A never-ending battle between privacy and transparency: The case of Registers of Beneficial Ownership before the CJEU

PANTAZATOU, Aikaterini

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A never-ending battle between privacy and transparency: The case of Registers of Beneficial Ownership before the CJEU

PANTAZATOU, Aikaterini

2023 • In EC Tax Review, 32 (3), p. 103 - 116

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Keywords :

tax transparency; register of beneficial ownership; AML

Abstract :

[en] This article reviews and critically assesses the recent Grand Chamber judgment of the CJEU on Registers of Beneficial Ownership (RBOs) and the preceding Advocate General’s Opinion. Throughout this analysis, the author pinpoints at certain misconceptions and ponders on the open questions left. The article focuses on the interaction of the transparency principle with the fundamental rights of privacy and data protection. It also considers the potential impact of the judgment on ‘tax-related’ data and on fighting money laundering and tax evasion altogether. It finally, discusses the effect the judgment is expected to have on RBOs across the EU, but also on transparency in general.

Disciplines :

European & international law

Author, co-author :

PANTAZATOU, Aikaterini ; University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Law (DL)

External co-authors :

Language :

English

Title :

A never-ending battle between privacy and transparency: The case of Registers of Beneficial Ownership before the CJEU

Publication date :

May 2023

Journal title :

EC Tax Review

ISSN :

0928-2750

eISSN :

1875-8363

Publisher :

Kluwer Law International

Volume :

Issue :

Pages :

103 - 116

Peer reviewed :

Peer Reviewed verified by ORBi

Focus Area :

Law / European Law

Available on ORBilu :

