Tipping of Justitia’s Scale: The Compatibility of Mandatory Disclosure for Intermediaries with the Right against Self-Incrimination and the Right to Confidentiality

Abstract: Human rights are the basis by which the dignity of the human being is guaranteed. This is especially important in the relationship between persons and governments, who on the one hand have great power in form of legislation over these persons, but on the other hand must ensure the protection of human rights. A problem may arise when these two opposing forces of the State collide,1 as the individual will bear the consequences of that collision. In the instance of the recently adopted amendment of the Directive on Administrative Cooperation (‘DAC6’) this very tension between the States’ power to legislate may lead to a conflict with its obligation to protect human rights. The aim of this paper is to establish whether the new mandatory disclosure rules for intermediaries under the DAC6 are compatible with human rights, specifically the right against self-incrimination (nemo tenetur) and the right to confidentiality. Using the legal dogmatic research method, the law as it stands will be explained in order to ensure that the interrelationship between the DAC6, the right against self-incrimination and the right to confidentiality are properly understood. The DAC6 as adopted on 25 May 2018 will then be analysed in light of the European Convention of Human Rights and Charter of Fundamental Rights of the European Union. This analysis will be supported by case law of both the Court of Justice of the European Union and the European Court of Human Rights. The implications for both intermediaries and taxpayers will be examined. Based on the findings of this paper, the research question can be answered in the affirmative. The DAC6 mandatory disclosure rules are compatible with the right against self-incrimination and the right to confidentiality. This was assessed by identifying the main implications for intermediaries and taxpayers respectively. Legal professional privilege (‘LPP’) can only be claimed when the intermediary is a professional bound by LPP and offering his or her services to the client in criminal proceedings. The taxpayer can theoretically claim nemo tenetur when the tax authorities are investigating a taxpayer for criminal charges. In both instances, the paper concludes that the DAC6 does not automatically cast doubt on the legality on the taxpayer’s actions when implementing a reportable cross-border arrangement.