29 October 2020

A tax dawn raid almost always takes place unannounced. It is thus of the utmost importance that you are well informed of your rights and obligations and that you are thoroughly prepared. Here we highlight three recurring topics addressed in recent case law: (i) the assistance of an attorney, (ii) authority to represent the company vis-à-vis the tax administration, and (iii) legal professional privilege regarding correspondence (applicable to attorneys).

It is disputed whether and under which circumstances a suspect can invoke the Salduz doctrine, according to which he/she is entitled to the assistance of an attorney during a first interrogation, in the context of a tax dawn raid. The Court of Cassation ("Hof van Cassatie"/"Cour de Cassation") and the Courts of Appeal of Brussels, Ghent and Liège have already ruled that this is not ipso facto the case when dealing with income tax, VAT or customs and excise duties. Recent case law of a first-degree court has adhered to this viewpoint. Consequently, the tax authorities do not, in principle, have to ensure that the taxpayer is assisted by an attorney during the dawn raid, but they cannot prohibit or prevent the attorney from assisting his/her client either. This is why you should find an arrangement allowing your attorney to arrive on site immediately in the event of a tax dawn raid.

Your business is at risk of being fined when an employee refuses to allow the tax authorities access to the premises where you carry on your professional activity because there was no one present who could represent your business. The Brussels Court of Appeal confirmed an administrative fine imposed on a company in such a situation. The issue is broader than the mere proper representation of your company vis-à-vis the tax authorities: you should also prevent unauthorised staff from taking positions or handing over documents which could bind your company and which often require the necessary contextualisation. It is therefore important to prepare in advance a step-by-step guide in case of a tax dawn raid or tax audit, to clearly define the authority of the staff members and to give them the necessary guidelines.

Finally, both the Constitutional Court and the Council of State recently explicitly reaffirmed that the professional secrecy of attorneys (also known as "legal professional privilege") covers both assistance during legal proceedings and legal advice. Moreover, the Constitutional Court reaffirmed that the information exchanged between an attorney and his/her client is confidential and may not be used by third parties (e.g. the tax authorities). It is therefore crucial to prevent such confidential information from being copied or retained during the dawn raid by keeping it separated (just as for private information). If this information cannot be filtered out at the moment itself, you must insist on making the necessary arrangements with the tax authorities to ensure that the information can be separated before the tax authorities proceed with their investigation.

These issues are just a few of many aspects you need to take into consideration during a tax dawn raid and for which you can prepare in advance. Eubelius is always there to coach you in these matters and to assist you during an actual tax dawn raid.