 101). The court must have access to the request and may ask the requested authority for the additional information it obtained (para. 92). The addressee has no right to the whole request, which remains secret under Article 16 (paras 93 to 95). It suffices, in principle, that he has the minimum information in Article 20(2): the identity of the taxpayer and the tax purpose. If the court seeks additional information, it must pass it on to the addressee, taking account of any confidentiality (para. 100). On this point the Court departed from its Advocate General. Costs were for the national court (para. 102).

Berlioz back in Luxembourg: Cour administrative, 26 October 2017, no. 36893Ca

After the ruling the ACD asked the French authorities, on 29 May 2017, for additional information on foreseeable relevance, which arrived on 2 June 2017 (p. 14). The judgment of the Cour administrative applies Berlioz to the case that gave rise to it, and it is stricter than the ruling it applied.

Access to the documents. The court held that the 2014 Law should provide a special procedure: the State lodges the request with the registry, only the judges see it, and the government representative reproduces in his reply the parts relating to the taxpayer’s identity and the tax purpose; supplementary information from the requesting State should be treated the same way (pp. 10–11). Since the law did not provide this, the court would have disapplied Article 3(4) and ordered production. It did not need to, because the government representative lodged the French request and the supplements at the hearing. Having compared them with what Berlioz already knew, the court found that they added nothing calling for a further response and ordered no further disclosure (pp. 11–12).

Article 6 disapplied, but the law survives. Article 6 of the 2014 Law excluded any direct action and did not allow review of the injunction in the action against the fine, and Luxembourg law does not allow an individual decision that cannot be challenged directly to be attacked by way of exception (p. 15). To that extent Article 6 was contrary to Article 47 and had to be disapplied. Berlioz’s further argument that the whole law was tainted by a “consubstantial defect” failed: the defect concerned only the remedies and was detachable from the rest of the law (pp. 15–16).

Article 3(1) disapplied. The parliamentary documents (doc. parl. 6680) showed that Article 3(1) was intended to confine the director to a formal check. Combined with Article 6(1), it excluded both administrative and judicial review of foreseeable relevance and was therefore incompatible with Articles 1(1) and 5 of the directive and Article 47 of the Charter; the same went for certain of the Article 17 limits (p. 17). The court added that the check of foreseeable relevance is also a substantive guarantee protecting the holder against arbitrary or disproportionate orders, and that carrying it out before the injunction is issued is “an essential protection whose breach affects the validity of the injunction” (pp. 17–18).

No review had been carried out. The injunction itself said only that the formal regularity of the request had been verified, and the State had argued until 2017 that the director’s role was purely formal; only in its memorial of 12 September 2017 did it claim that the director had checked relevance (p. 18). The court refused to carry out the check itself on the basis of the documents now produced:

While the administrative judge may substitute a justification for a decision taken by the competent authority, it cannot make good, at the litigation stage, the absence of an examination on the merits.

The injunction of 16 March 2015 was therefore invalid, the fine was annulled in its principle, and the judgment of 13 August 2015 was reversed. Berlioz’s claim for a procedural indemnity (indemnité de procédure) of €179,652.65 was rejected as it was not inequitable to leave those costs with it; the costs of both instances were charged to the State (p. 19).

Who may sue: État luxembourgeois v B and Others (C‑245/19 and C‑246/19)

Facts and first instance

Both cases arose from Spanish requests about F.C., a natural person resident in Spain under investigation there (para. 24). Following a request of 18 October 2016, the director on 16 June 2017 ordered company B to provide, for 1 January 2011 to 31 December 2014, its contracts with two named companies concerning F.C.’s rights, “any other contract” concluded or taking effect in that period in relation to F.C., the related invoices and payments, and details of the bank accounts holding the cash shown in its balance sheet (paras 25 and 26). Following a second request of 16 March 2017, the director on 29 May 2017 ordered Bank A to provide, for the same period, the holders, signatories, openers, statements and beneficial owners of a given account, information on any later account funded from it, and statements of financial assets held by F.C. in companies B and D or other companies she controlled, or of which she was beneficial owner (paras 35 and 36). Both orders stated that no appeal lay against them.

On 17 July 2017 company B brought an action against its order (case C‑245/19), and F.C. with companies B, C and D brought one against the bank’s order (case C‑246/19), the bank intervening. Applications for a stay were rejected by orders of the president of the tribunal of 21 July 2017 (Cour administrative, nos. 41486Ca, p. 3, and 41487Ca, pp. 3–4). By judgments of 26 June 2018 the Tribunal administratif declined jurisdiction over the main claim for variation, held that Article 6(1) of the 2014 Law was contrary to Article 47 of the Charter and had to be disapplied, admitted the alternative action for annulment, and annulled both orders in part as not foreseeably relevant (paras 29 and 39). The State appealed on 24 July 2018 without contesting the tribunal’s view of Article 47. The Cour administrative raised the jurisdiction point of its own motion by an avis of 23 November 2018 and, by judgments of 14 March 2019, referred questions on whether Articles 7, 8, 47 and 52(1) of the Charter preclude excluding any remedy for the holder (C‑245/19) and for the taxpayer and third parties (C‑246/19), and on the foreseeable relevance of orders defined by criteria rather than by individual documents (paras 34 and 42).

