EHRM, 16-06-2015, nr. 75292/10

On 14 December 2007 the Deputy Minister of Finance (Staatssecretaris van Financiën) gave notice (kennisgeving) to the applicant company of the fact that he had been requested by the Spanish tax authorities to provide them with information on the relations, the links and transactions between the applicant company and a certain company in Spain as well as information on the bank accounts and the activities of the applicant company with a certain bank.

In the notice sent to the applicant company, the Deputy Minister stated that he had complied with this request on 18 August 2007 and 29 November 2007 respectively, pursuant to section 1(1) of the International Assistance (Levying of Taxes) Act (Wet op de internationale bijstandsverlening bij de heffing van belastingen); as appropriate, Article 4 of Council Directive 77/799/EEC of 19 December 1977 concerning mutual assistance by the competent authorities of the Member States in the field of direct taxation; and, as appropriate, Article 28 of the Convention on the prevention of double taxation between Spain and the Netherlands.

The notice, which had been sent pursuant to section 5(2) of the International Assistance (Levying of Taxes) Act, listed the information and the enclosures sent to the Spanish tax authorities. They included the shareholders' register (register van aandeelhouders) of the applicant company; the annual accounts (jaarrekeningen) of the applicant company for 2003 and 2004; bank statements; two e-mails; correspondence and other documents concerning the establishment of a certain company; a statement concerning the owners of shares in a certain company; and documents that concerned the sale of shares. Part of the information sent had been gathered in the course of an investigation into the applicant company carried out by the Netherlands Tax and Customs Administration (Belastingdienst) in August 2006 which had been announced to the applicant company beforehand.

On 17 December 2007 the applicant company lodged an objection (bezwaar) against the Deputy Minister of Finance's decision to provide the Spanish tax authorities with the requested information. It argued that the provisions stated by the Deputy Minister in his notice could not be relied on as a legal ground for his decision.

After a hearing had been held in the objection proceedings, the applicant company argued additionally that its privacy of correspondence had been violated by the provision of the documents in issue to the Spanish tax authorities.

On 29 August 2008 the Deputy Minister dismissed the applicant company's objection. Its argument in relation to the violation of the right to respect for correspondence was rejected because, firstly, the inquiry had been carried out to provide information under the International Assistance (Levying of Taxes) Act and not under the General Act on State Taxes (Algemene wet inzake rijksbelastingen); secondly, the applicant company had not invoked its right to privacy of correspondence during the inquiry in 2006; and lastly, the correspondence did not concern the applicant company.

On 23 September 2008 the applicant company appealed against the decision claiming, inter alia, that its right under Article 8 of the Convention had been violated because there had been no legal basis for the provision of the information to the Spanish tax authorities. It further argued that it might suffer damage as a result of the Deputy Minister's decision, that it would need a judicial decision in order to submit a claim for compensation, and that it had incurred legal costs in relation to the proceedings.

On 29 April 2009 the Dordrecht Regional Court (rechtbank) declared the appeal inadmissible. It held that the applicant company had no standing because it had not substantiated that it had suffered any loss as a result of the Deputy Minister's decision to supply the information to the Spanish tax authorities.

On 4 May 2009 the applicant company lodged a further appeal with the Administrative Jurisdiction Division (Afdeling bestuursrechtspraak) of the Council of State (Raad van State) arguing, among other things, that it had an interest in the examination of the lawfulness of the inquiry because the forwarding of its correspondence to the Spanish tax authorities constituted an interference of Article 8 of the Convention for which there had been no legal basis and the necessity of which in a democratic society was open to serious doubt. The applicant company suggested that this claim warranted an examination on the merits by a judicial authority.

Additionally, the applicant company argued that not only had prior judicial examination of the Deputy Minister's decision been impossible, owing to the fact that for ‘urgent reasons’ the notice had been given to the applicant company after the implementation of the Spanish request, but the Regional Court's judgment had also made retrospective judicial examination impossible. This lack of an effective remedy appropriate to its complaint under Article 8 of the Convention, so it argued, constituted a violation of Article 13 of the Convention.

