Tax investigations: access to bank accounts becomes more difficult

A change of stance by the Court of Cassation on tax assessments based on bank investigations. In two separate orders issued by the Tax Division – namely, Nos. 19956 and 19960 – the Court clarifies that authorisation to carry out bank investigations cannot be regarded merely as an administrative act, exempt from any form of substantive review, if it legitimises interference with a category of data, such as banking data, which the European Convention on Human Rights and recent case law regard as equivalent to the most private data and deserving of the highest level of protection. Thus, with regard to authorisation, the Court of Cassation requires ‘a minimum level of detail sufficient to ensure that the grounds, purpose and limits of the interference with the taxpayer’s banking data can be verified, even retrospectively’.

But what are the consequences in the event of a significantly deficient authorisation ? The Court of Cassation is clear in its statement of principle: ‘it follows that, where the authorisation – following a specific objection by the taxpayer – is found to be missing or unsuitable, the bank documentation obtained is inadmissible, as the tax assessment notice is invalid insofar as the tax claim is based on it”.

The issue at stake, therefore, is not so much the tax authorities’ ability to access bank data – the Constitutional Court itself has ruled in favour of this (judgement no. 260 of 2000) – but rather whether the exercise of this power is accompanied by sufficient safeguards, such as to ensure that it complies with the principles of legality, proportionality and accountability regarding the extent of such interference.

In fact, the information that the tax authorities obtain from credit institutions’ records undoubtedly constitutes personal data , even if it relates to professional or business activities. In this regard, the European Court of Human Rights has emphasised that details of taxable income from employment and capital, as well as those relating to taxable net assets, concern taxpayers’ private lives. Ultimately, accessing an individual’s bank account constitutes an intrusion upon their right to respect for private life and can only be justified if a number of safeguards are in place.

The new framework set out in at European level therefore requires the Court of Cassation to adapt its approach: whilst it is true that authorisation for bank investigations must be classified as a preparatory and organisational measure within the context of inter-agency relations – and not to be equated with a tax assessment – nevertheless, given the consequences, this authorisation must precede, in chronological terms, the request for access to the bank account and must subsequently be subject to scrutiny in terms of its grounds, scope and limits.