Meanwhile the Law of 1 March 2019 opened an action for annulment to the holder. Advocate General Kokott pointed out that this did not make the reference in C‑245/19 inadmissible, since the action had been brought earlier (point 47).

The Advocate General

Advocate General Kokott (2 July 2020) proposed that all three categories could challenge the order. For the addressee, the order is itself an onerous act, not a preparatory step, and “it is unreasonable to require a person concerned to violate an administrative order in order to be able to review the legality of the order indirectly”, all the more so since the decision to impose a fine is discretionary (points 55 to 58). For the taxpayer, the collection of data from the bank is an interference with Article 8 of the Charter separate from the later tax assessment; an action against an assessment that may never be issued cannot prevent that interference (points 65 and 71 to 74). The third-party companies could rely on Article 7, and a damages action against the State was not an effective remedy (points 89 to 107).

On foreseeable relevance she proposed a stricter standard than the Court adopted. Later changes to the OECD commentary could not automatically change the meaning of a directive adopted earlier (points 118 to 125). By analogy with Commission inspection decisions in competition law, the requesting authority had normally to state the facts it was investigating, or concrete suspicions, and the duty to give reasons grew with the scope and sensitivity of the information (points 134 to 138). Without concrete evidence, a request for all of the taxpayer’s accounts and unspecified accounts of connected persons would be an impermissible fishing expedition (point 143).

The judgment

The holder (paras 56 to 69). Relying on Berlioz, the Court held that the addressee of an order can invoke the general principle of protection against arbitrary or disproportionate intervention (paras 57 to 59). The EU legislature had not itself limited the right to a remedy, so Member States may limit it only within Article 52(1) of the Charter, which requires respect for the essence of the right (paras 60 to 65). That essence includes access to a court competent to examine all relevant issues of fact and law, and a person “cannot be compelled to infringe a legal rule or obligation or to be subject to the penalty attached to that offence” in order to reach a court (para. 66). Under the 2014 Law the holder could reach a court only by refusing to comply and being fined:

It follows that, when confronted with a decision ordering that information be provided which is arbitrary or disproportionate, such a person is unable to access a court without first infringing that decision by refusing to comply with the order it contains and thus being subject to the penalty attached to non-compliance with that decision. Accordingly, that person cannot be regarded as enjoying the benefit of effective judicial protection.

Legislation excluding a direct action by the holder therefore does not respect the essence of Article 47 (para. 69).

The taxpayer (paras 70 to 93). F.C. holds the rights under Articles 7 and 8, and the disclosure of her data to an authority is an interference with them, so she is entitled to an effective remedy (paras 72 to 75). But the exclusion of a direct action is provided by law and respects the essence of the right, because she is under no obligation and risks no penalty, and because the order is adopted at the non-contentious stage of the investigation (para. 81, citing Sabou). If the information is used for a correction or adjustment decision, she can challenge that decision and, in that action, the order and the way the evidence was obtained (paras 82 and 83). Her remedy under Article 79(1) of the GDPR is not affected (para. 84). The exclusion pursues the objective of combating international tax fraud and evasion and is necessary and proportionate, given the deadlines in Article 7 of the directive (paras 85 to 93).

Third parties (paras 94 to 104). The companies concerned can invoke the general principle even though disclosure of their legal, banking or financial information “can in no way be regarded as going to the heart of those activities” (para. 96). But they too are under no obligation and risk no penalty, and an action for a finding of infringement and compensation, in which the court can review the measure, ensures effective protection (paras 99 to 102). The exclusion of a direct action is again proportionate (para. 104).

Foreseeable relevance (paras 106 to 124). Because the first questions were answered in the affirmative only for the holder, the Court answered the second question in C‑245/19 alone. A request serving a fishing expedition would be an arbitrary or disproportionate intervention and could not be foreseeably relevant (paras 113 and 114). But an order that states the identity of the holder, the taxpayer and the period, and covers contracts, invoices and payments concluded or made by the holder during the period and connected with the taxpayer, “clearly concerns information which is not manifestly devoid of any foreseeable relevance” (para. 118). That some of the information may turn out to be irrelevant at the end of the investigation, which by definition starts without full knowledge, does not make it manifestly irrelevant (paras 121 to 123). The Court did not take up the Advocate General’s proposal that concrete evidence of the facts under investigation be required, nor the referring court’s question about later versions of the OECD commentary.

