Brussels, 27/11/2015 (Agence Europe) - Banks are not allowed to impose bank secrecy on a branch in another member state if the information to be provided would help ensure effective tax controls.
This is the main conclusion suggested by Advocate General Maciej Szpunar for the European Court of Justice on Thursday 26 November in case C-522/14 concerning a German bank (Sparkasse Allgäu) which has branches in Austria. Following the death of one of its clients, who held a bank account in the bank's Austrian branch, the Austrian bank did not declare to the German tax authorities responsible for inheritance rights and inheritance tax on the dead person's assets and amounts receivable. The bank stated that there was basically no need for it to do this under the freedom of establishment and the rules in Germany are different from those in Austria, where bank secrecy is protected by criminal penalties.
In his conclusions, the Advocate General said that the bank's argument was not compatible with EU law. The freedom of establishment does not preclude the supply of information required by the German authorities, he argues, as long as the requests by the German authorities do not outstrip what is strictly necessary to ensure effective tax controls.
This is of course a restriction on the freedom of establishment because the rules in Germany stipulate extra obligations for German banks with branches in Austria (given their legal status, the branches themselves are not concerned). This restriction, however, which can make the exercise of cross-border business in the form of a branch economically unviable, is justified by the need for guarantees of the effectiveness of tax controls and the fact that the requested information only concerns clients living in Germany, concluded Szpunar. (Original version in French by Jan Kordys)