Data Protection Rights and Tax Information Exchange in the European Union: An Uneasy Combination
| Author | Marcel Schaper |
| Date | 01 June 2016 |
| Published date | 01 June 2016 |
| DOI | 10.1177/1023263X1602300308 |
| Subject Matter | Article |
514 23 MJ 3 (2016)
DATA PROTECTION RIGHTS AND
TAX INFORMATION EXCHANGE
IN THE EUROPEAN UNION:
ANUNEASY COMBINATION
M S*
ABSTRACT
Tax administrations in the European Union exchange an ever-increasing amount of
information on taxation matters on a man datory and automatic basis. is development
gives rise to data protection concer ns. e aim of this article is to examine how the se data
protection concerns have been recognized by the Union legislator in the recent and fast
process towards a comprehensive automatic exchange of tax data of private taxpayers in
the European Union. It will be shown that the combination of data protection rights and
exchange of tax information legi slation proves to be an uneasy one as the Union legislator
appears reluctant to provide for data protection safeguards in Union legislation on tax
information exchange.
Keywords: administrative cooperation between tax authorities; data protection;
exchange of information; Europe an Union; tax law
§1. INTRODUCTION
In combating tax underreporting (namely tax evasion and tax avoidance), states have
intensi ed their international administrative cooperation in taxation matters through
exchange of information (EOI) and automatic EOI (AEOI) in particula r.1 Although EOI
is a legitimate policy instrument to safeguard billions of Euros in public revenue, little
* Assistant Profe ssor, Maastricht Centre for Tax ation and the Instit ute for Transnational and Eu regional
cross border cooper ation and Mobility, Maast richt University, Maastric ht, the Netherlands.
1 See M. Stewar t, ‘Transnationa l Tax Information Exchange Networks: Steps towards a Global ized,
Legitimat e Tax Administrat ion’, 4 World Tax Journa l (2012), p.152–179.
Data Protection R ights and Tax Information E xchange in the Europe an Union:
AnUneasy Combinat ion
23 MJ 3 (2016) 515
(academic) attention has yet been paid to the balance of that public aim w ith the private
in ter es t of pro te ct ion of p er son al (ta x) d at a. 2 As th e Eu ro pea n D at a Pr ote ct io n Su pe rv is or
(EDPS) state d in 2010: ‘awarene ss of data protec tion require ments in relat ion to taxat ion
matters is still in its initial phase.’3 In 2015, the annual conference proceedings of the
International Fiscal Association corroborated that on the basis of 41 national branch
reports: ‘ e branch reports provide little evidence that any attention has been paid by
countries that are promoti ng AEOI to these data protection issues.’4
ree devel opmen ts mea n gr eate r scr utin y mus t be pa id to data prote cti on in relat ion
to EOI.5 First, the EOI standard in taxation matters has shi ed from EOI on request
(EOIR) to AEOI. is shi in standards leads to tax administrations making more
exchanges in a more systematic manner. As a direct consequence, the mandatory bulk
processing of tax data through AEOI requires personal data protection by regulatory
design. Second, there is an explicit international and EU policy to subject increasingly
more data items (such as nancial account information and tax rulings) to AEOI.
Accordingly, the number of situations involving AEOI will increase. Given the larger
scale of AEOI, the risk of data protection violations will also rise. ird, one can
arguably ask whet her the growing social and polit ical acceptance of imposing measures
against tax underreporting needs to b e e ectively counterbalanced by the protection of
private rights of taxpayers in a state governed by the rule of law. As the scope and legal
force of anti-avoidance and anti-evasion mea sures, including EOI, increase, the scope of
taxpayer rights, such a s data protection rights, should be reassessed accordi ngly.
is ar tic le’s goa l i s mo re m ode st t ha n su ch a fu ll rea ss ess men t an d it ai ms t o ex am ine
the reluctance with which data protection issues have been recognized by the Union
legislator in the recent and fast process toward comprehensive AEOI of tax data in the
European Union. To that end, there is a brief outline of the methods of EOI regarding
tax data in Section 2. Section 3 explains how EOI of tax data may fall within the scope
of EU data protection law. Section 4 describes the begi nnings of the uneasy road to data
protection in EU legislation concerning tax information exchange. Section 5 covers the
data protection issues in relation to the signi cant subsequent extension of AEOI to
nancial account information. Section 6 accounts for the most recent developments in
2 See J.M. Calderón, ‘Taxpayer Protection within the E xchange of Informat ion Procedure Bet ween
State Tax Administrations’, 28 Intertax (2000), p.462–475; X. Oberson, International Exchange of
Information in Tax Matte rs. Towards Global Transparency ( Ed gar Elg ar, 2 015) ; A. Rus t, ‘ Dat a pr ote cti on
as a fundame ntal right’, in A. Ru st and E. Fort (eds.), Exchan ge of Information and Ba nk Secrecy (Kluwer
Law Internationa l, 2012).
3 Opinion of the European Data Protect ion Supervisor on t he proposal for a Counc il Directive on
administ rative cooperation in t he eld of taxation, [2010] OJ C 101/01.
4 P. Baker and P. Pistone, ‘General Report’, in International Fiscal Association, e Practical Prote ction
of Taxpayers’ Fundamental R ights (IFA Cahiers Vol. 100b, Sdu, 2015), p.65.
5 See A. Cock eld, ‘Protecting Tax payer Privacy Rig hts under Enhanced Cros s-Border Tax Information
Exch ange : Towar d a Mul tila tera l Tax payer B ill of Ri ghts’, 42 University of B ritish Columbia Law Re view
(2010), p.420–471.
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