Company B: Cour administrative, 12 January 2021, no. 41486Ca

On the remedy, the Cour administrative applied the primacy of EU law (Costa, Simmenthal, Factortame) and disregarded the original Article 6(1), confirming that the tribunal had rightly admitted the action for annulment (pp. 6–7). On the merits, its review was limited: company B had filed no reply and no cross-appeal, so only the part of the order annulled at first instance was before the court (p. 7). The court repeated its Berlioz finding that the original Article 3(1) was incompatible with the directive and the Charter, but held, unlike in 2017, that the director had in fact checked foreseeable relevance despite the “unfortunate wording” of the order, given that the order postdated Berlioz and that the State’s first-instance account had not been contested (p. 11).

The tribunal had annulled the request for “any other contract” and the related invoices because Spain had given no indication that other contracts existed. The Cour administrative held that the Court of Justice had overturned that reasoning: a request need not designate the documents precisely if they are delimited by the three common elements of being concluded or received by the holder, falling within the period and being linked to the taxpayer (p. 12). It noted that the Court of Justice had not answered its question about the 2014 changes to the OECD commentary but held that it was bound to apply the interpretation given (p. 12). The tax purpose, establishing F.C.’s worldwide income for 2011 to 2014, and the link with her artistic activity were enough (p. 13). The State’s appeal succeeded; the action for annulment was dismissed in full; the costs of both instances were split equally (p. 13). The Luxembourg judgment uses different letters for the two contracting companies (“D” and “E”) from those used in the Court of Justice’s judgment (“E” and “F”).

The bank order: Cour administrative, 12 January 2021, no. 41487Ca

The second judgment applied the other half of the ruling. Companies B, C (an investment company with variable capital having the status of a specialised investment fund) and D were third parties whose data would be disclosed if the bank complied; F.C. was the taxpayer. Following the Court of Justice, the original Article 6(1) remained valid in their regard, and the action of the three companies was inadmissible (pp. 9–10).

For F.C. the court added its own reading. The Court of Justice had referred by analogy to WebMindLicenses (C‑419/14), a VAT case, whereas direct taxation is a national competence; the court therefore read the ruling, in the light of Sabou, as meaning that it is the requesting State’s recourse to exchange under the directive that obliges it, under Articles 47 and 52(1) of the Charter, to give the taxpayer an action against the final assessment in which the legality of the exchange can be raised (p. 10). It did not hide its reservations:

Nevertheless, for the Court, the fact remains that an incidental challenge to the final tax assessment necessarily offers the taxpayer concerned by an investigation in the requesting State and by a request for exchange of information from that State fewer procedural guarantees than a direct action against the decision of the competent authority of the requested Member State to act on that request and to require the holder on its territory to communicate the information requested, the protected information having in fact been disclosed to the authorities of both Member States well beforehand.

The State had said that F.C. could raise the point in Spain but said nothing about whether Spanish law actually allowed it; F.C. had not argued that she had no such remedy (p. 11). Her action was also inadmissible. The State’s appeal succeeded, the tribunal’s judgment was reversed, and the respondents were ordered to pay the costs of both instances (p. 11).

Group requests and the minimum information: the case of company (L)

Facts and first instance

On 27 April 2017 the French tax administration sent a request under the directive and the Franco-Luxembourg tax convention of 1 April 1958. By an injunction of 28 February 2018, which stated that the formal regularity had been checked and “the manifest absence of foreseeable relevance” excluded, the director asked company (L), a Luxembourg public limited company, for the names and addresses of its shareholders and of its direct and indirect beneficial owners “whatever the interposed structures”, the distribution of its capital, and a copy of its share registers, for 2012 to 2016 (Cour administrative, 23 May 2019, no. 42143C, pp. 2–3). The French company named as the person concerned was a real estate company that, according to the State, was fiscally transparent and wholly owned by a Dutch company, itself wholly owned by (L); (L) also held a property in France directly (pp. 4 and 10–11). French law, the French authorities explained, requires natural persons holding French real estate directly or indirectly to declare it, and the French company had not cooperated (p. 4). The 2019 judgment calls the French company “F”; the 2022 judgment calls it “(AB)”.

Company (L) lodged a formal administrative appeal under § 237 AO on 5 April 2018, which the director declared inadmissible on 4 June 2018; an action against that decision was pending before the tribunal (p. 3). After a reminder of 13 June 2018 the director imposed a fine on 6 August 2018, the amount of which is blanked in the published texts. By judgment of 18 December 2018 (no. 41673) the Tribunal administratif annulled the fine: it saw a contradiction between the person named as the subject of the request, the French company, and the stated purpose, which was to identify unknown natural persons, and concluded that the information was manifestly devoid of foreseeable relevance (p. 7). The State appealed.

