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Federal Tax Court forces Tax Office to release confidential information!

Federal Tax Court forces Tax Office to release confidential information!

The Federal Tax Court declares Tax Office refusal to disclose details of enforcement actions against agencies and tax consultants illegal

Federal Tax Court (BFH), Ruling of 11 February 2016 – VIII S 8/15


The Plaintiff asked the Federal Tax Court to order the tax office to disclose unredacted files concerning the involvement of third parties and their tax liability.

The petition was filed before the Tax Court in Munich. The contested tax assessments were based on tax investigations into so-called O2 cases. In this respect, the Munich tax investigation office assigned the freelance engineers’ economic ownership of the fees charged by agencies to O2 for their activities and received in foreign accounts. The question before the Constitutional Court is whether the financial control and beneficial ownership of payments by domestic end customers to foreign agencies can be allocated to a third party on the basis of a probability assessment of group-related investigations, irrespective of the extent and timing of the agency payment to the third party and irrespective of the enforceability of a third-party claim for payment in the event of a dispute.

It was also disputed whether the deadline for identifying cases of tax evasion is ten years as suggested by Section 169 para. 2 sent. 2 of the German Tax Code (AO). During the appeals process, the petition claims, the tax office questioned agency representatives and tax consultants per Section 360 German Tax Code and decided to hold them liable (Sections 191, 71 German Tax Code). In the main proceedings, the tax office presented dossiers to the Tax Court with passages blacked out and empty pages, suggesting that entire sections of the files had been redacted.

The Plaintiff made a motion to view the redacted portions of the files. The tax office and co-respondent Bavarian Ministry of Finance refused to comply, on the basis of tax secrecy protection.


The Federal Tax Court agreed with the Plaintiff’s motion and declared the tax office’s refusal to disclose unredacted files illegal.

The tax office is obliged to disclose complete, unredacted files provided it does not disclose any information about third parties covered by tax secrecy (Section 30 German Tax Code). The concept of circumstances is to be given a broad teleological interpretation. It covers everything the tax office knows about a person, and therefore all of the personal, economic, legal, public, and private details about a natural or legal person.

All co-debtors are treated as third parties in Section 30 German Tax Code. The Plaintiff as taxpayer and the agency representatives and tax consultants as liable parties would have to stand for the same benefit from the tax liability ratio (Section 44 para. 1 German Tax Code). To this extent, a violation of tax secrecy is precluded if the disclosure of the circumstances of third parties helps execute a tax procedure.
This is the case here.

The action of those liable parties could influence the question of whether this is a case of tax evasion
and thus extend the time limit for the taxpayer’s liability to ten years. In this respect, the involvement of
agency representatives and tax consultants in the tax advice of the Plaintiff is relevant in clarifying
their intentions.For this reason, the complete disclosure of the files by the tax office is not a breach of tax secrecy.

The information they contain about the agency representatives and tax consultants as liable parties
could be significant for the contested tax claim against the Plaintiff. These could be related to the
dispute over tax evasion and a prolonged limitation period.


The Federal Tax Court considered the strict requirements for the breach of tax secrecy to be met in
cases of joint and several liability.

The main point is that the administrative actions of the tax office, particularly in the so-called O2
liability cases is unlawful. In so far as the tax office is involved and asserts liability claims against the
joint and several debtors, it regularly refuses to disclose this information to the taxpayer, citing tax
secrecy. The fact that the taxpayer and the parties with liability are answering to the same tax case,
this objection is irrelevant.

As a result, it is crucial that the widespread practice of the tax office of withholding information on third
party liability from taxpayer provokes legal disputes such as this. It would be useful if the tax office
would take account of this fact within their discretion and remedy the taxpayer’s requests for
information in a tax-management cooperative manner.

Patricia Lederer
Specialist lawyer for tax law
Specialist lawyer for commercial and corporate law
Partner, LedererLaw Firm for International Tax Law, Frankfurt am Main