On 16 June 2010 the Administrative Jurisdiction Division of the Council of State dismissed the applicant company's arguments and upheld the judgment of the Regional Court. In relation to the alleged violation of Article 8 of the Convention it held that the mere fact that the applicant company wanted a judgment of principle on the issue did not constitute a sufficient interest. It further held that the applicant company had neither substantiated any pecuniary damage nor specified any non-pecuniary damage allegedly suffered as a result of the Deputy's Minister's decision. The requirement of actual harm did not impinge on the applicant company's rights to the point of violating Article 13 of the Convention.

At the relevant time, the International Assistance (Levying of Taxes) Act, as applicable to the case before the Court, read as follows:

Section 1

Section 5

Section 8

Section 13

In its relevant parts, the Instruction on mutual international assistance in the levying of taxes (Voorschrift internationale wederzijdse bijstand bij de heffing van belastingen) promulgated on behalf of the Deputy Minister of Finance by the Director General of the Tax and Customs Administration (directeur-generaal Belastingdienst) (Official Gazette (Staatscourant) of 30 May 2002, no. 100, page 9) reads as follows:

As relevant to the case before the Court, and as in force at the time of the events complained of, Council Directive 77/799/EEC of 19 December 1977 provided as follows:

Article 1

General provisions

Article 2

Exchange on request

Article 4

Spontaneous exchange of information

Article 5

Time limit for forwarding information

Article 6

Collaboration by officials of the State concerned

In its judgment of 22 October 2013 (Jiří Sabou v Finanční ředitelství pro hlavní město Prahu (Case No. C-276/12), ‘the Sabou judgment’), the Grand Chamber of the Court of Justice of the European Union held as follows:

and ruled as follows:

Spain joined the European Communities on 1 January 1986 in accordance with the provisions of an Accession Treaty signed on 12 June 1985. The parties to the Accession Treaty, in addition to the Kingdom of Spain (by this time the successor to the State of Spain) were the existing Member States (including the Kingdom of the Netherlands) and the Portuguese Republic.

Appended to the Accession Treaty was an Act concerning the conditions of accession of the Kingdom of Spain and the Portuguese Republic and the adjustments to the Treaties, which, in its relevant part, provides as follows:

Article 2

The Court must therefore first determine that the applicant company's substantive complaint under Article 8 was ‘arguable’ before it can consider whether there has been a violation of Article 13.

The applicant company's position is that the undertaking of an investigation by the Netherlands Tax and Customs Administration at the request of their Spanish opposite numbers, followed by the transfer of the information thus obtained to the Spanish tax authorities without its prior knowledge, constituted an unwarranted interference with its rights under Article 8.

The Court is prepared to accept that there has been interference with the applicant company's rights under Article 8 (see Société Colas Est and Others v. France, no. 37971/97, § 42, ECHR 2002-III, and Bernh Larsen Holding AS and Others v. Norway, no. 24117/08, § 106, 14 March 2013). Such interference will constitute a violation of that Article unless it is ‘in accordance with the law’, pursues one or more of the ‘legitimate aims’ set out in the second paragraph, and is ‘necessary in a democratic society’.

The applicant company's essential argument, as the Court understands it, was that the transfer of its tax information to the Spanish tax authorities without its prior knowledge was not ‘in accordance with the law’ because the bilateral arrangement in place did not admit of the investigation by which this information was obtained.

The Court notes at the outset that the applicant company can derive no comfort from Article 28 of the 1971 Convention between the Government of the Kingdom of the Netherlands and the Government of the State of Spain for the avoidance of double taxation with respect to taxes on income and on capital (see paragraph 20 above). In becoming a Member State of the European Communities, Spain committed itself to the entire acquis communautaire, including Council Directive 77/799/EEC (see paragraphs 18 and 19 above). The parties to the pertinent international instrument, the 1985 Accession Treaty, include all States then Member States of the European Community including the Netherlands. Whether or not it be correct that Article 28 of the 1971 bilateral treaty opposes investigations by the respondent Party for the purpose of providing information to the Spanish tax authorities as the applicant company argues, the Court therefore finds, consistently with Article 30 § 3 of the Vienna Convention on the Law of Treaties, that that provision is superseded by Council Directive 77/799/EEC.