The referral of 23 May 2019

The Cour administrative first rejected the tribunal’s reasoning. Read as a whole, the request concerned both companies, and an enquiry into French reporting duties triggered by indirect holdings could validly extend to identifying the natural persons who were the companies’ shareholders and beneficial owners (pp. 8–9). It then raised of its own motion a different problem. The French authorities had not ticked the box for natural persons in section B1 of the request form and had identified the natural persons only as “the shareholders and beneficial owners” of (L) (p. 9). Under Article 20(2)(a) of the directive, as read in Berlioz, the identity of the taxpayer is information the requesting authority “must” supply; read in its ordinary sense (the court cited the Grand Robert dictionary), identity means individualisation excluding any confusion (pp. 9–14).

The State relied on the 2012 update of the OECD commentary on Article 26 (points 5.1 and 5.2), under which a request may concern a group of taxpayers not identified by name if it describes the group, the facts, the law and why the group is thought to be non-compliant. The court doubted that this could be read into a directive proposed in 2009 and adopted in 2011, given the specific wording of Article 20(2)(a), which has no counterpart in Article 26 of the Model; it distinguished N Luxembourg 1, where the concept of beneficial owner was identical in the directive and the Model, and asked whether the EU legislature could have delegated the interpretation of binding EU law to an international organisation (pp. 14–17).

The State also argued that the questions were premature, because Directive 2015/849 had been transposed by the Law of 13 January 2019 establishing a register of beneficial owners and Directive 2018/822 was to apply from 1 July 2020, so that such information would in future be collected through other channels. The court rejected that argument: the legality of the injunction had to be assessed at 28 February 2018, when neither text had any effect on (L) (p. 17). (On the register, see our review of the Register of Beneficial Owners after WM and Sovim.)

Finally, (L) raised a point that Berlioz had left open. Under the 2014 Law a holder had to decide whether to comply or to refuse and litigate without knowing the minimum information on the tax purpose, which it learned only in the court proceedings; if it lost, it would owe both the information and the fine (pp. 18–19). The court referred three questions: whether a request defining the taxpayers only by their status as shareholders and beneficial owners meets Article 20(2)(a); if so, whether the requesting authority must show a targeted enquiry into a limited group justified by founded suspicions of a specific breach; and whether Article 47 requires that a holder who loses be given a suspensive period to comply before the fine becomes payable (pp. 20–21). Costs were reserved.

The ruling in Case C‑437/19, as applied by the Cour administrative

The Court of Justice ruled on 25 November 2021 in Case C‑437/19. That judgment is not among the sources of this review; what follows is what the Cour administrative quoted from it in its judgment of 31 March 2022, no. 42143Ca. The Court of Justice held that the identity of the person under investigation is an element the request must contain (para. 48 of C‑437/19), that it is an autonomous concept of EU law, and that it covers “not only the name and the other personal data, but also a set of distinctive qualities or characteristics” enabling identification (para. 61), so that it may refer to “a limited group of persons identifiable on the basis of a common set of qualities or characteristics that distinguish them” (para. 62) (pp. 7–8, our translations of the French text quoted). For such requests the requesting authority must, first, describe the group as fully as possible, secondly, explain the specific tax obligations of its members and, thirdly, set out the reasons why they are suspected of the omissions or breaches investigated (para. 67) (p. 9). The Court of Justice also held that the addressee of an injunction must, once its legality has been confirmed by the court, be allowed to comply within the period originally provided by national law without the penalty being maintained; only if it does not comply within that period does the penalty become payable (para. 98) (p. 15). The Cour administrative later read the same judgment as requiring the minimum information on the tax purpose to be given in the injunction itself (see the 2026 judgment below).

The final judgment: Cour administrative, 31 March 2022, no. 42143Ca

The court observed that the Court of Justice had not addressed its questions on the OECD commentary, but that by relying on the 2012 commentary to interpret a 2011 directive it had “implicitly but necessarily” endorsed, at least to some extent, a dynamic interpretation (p. 10). It then applied the three conditions:

• The group. Being shareholders and beneficial owners of (L) is a single common quality rather than a set of qualities, but read flexibly, as the Court of Justice required for Article 20, it distinguished the persons sufficiently. The French authorities had given all the characteristics available to them; that some shareholders might be legal persons did not matter, since they could lead to the natural persons behind them (pp. 8 and 10–11).
• The obligations. The French authorities had described the reporting duty of natural persons holding French real estate directly or indirectly. They did not have to cite the provision or its exemptions, because the requesting authority is “sovereign and responsible” for interpreting its own law and the Luxembourg courts do not check its legal basis (pp. 11–12).
• The suspicion. The suspicion that no declaration had been filed for the property was sufficient (pp. 12–13).

The court did not depart from the Court of Justice’s own view that the reasoning of the French request “appears to satisfy” the requirements, but added a warning for future requests:

The Court nevertheless considers that, following the clarifications provided by the judgment of the Court of Justice of 25 November 2021, it will henceforth be for the competent authority of a requesting Member State to provide, in a request for exchange concerning a defined group of taxpayers who are not individually identified, sufficiently explicit indications as to the tax obligations specifically concerned and the reasons why the members of the group are suspected of having committed omissions or breaches of those obligations.

