Belgium: DAC6 legislation held invalid, questions raised to CJEU (Constitutional Court decision)

The Constitutional Court on 15 September 2022 in a case brought by Belgian lawyers and the Institute of Tax Advisors and Accountants invalidated provisions in the domestic legislation implementing the mandatory automatic exchange of information for cross-border arrangements (DAC6), that provided that an intermediary bound by a professional privilege sanctioned by criminal law cannot invoke such privilege with respect to the periodic reporting of marketable arrangements.

The court also asked the Court of Justice of the European Union (CJEU) whether DAC6 infringes:

• The principle of equality and non-discrimination in Article 6(3) of the EU Treaty and Articles 20-21 of the EU Charter of Fundamental Rights, to the extent that the DAC6-reporting obligation in Belgium does not only apply to corporate income tax but also to other taxes, including direct taxes other than corporate income tax as well as registration duties
• The principle of legality in criminal cases and the general principle of legal certainty and the right to respect for private life in Article 49(1) and Article 7 of the EU Charter of Fundamental Rights and Article 8 of the European Convention on Human Rights, to the extent that the terms which are used to determine the scope and application of the DAC6-reporting obligation (e.g., “arrangement” (including “cross-border arrangement,” “marketable arrangement,” and “customized arrangement”), “intermediary,” “participant,” “associated enterprise,” “cross-border,” the different “hallmarks” and the “main benefit test”) do not seem to be sufficiently clear and precise
• The principle of legality in criminal cases and the right to respect for private life in Article 49(1) of the EU Charter of Fundamental Rights and Article 7 of the European Convention on Human Rights, to the extent that the trigger date for the 30 days reporting period does not seem to be sufficiently clear and precise
• The right to respect for private life in Article 7 of the EU Charter of Fundamental Rights and Article 8 of the European Convention on Human Rights, when a Member State, which provides for an exemption from DAC6-reporting obligations based on a national professional privilege, is required to oblige intermediaries to notify without delay other intermediaries (or in their absence, the relevant taxpayer) about the intermediary’s reporting obligation, to the extent that the consequence of this notification requirement is that an intermediary who is bound by professional privilege sanctioned by criminal law under that Member State’s legislation, is obliged to disclose information acquired in the course of exercising his/her profession, to another intermediary that is not his/her client
• The right to respect for private life in Article 7 of the EU Charter of Fundamental Rights and Article 8 of the European Convention on Human Rights, to the extent that the DAC6-reporting obligation would lead to an interference with this right of the intermediary and the relevant taxpayer, which is neither reasonable nor proportional to the aimed objectives and which is not essential regarding the objective of safeguarding a good functioning of the internal market

These questions are in addition to the those raised by the court in the case of C-694/20 which is still pending. For prior coverage, read TaxNewsFlash

Read a September 2022 report prepared by the KPMG member firm in Belgium