End of Professional Confidentiality: Accountants and Tax Advisors Must Report on Their Clients

The Court of Justice of the European Union (CJEU) has confirmed that accountants and tax advisors, among others, can no longer rely on professional secrecy to protect their clients.

In the news: The new ruling by the Court of Justice is bad news for accountants, tax advisors, notaries and lawyers. The European Legal Foundation upheld the so-called DAC-6 directive in a ruling on July 29, L’Echo reports.

• What exactly does that mean? It means that these professionals will be required to report aggressive tax planning schemes. In other words, they must report those who exploit the complexities of the tax system or the inconsistencies between different tax systems to reduce their tax burden.

proportionate and justified action

review: In 2011, EU Member States introduced the principle of “enhanced administrative cooperation” to combat fraud and tax evasion.

• This directive was subsequently revised in 2018 and transposed in Belgium in 2019 under the name DAC 6, to strengthen the fight against creative tax optimization, particularly among multinational companies.
• But questions about privacy have been raised. This concern was brought to the attention of the European Court of Justice by the Belgian Constitutional Court. With its new ruling, the ECJ addresses these concerns by ensuring that the measure is proportionate and justified in order to combat aggressive tax planning.
• With its new ruling, “the ECJ confirms in particular that the DAC 6 building does not violate the principle of legal certainty or the right to privacy,” explains Denis-Emmanuel Philippe, partner at Bloom and lecturer at ULiège, to L.Echo.

Exception for lawyers

but: The Court grants one exception to the reporting obligation among intermediaries subject to professional secrecy: lawyers.

• The exception applies because of the confidentiality of the lawyer-client relationship, which is particularly protected because of the lawyer’s special position in the legal system. This exception also applies to other professions licensed to provide legal representation.

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