In 2017, the Luxembourg tax authorities, on the basis of a request for exchange of information from the Spanish tax authorities, issued two injunctions against a Luxembourg company and a Luxembourg bank in order to oblige them to provide a certain amount of information on a Spanish taxpayer.
Following the Berlioz judgment (C-682/15) of the Court of Justice of the European Union (“ECJ") which ruled against Luxembourg due to the absence of an effective remedy allowing a review of the legality of an injunction (please refer to our legal alert dated June 16th 2017), two claims were brought before the lower administrative court (tribunal administratif) against the injunctions. In the first instance, the lower administrative court partially annulled both decisions on the grounds that the information requested by Spain could not be qualified as “reasonably relevant”.
In the appeal pending, the higher administrative court (Cour Administrative) adopted a prudent approach, by pointing out the differences between the present case and the Berlioz case. Unlike the case at hand, Berlioz concerned a claim that was brought by a holder of information against the penalty decision issued for non-compliance with the injunction. Since the ECJ has not yet expressed an opinion on the compliance with EU law of an absence of a direct recourse against an injunction, as well as on the possibility for the taxpayer or an interested third party to bring a claim against a decision issued in this context, the Court considered it useful to request a preliminary ruling from the ECJ to clarify the EU law requirements of an effective remedy. In essence, the Luxembourg Court asked (i) whether the right to an effective remedy should be interpreted as obliging Member States to provide in their domestic law for a direct recourse against injunctions which would not only enable the holder of information, but also the taxpayer concerned, respectively a third party concerned, to act against it, and (ii) whether the Directive 2011/16, providing for exchange between Member States, should be interpreted in an evolving manner, taking into account all interpretative changes made by the OECD to the notion of "reasonably relevant " after the adoption of the Directive, knowing that the notion of "reasonably relevant " in the Directive is based on the one developed by the OECD.
Depending on the answers given by the ECJ, Luxembourg might be obliged to further amend the law of 1 March 2019 providing for the procedure applicable to the exchange of information on request in tax matters, since the recently introduced right to appeal is limited to holders of information and not granted to the taxpayer effectively concerned or to interested third parties.