What information may the tax authority ask from your bank?

How resistant is bank secrecy against a call made by the tax authority? What questions about your account must your bank answer? Will the tax administrator learn from your bank that you use internet banking and who has disposal rights to your account? A new Supreme Administrative Court’s judgment may help find answers to the above questions.

To some extent, the Tax Procedure Rules breaks through bank secrecy rules, as they clearly impose the duty on banks to provide information such as account numbers, account owners, account balances, cash movements in accounts as well as information about provided loans, upon the tax authority’s request. This information may then be used by the tax administrator to enforce tax arrears and assess additional tax. In practice, though, the tax administrator often requests much more, for example, information about the names of persons with the right of disposal, internet banking details or account owner contact information.

The Supreme Administrative Court (the SAC) has recently considered a very similar matter. In this particular case (4 Afs 177/2016), the tax administrator requested, among other things, information about persons with the right of disposal, an e-mail address and the phone number used for remote access to the respective account. The bank repeatedly refused to provide such information and the tax administrator imposed a fine on the bank. The case then ended up before the SAC, which decided in favour of bank secrecy. The SAC judges clearly held that the bank or any other payment service provider is obligated to only provide information explicitly stipulated by law and that the scope of information cannot be extended by mere interpretation. The SAC confirmed that the tax authority is not authorised to request information about persons holding the right of disposal to an account.

The court thus partially stood up against the tax authority’s attempts to request an ever-increasing amount of information from banks. Also, the duty to provide information to the tax authority applies not only to banks but also to any other entities whose information is vital for the tax administration. In practice, usually the tax authority decides what information is essential in this respect. The respective judgment however shows that resistance against excessive tax authority demands for information may be worthwhile.

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