The argument that France had not exhausted its usual sources failed. Article 18(1) of the Law of 29 March 2013 makes exhaustion a condition, subject to the proviso “without running the risk of jeopardising the achievement of its objectives”; the French authorities had stated in the request form that they had exhausted their sources and that the French company “did not cooperate”, and nothing contradicted that (pp. 13–14).

On the suspensive period, the court found a gap: Article 5 of the 2014 Law, in its original and current wording, makes the fine payable as soon as the director finds non-compliance and provides no period to comply after a court has confirmed the injunction (p. 16). Applying primacy, it filled the gap itself: (L) was given one month from notification of the judgment to supply the information, and the fine would not be due if it did so (pp. 16–17). The State’s appeal was partly successful: the tribunal’s annulment was reversed and (L)’s action dismissed, subject to that period. On (L)’s cross-appeal the court awarded it a procedural indemnity of €2,000 for both instances, because it had legitimately challenged an injunction that raised questions requiring a reference and had been barred by the 2014 Law from challenging it directly (p. 17). The reasons say the costs should be split two thirds to (L) and one third to the State; the operative part divides them equally (p. 18).

Lawyers’ professional secrecy: F SCS and the Luxembourg Bar (C‑432/23)

Facts and procedure

On 28 June 2022, acting on a Spanish request, the ACD ordered F SCS, a Luxembourg law firm organised as a limited partnership, to provide for 2016 to 2019 “all available documentation (engagement letter, contracts with the client, reports, memoranda, communications, invoices etc.)” on its services to the Spanish company K in connection with the acquisition in 2015 of 80% of the shares in a Spanish company and the acquisition of another Spanish undertaking in 2018, together with a detailed description of the transactions, its involvement and the identity of its interlocutors (paras 22 and 23). F replied on 8 July 2022 that it had acted as legal counsel to K’s group and was bound by professional secrecy, and on 8 August 2022 that its instructions concerned company law, not tax (paras 24 and 26). On 19 August 2022 the ACD again ordered production, on pain of a fine; on 16 September 2022 it imposed one (paras 27 and 28).

F brought actions against the fine on 18 October 2022 and against the decision of 19 August 2022 on 25 November 2022; the Luxembourg Bar (Ordre des avocats du barreau de Luxembourg, OABL) intervened. On 23 February 2023 the Tribunal administratif dismissed the action for annulment, and with it the intervention, as inadmissible ratione temporis. On appeal by F and the OABL, the Cour administrative held on 4 May 2023 that both were admissible and, by decision of 11 July 2023, referred six questions (paras 29 to 32 and 41). They asked whether company-law advice falls within the protection of Article 7 of the Charter, whether the order interfered with it, whether Directive 2011/16 is valid given that, beyond Article 17(4), it contains no rule on lawyers in exchange on request, whether national law governs the matter through Article 18(1), and what national law must contain: respect for the essence of confidentiality, an enhanced check that the requesting State has exhausted its sources, recourse to a lawyer only as a last resort, and a case-by-case balancing (para. 41).

The Advocate General

Advocate General Kokott (30 May 2024) rejected Austria’s objection to jurisdiction and found that legal professional privilege is protected for “any legal advice”, so that it is impossible to draw distinctions between fields of law “as Luxembourg has done in this case” (points 25 and 26); legal persons can rely on Article 7 (point 28). The directive was valid, since Article 17(2) and (4) leave Member States the room needed to protect privilege, and the interference was attributable to Luxembourg law (points 40 to 42), though she doubted the compatibility of the first sentence of Article 8ab(5) with Article 7 (point 44). On justification she found the abstract determination of an “inviolable essence” difficult and preferred proportionality (point 52): enquiries in the requested State are subordinate to those in the requesting State, the requested authority must at least obtain confirmation that domestic enquiries have been exhausted before turning to a lawyer, disclosure may be sought from a law firm only exceptionally, and a request for “all available documentation” was of doubtful proportionality (points 55 to 62). She also noted the Commission’s doubts whether such a request was foreseeably relevant at all (point 35). She proposed that legislation excluding tax advice from privilege, with no case-by-case balancing, is contrary to Article 7 (point 64).

The judgment

The Second Chamber decided without a hearing. It held that it had jurisdiction, because a Member State that issues an information order to execute a request under Section I of Chapter II of the directive implements EU law (paras 43 to 45, citing État luxembourgeois v B, paras 45 and 46).

Scope of the protection (paras 46 to 52). Following Orde van Vlaamse Balies (C‑694/20), Article 7 protects the confidentiality of legal advice “both with regard to its content and to its existence” (para. 49). Hence:

It follows from the foregoing considerations that, whatever the area of law to which it relates, legal advice given by a lawyer enjoys the strengthened protection guaranteed by Article 7 of the Charter to communications between lawyers and their clients. It follows that a decision such as that at issue in the main proceedings constitutes an interference with the right to respect for communications between lawyers and their clients guaranteed by that article.

