The advocate general of the Court of Justice of the European Union (CJEU) has delivered her opinion in case C-432/23, which pits the Luxembourg Bar Association against the Direct Tax Administration (Administration des Contributions Directes or ACD).

The case, brought by the Spanish tax authorities, dates back to June 2022. The director of the ACD issued an injunction to a law firm asking it to provide certain information relating to transactions carried out by one of its clients. The company refused, arguing that, as its client’s legal adviser, it was legally impossible for it to pass on such information, which was covered by its professional secrecy. In a registered letter dated 8 August 2022, the firm reaffirmed its position, specifying that its legal mandate in the case concerned by the ruling was not of a tax nature, but related exclusively to company law. This is an important clarification, as Luxembourg law has chosen to exclude consultations and representations in tax matters from the protection afforded by lawyers’ professional secrecy. The director of the ACD was not satisfied with this response and, in a decision dated 16 September 2022, imposed a fine on the firm for failing to comply with the injunction.

This decision was challenged before the Luxembourg Administrative Court by an appeal supported by the Luxembourg Bar Association. In a judgment dated 23 February 2023, the administrative court dismissed the appeal. The company, advised by Allen & Overy, and the Luxembourg Bar Association challenged this decision and in March brought the case before the Luxembourg Administrative Court.

The ACD cannot ask for everything

The administrative court then referred a question to the Court of Justice of the European Union for a preliminary ruling on whether or not legal advice from a lawyer in company law matters--in this case, with a view to setting up an investment company structure--falls within the scope of the enhanced protection of exchanges between lawyers and their clients granted by Article 7 of the Charter of Fundamental Rights of the European Union. Advocate General Juliane Kokott presented her conclusions on 30 May. It should be remembered that the role of the advocate general is to present, impartially and independently, a legal opinion, known as a “conclusion,” in the cases referred to them. This opinion sets out the state of the law, but is not binding on the court. Even if, in practice, in more than nine cases out of ten, this opinion is followed.

And for her, the answer is yes: “Legal advice provided by a law firm also falls within the scope of the protection of lawyer-client privilege guaranteed by Article 7 of the charter in company law matters.” In the advocate general’s view, an injunction issued by the competent tax authority against a law firm as part of an exchange of information on request--in which the authority requests all documentation relating to the advice given to a client in connection with certain transactions and their involvement in them--constitutes an infringement of the right to respect for communications between lawyer and client, guaranteed by Article 7 of the charter.

If the CJEU follows its advocate general, the administrative court should annul the ACD’s disclosure order and the fine.

This article in Paperjam. It has been translated and edited for Delano.