since 03 April 2023

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Bibliography

1 CJEU judgment of 22 Nov. 2022, Joined Cases C-37/20 and C-601/20 (Luxembourg Business Registers), ECLI:EU:C:2022:912.
2 Council Directive (EU) 2016/2258 of 6 Dec. 2016 amending Directive 2011/16/EU as regards access to anti-money-laundering information by tax authorities (‘DAC 5’).
3 See for instance, Tax Justice Network, ‘EU court returns EU to dark ages of dirty money’ (23 Nov. 2022), https://taxjustice.net/press/eu-court-returns-eu-to-dark-ages-of-dirty-money/; OCCRP, This Luxembourg Businessman Got Europe’s Corporate Registries Shut Down. But Whose Privacy Was He Protecting? (10 Feb. 2023), https://www.occrp.org/en/beneficial-ownership-data-is-critical-in-the-fight-against-corruption/this-luxembourg-businessman-got-europes-corporate-registries-shut-down-but-whose-privacy-was-he-protecting (both accessed 16 Feb. 2023).
4 Regulation of 27 Apr. 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation) (OJ 2016 L 119, at 1), hereinafter ‘GDPR’.
5 SSDirective (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 amending Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, and amending Directives 2009/138/EC and 2013/36/EU (OJ 2018 L 156, at 43), hereinafter ‘5th AMLD’.
6 Directive (EU) 2015/849 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing (OJ 2015 L 141, at 73), hereinafter the ‘AMLD’, referring to its consolidated version.
7 Article 30 (5) (c) AMLD. Under the previous version of the AMLD, Art. 30 (5) (c) read as: ‘any person or organisation that can demonstrate a legitimate interest’. (emphasis added).
8 Article 30 (5) second subparagraph, AMLD.
9 Article 30 (5) third subparagraph, AMLD.
10 Article 30 (5a) AMLD.
11 Please note that at the time of the writing of this paper, AG Pitruzzella’s Opinion does not exist in English. The author has consulted the French and Greek versions and all translations provided in the paper are unofficial and of the author.
12 CJEU, supra n. 1, para. 38.
13 Ibid.
14 Ibid.
15 CJEU, supra n. 1, para. 39 and case law cited therein.
16 CJEU, supra n. 1, para. 41.
17 Ibid., para. 42-43. Note that AG Pitruzzella examines this potential under the GDPR’s purpose limitation principle, which is discussed below.
18 AG Opinion, supra n. 11, para. 104 and analysis before.
19 AG Opinion, supra n. 11, para. 104 (free translation from French).
20 Ibid., paras 105-107.
21 Ibid., para. 107.
22 CJEU, supra n. 1, paras 45-46.
23 Ibid., paras 47-49.
24 AG Opinion, supra n. 11, para. 110.
25 Ibid., paras 114-116.
26 Ibid., paras 120-127.
27 CJEU, supra n. 1, para. 50.
28 Ibid., paras 51-52.
29 Ibid., para. 82.
30 AG Opinion, supra n. 11, para. 137.
31 CJEU, supra n. 1, para. 53.
32 See particularly, Recitals 4 and 31 of Directive 2018/843.
33 5th AMLD, supra n. 5, Preamble, Recital 30.
34 For a summary of the exact wording of the relevant provisions see especially, CJEU, supra n. 1, paras 55-57.
35 CJEU, supra n. 1, para. 59 and case law cited therein.
36 AG Opinion, supra n. 11, paras 38-48.
37 CJEU, supra n. 1, paras 60-62.
38 AG Opinion, supra n. 11, paras 40-41 and 44.
39 Ibid., paras 45-48.
40 CJEU, supra n. 1, para. 58.
41 AG Opinion, supra n. 11, coming back to that point at para. 144.
42 CJEU, supra n. 1, para. 67.
43 Note here that the CJEU refers only to the protection of personal data.
44 CJEU, supra n. 1, para. 64.
45 Ibid., para. 69.
46 Ibid., para. 67.
47 Ibid., para. 68.
48 Ibid., paras 70-71.
49 Ibid., para. 74.
50 Ibid., paras 75-76.
51 AG Opinion, supra n. 11, paras 160-165.
52 Ibid., para. 177.
53 Ibid., paras 168-170.
54 Ibid., paras 172-176.
55 Ibid., paras 178-180.
56 Ibid., paras 195-208.
57 Ibid., paras 195 et seq.
58 Ibid., paras 200-201.
59 Ibid., paras 202-203.
60 Ibid., paras 205-206.
61 Ibid., paras 207-208. Note that the Court (above) had not considered this possibility in the measure’s susceptibility to abuse.
62 Court, supra n. 61, para. 80.
63 Ibid., para. 79.
64 AG Opinion, supra n. 11, para. 223. In the previous paragraphs the AG explicitly notes that the ‘exceptions system’ should be considered in the overall assessment of the proportionality of the measures.
65 Court, supra n. 61, para. 86.
66 Ibid. and case law cited.
67 CJEU, supra n. 1, para. 65.
68 Court, supra n. 61, para. 82.
69 Ibid., para. 83.
70 Ibid., para. 85 and case law cited therein.
71 Ibid., para. 88.
72 CJEU, supra n. 1, paras 81-82.
73 AG Opinion, supra n. 11, para. 230.
74 CJEU, supra n. 1, paras 75-76.
75 Ibid., para. 83.
76 Ibid., paras 74-75.
77 AG Opinion, supra n. 11, paras 140-143.
78 Ibid., paras 173-174.
79 Ibid., para. 175.
80 Ibid., paras 101-103. Note that throughout his analysis the AG excludes the additional data that may become available on the basis of Art. 30 (5) second and third subparagraphs.
81 AG Opinion, supra n. 11, para. 101 (free translation).
82 Ibid., para. 102 (free translation).
83 Drawn from ibid., para. 102, last sentence.
84 CJEU, supra n. 1, para. 41.
85 See for instance, International Consortium of Investigative Journalism (ICIJ), LuxLeaks files (2014), database, https://www. icij.org/investigations/luxembourg-leaks/explore-documents-luxem bourg-leaks-database/; Panama Papers (2016), https://www.icij.org/investigations/panama-papers/; Paradise Papers (2017), https://www.icij.org/investigations/paradise-papers/. With regard to this, see also S. Y. Oei and D. Ring, Leak - Driven Law (2018) 65 UCLA Law Review.