Validity of the directive (paras 53 to 61). In exchange on request, the directive governs only the obligations between Member States; it imposes no reporting obligation on holders, unlike the automatic exchange under Article 8ab, and Article 17(2) and (4) do not determine national information-gathering procedures (paras 56 to 58). The EU legislature has left it to the Member States to ensure that those procedures comply with the Charter, and each Member State must guarantee the strengthened protection of lawyer-client communications and ensure that any limitation is “provided for by law” (paras 59 and 60). Nothing affected the directive’s validity (para. 61).

Article 177(2) AO (paras 62 to 75). Rather than weighing proportionality, as its Advocate General had proposed, the Court went to the essence of the right. Article 177(2) means that none of the content of lawyer-client exchanges in tax matters, other than what would expose the client to prosecution, can be kept secret (para. 68), and the order applied it so that none of F’s exchanges with its client could be kept secret (para. 69). Orde van Vlaamse Balies was distinguishable, because the notification duty there involved only a limited lifting of confidentiality and no disclosure of content without the client’s consent (para. 71). Adopting point 50 of the Opinion, the Court held that Article 177, by excluding almost an entire branch of law from the protection, renders it “devoid of its very substance in that branch of law”; the order, by demanding the whole file on advice that F said was not about tax at all, extended the infringement further (para. 72). Article 177 and its application here “far from being confined to exceptional situations, infringe the essence of the right guaranteed by Article 7 of the Charter” (para. 73), an interference that cannot be justified (para. 74). Article 7 and Article 52(1) therefore preclude such a decision (para. 75). Costs were for the referring court (para. 76).

The present position: Cour administrative, 13 October 2026, no. 54938C

The most recent judgment shows how the case law is now applied under the amended 2014 Law. On 4 December 2025 Luxembourg received a request from Belgium based on the directive, the Belgium–Luxembourg tax convention of 17 September 1970 and the Multilateral Convention on Mutual Administrative Assistance in Tax Matters of 25 January 1988 (p. 13). On 7 January 2026 the director ordered Ms (A), resident in Luxembourg, to answer by 17 February 2026 seventeen questions for 2018 to 2023 on her economic activities, any permanent establishment, home and centre of vital interests, employment income and the 183-day rule, benefits in kind, other income, activities as an employer, premises, staff and subcontractors, and her Luxembourg bank accounts with balances, interest, tax withheld and statements (pp. 2–3). The injunction said only that the tax purpose was “to verify your tax situation in Belgium” and that the formal regularity had been checked and manifest irrelevance excluded (p. 2). She brought an action for annulment on 4 February 2026; on 18 May 2026 the Tribunal administratif (no. 54237) held it admissible but unfounded and ordered her to pay costs (p. 4). Her appeal argued inadequate reasoning, no real check by the ACD, lack of foreseeable relevance (Belgium, she said, was fishing to support a fraud procedure under Article 333, third paragraph, of the Belgian Income Tax Code that she was contesting before the Belgian courts) and breaches of proportionality, equal treatment, the rights of the defence and legitimate expectations (pp. 4–10).

Reasoning in the injunction. The tribunal was right that the request itself is not disclosed and that, under Articles 3(4) and 6(1), only its substance is communicated if the tribunal orders it; the Belgian origin could be deduced from the injunction, and the origin and legal bases were confirmed in the State’s reply (pp. 13–14). On the tax purpose, the court drew the line between Berlioz and C‑437/19: since the latter, and as the Cour administrative had held on 25 January 2024 (no. 49787C), the minimum information on the tax purpose must be given as reasoning in the injunction itself (pp. 14–15). “Verify your tax situation in Belgium” was too vague; the real object, determining her tax residence, emerged only from the State’s reply at first instance (p. 15). But in line with its established case law (citing nos. 47733C and 47734C of 17 November 2022), insufficient reasoning does not void the injunction:

In the absence of an express provision in the Law of 25 November 2014 making annulment of an injunction the sanction for failure to state the tax purpose on which it is based or for insufficient reasoning, the Court has consistently held that this defect does not lead to the annulment of the injunction, but that the one-month time limit for bringing an action laid down in Article 6(2) of the Law of 25 November 2014 begins to run only from the moment when the holder of the information has received sufficient communication of the tax purpose justifying the foreign request for exchange and therefore the injunction issued in response to it.

The court added that the failure is also a ground for ordering the State to pay a procedural indemnity, whatever the outcome, if the holder asks for one, a circumstance it found not met here (p. 15).

The ACD’s check. The injunction stated that the check had been made, the request named Belgium and its legal bases and stated that Belgium had exhausted its usual sources; the ACD did not have to doubt that statement, and the court does not review the facts or the requesting State’s compliance with its own law (pp. 15–16).