As is reflected in paragraph 1(1) of the International Assistance (Levying of Taxes) Act itself and sub-paragraph 3.4 of the Instruction on mutual international assistance in the levying of taxes (see paragraph 15 above), Council Directive 77/799/EEC was transposed into Netherlands domestic law by the International Assistance (Levying of Taxes) Act. That being so, the Court finds that the interference in issue has an adequate statutory basis and is thus ‘in accordance with the law’.

The Court does not doubt that the aim of ensuring that taxes are paid is a legitimate one for the purposes of Article 8 § 2, namely the economic well-being of the country (see Bernh Larsen Holding AS, cited above, § 135, and Rousk v. Sweden, no. 27183/04, § 135, 25 July 2013). In the Court's opinion, this is so even though the taxes concerned be due to Spain, the economies of the European Union Member States forming a unified whole.

The final question is whether the interference in issue could properly be considered ‘necessary in a democratic society’. The Court will consider it in the light of the interpretation given by the Court of Justice of the European Union to Council Directive 77/799/EEC.

The Court of Justice of the European Union, in its Sabou judgment, drew a distinction between the ‘investigation’ stage of tax proceedings, in which information may be obtained from the tax authorities of other European Union Member States, and the ‘contentious’ stage, which started when the taxpayer was sent the proposed adjustment and became entitled to what the Court of Justice of the European Union referred to as the ‘rights of the defence’ (loc. cit., paragraph 40). A request for information under Council Directive 77/799/EEC was part of the investigation and did not require either the requesting State or the requested State to inform the taxpayer (loc. cit., paragraphs 41–43).

While it may well be that the applicant company is not the ‘taxpayer’ and therefore not directly concerned by the Sabou judgment, that distinction cannot be decisive. For its part, the Court has accepted, in the context of ‘the interests of national security’ and ‘public safety’ and ‘the prevention of crime’, that investigative methods may have to be used covertly (see, among other authorities, Klass, cited above, § 48; Malone v. the United Kingdom, 2 August 1984, § 81, Series A no. 82; and Leander v. Sweden, 26 March 1987, § 66, Series A no. 116), even against persons who are not themselves objects of investigation or surveillance (see Greuter v. the Netherlands (dec.), no. 40045/98, 19 March 2002; and by implication, Weber and Saravia v. Germany (dec.), no. 54934/00, ECHR 2006-XI, and Liberty and Others v. the United Kingdom, no. 58243/00, 1 July 2008). It considers that the same applies in matters of taxation: it cannot be a requirement of Article 8 of the Convention that prior notice of lawful tax investigations or exchanges of tax-related information be given to all persons potentially implicated.

The Court must therefore find that the applicant company had no ‘arguable claim’ under Article 8.

It follows from the conclusion set out in paragraph 45 above that Article 13 cannot be construed in the sense that the applicant company was entitled to receive prior notice of the transfer of tax information to the Spanish authorities. To that extent, the application is accordingly incompatible ratione materiae with the provisions of the Convention within the meaning of Article 35 § 3 (a) and must be rejected in accordance with Article 35 § 4.

For the remainder, the Court notes, firstly, that the applicant company's complaints that the Administrative Jurisdiction Division restricted the possibility of awarding compensation to pecuniary damage only and had disregarded its privacy interests (paragraph 21 above, under (a) and (c)) lacks a basis in fact (see paragraph 13 above); and secondly, that the applicant company had the benefit of ex post facto review at two instances before administrative tribunals meeting the requirements of Article 6 of the Convention. Any remaining complaints under Article 13 are accordingly manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.

For these reasons, the Court, unanimously,

Declares the application inadmissible.

Done in English and notified in writing on 9 July 2015.

Marialena Tsirli

Deputy Registrar

Josep Casadevall

President