A response to a collective information request from the tax investigation department cannot be refused on the grounds that data confidentiality was privately agreed upon. This was ruled by the Federal Fiscal Court (BFH) in its judgment of May 16, 2013 (II R 15/12).
In the case at issue, the tax office sought to identify which users had generated sales proceeds exceeding 17,500 Euros per year through an internet trading platform. The names and addresses of the traders, along with their bank details, were to be provided. Additionally, a statement of individual sales was to be submitted. VAT is due on turnover exceeding 17,500 Euros per year.
The collective information request was directed to the German sister company of a Luxembourg-based operator of an internet trading platform. The German-based GmbH had previously operated the internet trading platform itself. Following the transfer of the business to its Luxembourg-based sister company, it had undertaken to provide extensive data processing services for the latter, based on Luxembourg law. Moreover, it had committed not to disclose the data it processed to third parties.
Before the court, the plaintiff argued that it could not provide the requested information, as it was not authorized to do so under the binding instructions of its sister company. It further stated that it could not compel its sister company to consent to the data disclosure. Moreover, the data was not actually available to it, as it was stored on servers abroad that it neither owned nor managed or maintained.
The Fiscal Court (FG) subsequently granted the action and annulled the collective information request, reasoning that it was factually impossible for the plaintiff to provide the information. Upon the tax office's appeal on points of law, the BFH overturned the FG's judgment and remitted the case.
The FG – as is evident from the reasoning of its judgment – failed to make sufficient factual findings that access to the data was technically impossible for the plaintiff. The location of data servers abroad does not preclude data access. Therefore, the BFH was not bound by the FG's factual assessment. Instead, the FG primarily focused on the plaintiff's obligation to its sister company regarding data confidentiality. The BFH rejected this legal evaluation. Privately agreed confidentiality cannot successfully be invoked against a public law duty to provide information. Consequently, the FG's judgment could not be sustained.
The FG must now determine whether the plaintiff can actually access the data in question. The BFH also provided the FG with extensive guidance for the further handling of the case.
Source: Press release of the Federal Fiscal Court
Goldberg Attorneys at Law 2013
Attorney Michael Ullrich, LL.M. (Information Law)
Specialist Attorney for Information Technology Law
Email: info@goldberg.de