Foreseeable relevance. Following its case law since 2024 on Article 6bis of the Law of 29 March 2013, the court checks whether the description of the tax purpose suffices to justify the requesting authority’s assessment that there is a reasonable possibility of relevance; an injunction is a fishing expedition if that description “manifestly” does not (p. 17). The court’s role is limited to checking the coherence of the requesting authority’s explanations; the persons concerned cannot prove in Luxembourg that those explanations rest on inaccurate facts or an unlawful procedure, a debate that belongs before the authorities of the requesting State, unless they produce “circumstantiated elements” that seriously undermine the request in essential respects (p. 17, citing no. 44825C of 1 October 2020). Belgium had explained that Ms (A) was suspected of declaring a fictitious Luxembourg address while living in Belgium with her two children and their father in a villa owned by a company she managed, rent-free; that a police search showed a lifestyle beyond her declared income; that her marriage to her late husband appeared to be one of convenience; and that the estate declaration appeared undervalued (p. 18). Against that background, the questions on her establishment, presence, income, employer activities, social ties and bank accounts were relevant to her centre of vital interests and residence, and their scope was not disproportionate; the request to narrow nine of the questions and the period was rejected (pp. 18–19).

The Belgian proceedings. Her pending Belgian action against the notification of indications of fraud had no suspensive effect and was not, until decided in her favour, a circumstantiated element; the reported decision not to prosecute was unsupported by any official document and, as she herself conceded, did not prevent a tax audit; the regularity of the Belgian procedure was for the Belgian courts alone (pp. 19–20). The remaining grounds fell with these (p. 20). The appeal was dismissed, her claim for a procedural indemnity of €1,000 per instance, made without supporting argument, was rejected given the outcome, and she was ordered to pay the costs of the appeal (pp. 20–21).

How the judgments fit together

The right to sue moved from the fine to the injunction, and then into the statute. Berlioz gave the addressee review of the injunction only as a defence against a fine. État luxembourgeois v B held that this was not enough: the addressee cannot be required to break the law to reach a court. The Luxembourg courts had already reached the same result in the first instance cases of 2018 by disapplying Article 6(1), and the legislature opened the action for annulment by the Law of 1 March 2019, before the Court of Justice ruled. The Cour administrative’s judgment of 2017 also anticipated the procedural regime now found in Article 6(1): the request lodged with the court only, the State setting out the identity and tax purpose in its reply, and disclosure of the substance at the court’s discretion.

The taxpayer and third parties stayed outside. The Court of Justice rejected its Advocate General’s view that the taxpayer and third parties must also have a direct action. In Luxembourg that means that only the holder can challenge the order (41487Ca); the taxpayer must wait for an assessment in the requesting State and challenge the evidence there. The Cour administrative said openly that this offers fewer guarantees, because the data have already been transferred by then, but applied the ruling. The sources show no Luxembourg legislation going further.

The review standard was stated strictly and applied generously. Berlioz rejected a merely formal check but limited the court to manifest irrelevance. The Cour administrative in 2017 turned the administrative check into an essential guarantee and annulled the fine because it had not been carried out, refusing to perform it in the State’s place. Later decisions were less demanding. In 41486Ca the court accepted, on an uncontested account, that the director had checked relevance despite identical wording in the order. État luxembourgeois v B accepted orders for unspecified documents defined by holder, period and link with the taxpayer, rejecting the Advocate General’s demand for concrete evidence. C‑437/19, as applied in 42143Ca, accepted requests that do not name the taxpayer at all, provided the group, the obligation and the suspicion are described. Article 6bis of the Law of 29 March 2013, with its reference to taxpayers “identified by name or otherwise”, now writes that position into the statute, and the Cour administrative has built its current test on it. The doubts the court expressed in 2019 about reading later OECD commentary into the directive were never answered by the Court of Justice and have in practice been overtaken.

The minimum information moved from the courtroom to the injunction. Berlioz held that the addressee was entitled in principle to know the taxpayer’s identity and the tax purpose, and the Cour administrative saw in 2019 that under the 2014 procedure holders learned the purpose only after being fined and suing. After C‑437/19, as the Cour administrative reads it, the purpose must be stated in the injunction itself. But the sanction is not annulment: the time limit for an action does not start, and the State may have to pay a procedural indemnity. A holder who refuses and loses gets a period to comply before the fine bites, which in the (L) case the court created itself because the 2014 Law did not provide it.

Professional secrecy is a separate and harder limit. Foreseeable relevance asks whether the requesting State may want the information; C‑432/23 asks whether Luxembourg may take it from a lawyer at all. The Court of Justice located the duty to protect privilege in national procedure rather than in the directive, and found the Luxembourg rule in Article 177(2) AO incompatible with the essence of Article 7 of the Charter, a stronger finding than the proportionality analysis proposed by the Advocate General. The ruling does not say what a compliant national rule would look like; the Advocate General’s points on exhaustion, last resort and case-by-case balancing (points 55 to 63) are the only guidance in these materials. Nor does it decide whether the order for “all available documentation” was foreseeably relevant, a doubt the Advocate General recorded (point 35).

