Do internet platforms have to support the tax investigation ?

The response to a request for collective information from the tax investigation office cannot be refused on the grounds that the confidentiality of the data was agreed under private law. This was decided by the Federal Fiscal Court (Bundesfinanzhof, BFH) in its ruling of 16 May 2013 (II R 15/12).

In the case in question, the tax office wanted to know which users had achieved sales revenues of more than 17,500 euros per year via an internet trading platform. The name and address of the traders were to be given as well as their bank details. In addition, a list of the individual sales should be provided. From a turnover of more than 17,500 euros per year, turnover tax must be paid.

The collective information request was addressed 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. After transferring the business to its Luxembourg-based sister company, it had undertaken to provide extensive data processing services for the latter on the basis of Luxembourg law. It had also undertaken not to pass on the data to be processed by it to third parties.

Before the court, the plaintiff argued that it could not provide the information requested of it because it was not authorised to do so under the instructions of its sister company, which were binding on it. It could not get its sister company to agree to the release of the data. The data was not actually available to it because it was stored on servers abroad which neither belonged to it nor were managed or maintained by it.

The Fiscal Court (Finanzgericht, FG) thereupon upheld the action and cancelled the request for collective information, since it was factually impossible for the plaintiff to provide the information. On appeal by the tax office, the Federal Fiscal Court (Bundesfinanzhof, BFH) overturned the ruling of the Fiscal Court and referred the case back.

As can be seen from the reasons for the judgement, the FG did not make sufficient factual findings that the plaintiff was unable to access the data for technical reasons. The fact that the data servers are located abroad does not prevent access to the data. The BFH was therefore not bound by the factual assessment of the Fiscal Court. Instead, the Fiscal Court focused on the fact that the plaintiff had undertaken to keep the data confidential vis-à-vis its sister company. The BFH rejected the legal assessment contained therein. The secrecy agreed under private law cannot successfully be held against the obligation to provide information under public law. Therefore, the judgement of the Fiscal Court could not be upheld.

The FG must now determine whether the plaintiff can actually access the data in question. The BFH has also given the FG extensive guidance for the further handling of the case.


Source: Press release of the Federal Supreme Finance Court


Goldberg Attorneys at Law 2013

Attorney at Law Michael Ullrich, LL.M. (Information Law)

Specialist lawyer for information technology law