86 CJEU, supra n. 1, paras 81-82 and AG Opinion, supra n. 11, paras 107-108 and 117.
87 J. Hay, Transparency and Publicity, in Tax Transparency 205 (F. Başaran Yavaşlar & J. Hay eds, IBFD 2019).
88 B. Kuzniacki, Beneficial Ownership in International Taxation 5 et seq. (Edward Elgar 2022).
89 AMLD, supra n. 6, Art. 3 (6).
90 CJEU, judgment of 26 Feb. 2019, Case C-115/16 N Luxembourg 1 (EU:C:2019:135) with references to the Interest-Royalty Directive (Directive 2003/49/EC).
91 With regard to this see Opinion of AG Kokott of 2 Jul. 2020, État luxembourgeois v. B and others, Joined Cases C-245/19 and C-246/19, EU:C:2020:516, para. 88 and case law cited therein. Accordingly, legal persons should be able to claim the protection of ‘personal data’ under Art. 8 of the Charter only in so far as their official title identifies a natural person.
92 Council Directive (EU) 2016/2258 of 6 Dec. 2016, supra n. 2.
93 ‘DAC 5’, supra n. 2, Preamble, Recital 4.
94 Le Monde, OpenLux: The Secrets of Luxembourg, a Tax Haven at the Heart of Europe (8 Feb. 2021), https://www.lemonde.fr/les-decodeurs/article/2021/02/08/openlux-the-secrets-of-luxembourg-a-tax-haven-at-the-heart-of-europe_6069140_4355770.html. (accessed 16 Feb. 2023).
95 K. Pantazatou, The ‘OpenLux Revelations’: Who Is to Be Blamed?, 1 Cahiers de fiscalité luxembourgeoise et européenne 153-161 (2022).
96 J. Kokott & P. Pistone, Taxpayers in International Law - International Minimum Standards for the Protection of Taxpayers’ Rights 405 (Hart Publishing 2022) and references listed therein.
97 Ibid.
98 This should be contrasted to the AG Opinion’s, supra n. 11, paras 100-104, according to which access to the beneficial ownership data allowed the public to create a ‘limited picture’ to the beneficial owner’s investment and wealth profile and thus, the interference with said fundamental rights was of a limited nature.
99 ECtHR judgment of 27 Jun. 2017, Satakunnan Markkinapörssi Oy and Satamedia Oy v. Finland [GC], 2017.
100 Ibid., § 174.
101 ECtHR judgment of 09 Mar. 2023 Case of L.B. v. Hungary (Application no. 36345/16) [GC], 2023.
102 Ibid., §§ 110-112.
103 Ibid., § 113.
104 Ibid., § 130.
105 Ibid., §§ 130-138.
106 AG Opinion, supra n. 11, paras 70 and 119-120.
107 Ibid., paras 121-125.
108 Ibid., para. 126 (free translation).
109 CJEU, Latvijas Republikas Saeima C-439/19, EU:C:2021:504.
110 CJEU, Manni C-398/15, EU:C:2017:197.
111 Ibid., para. 87. The Manni case concerned the compulsory disclosure by companies of certain information, including of their representatives in legal proceedings, provided for in First Council Directive 68/151/EEC as amended by Directive 2003/58/EC. The question referred by the Italian court asked, in essence whether natural persons, like legal representatives and liquidators, whose names were publicly accessible in the register, were allowed, on the basis of the Data Protection Directive (Directive 95/46/EC) to request the authority responsible for maintaining the companies register to limit, after a certain period, access to personal data concerning them and entered in that register.
112 CJEU, Latvijas Republikas Saeima, supra n. 109, para. 113.
113 Ibid., para. 121.
114 See also GDPR, supra n. 4, Preamble, recital 39 providing, inter alia, that‘ [p]ersonal data should be processed only if the purpose of the processing could not reasonably be fulfilled by other means’.
115 AG Opinion, supra n. 11, paras 195-208.
116 See with respect to this especially Art. 6 (1) points (e) and (f).
117 For a discussion on the regime under the 4th AMLD, see A. Dwi Nugroho, Central Register as a Model Instrument to Unveil Beneficial Owners for Tax Purposes, 5 EC Tax Rev. 274-283 (2017).
118 GDPR, supra n. 4, Art. 6 (1) (f). For a discussion see F. Ferretti, Data Protection and the Legitimate Interest of Data Controllers: Much Ado About Nothing or the Winter of Rights?, 51 CMLRev 843-868 (2014) and I. Kamara & P. de Hert, Understanding the Balancing Act Behind the Legitimate Interest of the Controller Ground: A Pragmatic Approach, 12 Brussels Privacy Hub (2018).
119 GDPR, supra n. 4, Preamble, Recital 49.
120 Delano, Access to RBO to resume for some professionals (6 Dec. 2022), https://delano.lu/article/access-to-rbo-to-resume-for-so (accessed 16 Feb. 2022).
121 Ibid.
122 https://presse.economie.gouv.fr/19012023/ (accessed 20 Feb. 2023).
123 France, Conseil constitutionnel, 8 Dec. 2016, no 2016-741 DC and for an analysis see L. Stankiewicz, France, in Tax Transparency 511-548 (F. Başaran Yavaşlar & J. Hay eds, IBFD 2019).
124 See https://danishbusinessauthority.dk/beneficial-owners#:~:text=Ownership%20information%20is%20publicly%20available,is% 20registered%20as%20an%20owner and https://www.ur.gov.lv/en/get-information/ (accessed 23 Mar. 2023)
125 USA, Financial Crimes Enforcement Network (FinCEN), Treasury, Beneficial Ownership Information Access and Safeguards, and Use of FinCEN Identifiers for Entities: A Proposed Rule by the Financial Crimes Enforcement Network on 12/16/2022, https://www.federalregister.gov/documents/2022/12/16/2022-27031/beneficial-ownership-information-access-and-safeguards-and-use-of-fincen-identi fiers-for-entities (accessed 16 Feb. 2023).
126 The author refers here to directives ‘DAC 1’ - ‘DAC 7’ that have contributed to increasing transparency within the EU through an elaborate legal framework built on mandatory disclosure rules and (automatic) exchange of information.