What it means in practice

For the addressee of an injunction. The order can now be challenged directly by an action for annulment before the Tribunal administratif under Article 6(1) of the 2014 Law. The time limit is one month under Article 6(2), but according to the Cour administrative it runs only once the tax purpose has been sufficiently communicated. Holders no longer need to refuse and be fined in order to obtain review; the judgments of 2017 and 2022 show what that route cost in time.

What the injunction must contain. The injunction must state the tax purpose of the foreign request itself, not only in the State’s later pleadings. A vague statement will not void it, but it keeps the time limit open and supports a claim for a procedural indemnity, which must actually be requested and argued.

What a court will and will not examine. The court checks that the request is coherent and that the information is not manifestly irrelevant to an identified taxpayer, or a described group, and to the stated purpose. It does not check the facts alleged by the requesting State or its compliance with its own procedural law. Arguments that the foreign audit is time-barred or that the foreign fraud notification is unlawful must be taken to the courts of the requesting State; in Luxembourg they count only as “circumstantiated elements” once they have succeeded, or if they otherwise seriously undermine the request.

Broad requests. Requests for unspecified contracts, invoices and payments connected with the taxpayer within the period, for all accounts and statements, or for a company’s shareholders and beneficial owners can all pass the test. A challenge is more likely to succeed where the description of the purpose does not connect the questions to the investigation at all, or where a group request fails to describe the group, the obligation or the suspicion. The Cour administrative has said that it expects group requests to be explicit on the last two points.

Lawyers and their clients. Advice in any field, company law included, is protected by Article 7 of the Charter as to its content and its existence. An order to a law firm for its whole client file, based on the exclusion of tax advice in Article 177(2) AO, infringes the essence of that right. Firms receiving an injunction should identify which material is legal advice given in the course of a specific instruction and assert privilege for it in writing. The Advocate General’s view that information obtained in a purely commercial capacity is not equally protected (point 60) was not taken up by the Court.

Taxpayers abroad and related companies. A taxpayer or a related company whose data are requested from a bank or another holder has no direct action in Luxembourg against the order (41487Ca). The taxpayer’s protection lies in the action against any correction or adjustment decision in the requesting State and in the remedies under the GDPR; third parties concerned are left with an action for a finding of infringement and compensation (C‑245/19, paras 83, 84 and 101 to 104).

If the holder refuses and loses. Under the 2022 judgment the holder must be given the period originally allowed (one month) to comply after the court confirms the injunction, and the fine is not due if it complies. The amount of a fine is itself open to review in the action for variation: the Tribunal administratif reduced Berlioz’s fine from €250,000 to €150,000, before the Cour administrative annulled it altogether.

Documents to keep. The injunction and its envelope or registered-mail receipt (the date of notification starts the one-month periods); all correspondence with the ACD, including written explanations for any information not supplied, which the injunction in the 2026 case expressly required; the State’s reply in any litigation, where the identity and tax purpose are set out; for law firms, the engagement letter and a record of the scope of each instruction; and evidence of any proceedings in the requesting State on which a challenge may later rely.

Status

The Berlioz case ended with the annulment of the fine on 26 October 2017; the two Spanish cases ended on 12 January 2021 with the dismissal of company B’s action and the inadmissibility of the other actions; the (L) case ended on 31 March 2022 with the confirmation of the fine subject to a one-month period to comply. The sources do not show whether (L) supplied the information within that period. In the F SCS case, the Court of Justice’s judgment of 26 September 2024 returned the matter to the Cour administrative; the follow-up judgment is not among the sources, and nor is any amendment of Article 177 of the General Tax Law. The judgment of 13 October 2026 in no. 54938C dismissed the appeal.

The legislative changes visible in the sources are the Law of 1 March 2019, which introduced the review of foreseeable relevance into Article 3(1) and the action for annulment into Article 6(1) of the 2014 Law, and Article 6bis of the Law of 29 March 2013, which transposes the definition of foreseeable relevance from Directive (EU) 2021/514. As the Cour administrative noted in 2022, Article 5 of the 2014 Law still provides no period to comply after an injunction is confirmed; the courts supply it. The Law of 25 November 2014 is not among our translations, and the provisions cited above are quoted as they appear in the judgments.

Provisions discussed

The judgments reviewed here interpret legislation that is not yet among our translations; the provisions are cited in the text.

Related reviews

How to cite

Case law review by BCA EU, for information. Quotations from the judgments are our translations; only the original texts published by the courts are authoritative. Judgments checked on the official sources on 30 October 2026. This page is not legal or tax advice.