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Berlioz: cross-border information requests

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From where I sit, it’s reasonably clear that tax authorities are cooperating increasingly with each other. There is spontaneous disclosure of information, and also increasing use of specific requests for information that’s ‘foreseeably relevant’ to ongoing enquiries. That’s both information held by the other tax authority, and information it could collect locally and pass on to the first authority conducting the enquiry. And there’s concern that as the new environment beds in, sometimes tax authorities overreach.
The CJEU effectively ruled in Berlioz Investment Fund SA (Case C-682/15) that if a taxpayer wants to control requests made under EU law, they need to engage with the authority conducting the enquiry. Once the cross-border request has been made, even EU law gives only limited power to control it. 
The French authorities were checking the tax position of a French company. They wanted information from its Luxembourg parent company, Berlioz. They asked the Luxembourg tax authority to get it, using the EU Administrative Cooperation Directive. Berlioz refused to comply with the request in full, saying that it included material that wasn’t foreseeably relevant to the French authorities’ enquiries. Berlioz were fined, and appealed against the fine. The questions were: 
  1. how substantively Luxembourg should test the information request; and 
  2. how far Berlioz was entitled to be involved and make representations.
The CJEU held that although Luxembourg should check the foreseeable relevance, this was limited to checking the explanation given by the French authorities, and confirming that based on this the relevant part of the request was not ‘manifestly devoid’ of reasonable relevance. In an appeal such as Berlioz’s, the Luxembourg court should take the same approach. And Berlioz would only be entitled to see the explanation if Luxembourg thought France’s original explanation was insufficient: in which case, Berlioz would be entitled (only) to the supplemental explanation given later.
Obviously requests between EU member states are a special case. What about other requests? They are even more dependent on local law in the state where the information’s being requested. Berlioz was about additional protections given under EU law. Where EU law doesn’t apply, even the limited right to the supplemental explanation might not be available. 
Issue: 1355
Categories: In brief