1. The document discusses the legal implications of a Dutch court case regarding an automated system for detecting potential frauds. The court found the system lacked proportionality and transparency. 2. It examines how this case and principles of privacy from the European Convention on Human Rights apply to international tax administration and data exchange. Automatic profiling and decision-making may violate a taxpayer's right to a fair procedure. 3. Recent developments in international tax cooperation have increased automatic exchange of broad financial and personal data. However, privacy and proportionality principles from the ECHR, EU law, and other legal frameworks still apply limits to protect taxpayers' fundamental rights.

1. The Dutch Lesson
What can we learn
from the SyRI Case ?
Worldwide, July 20th 2020
Marco Greggi, University of Ferrara

2. Word-sense Disambiguation
2
Definitely, not this kind of lesson !

3. Outline of the Presentation
• International taxation more and more data-centric discipline;
• Defining tax h(e)aven: low level of exchange of information, rather than
low level of taxation;
• Data is the new benchmark;
• However:
1. Most recent innovation has been driven by Tax administrations as policy
makers (OECD, …);
2. No significant steps for an international jurisdiction, not even attempts by
academics;
• Therefore:
1. In need to set a proper legal framework for data management;
2. The latest frontier: automatic data management.
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4. More Precisely
1. Attention to the Hague district Court decision
published on March 6th 2020 (n° 1878);
1. Social welfare case addressing ways and means for
audit systems that might be or relevance for taxation
too;
2. SyRI: Systeem Risico Indicatie.
• Software and data management system to detect potential
frauds.
• 3.2. A “Risk reporting software” selecting people “deemed
worthy of investigation”.
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5. The Highlights of the Case
• Point of relevance for the tax discussion:
1. Lack of proportionality (no fair balance between
individual rights and public necessities);
1. Note “Data” and “Processing” are to be intended as in line
with the European GDPR (§4.3);
2. Lack of transparency and verifiability on the software
application.
• List of possible data at § 4.17 of the Sentence.
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6. The Legal Basis
• Article 8, §2 European Convention on Human
Rights;
• Respect of family life and home;
• Necessity to check constantly the compatibility of audit
and assessment measures with individual rights;
• Necessity to engage taxpayers in such procedures
(further evidence on the need for and adversarial
procedure ?)
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7. The Specific References …
• A number of legal provisions have been considered,
including:
• Article 8 ECHR;
• Articles 7 and 8 Charter of the Fundamental Rights of
the European Union;
• Article 17 International Covenant on Civil and Political
rights;
• …
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8. The (alleged) Dutch Vision
on Privacy
• Privacy as a Fundamental Right under Art. 8 ECHR
and 17 ICCPR to be applied according to Articles 93
and 94 of the Dutch Constitution;
• Protection of personal data not specifically
mentioned in the ECHR, but definitely falling under
Article 8.
• See § 6.20 and 6.25.
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9. A possible Map …
9
Principles of …
(§§ 6.31 – 6.34)
Legitimate
Explicit
Specified
Data minimisation
Limited
Relevant
Adequate
Integrity and
Confidentiality

10. The Impact of GDPR
• GDPR contains a ban on profiling and automated
individual decision making, including profiling;
• More precisely: article 22 contains a general ban on
fully automated individual decision-making.
• See 6.35.
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11. Point under Discussion
• Is deep learning compatible with a procedure
under the rule of law ?
• Due procedure clause is incompatible with hidden
algorithm as it is not possible to “substantiate”
their predictions;
• An administrative organ can not decide according
to hidden data management (§ 6.46).
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12. The cornerstones to be
consider in specific
• 6.89 The SyRI legislation does not provide
information on the functioning of the risk model;
• Derogations ? YES! In case of Pressing social need.
• Is evasion / avoidance such a need ?
• IN the view of the The Hague District Court the necessity
of a sound review comes first (§ 6.100).
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13. ..and the need for a
broader vision
• The overall scenario in Europe is much more
complex as exchange of information (on several
basis) is taking ground;
• Necessity to find and introduce a proper and
coherent approach to data management:
1. Within the home country;
2. From the country to another state.
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14. Three Possible Perspectives
• Europe and Taxation:
• Recent developments: ATAD (I and II), Directives on Exchange of Information
(2011/16/EU, …);
• Joint audit projects by Tax Administrations;
• Assistance in the Collection of taxes (abroad …);
• OECD and Taxation:
• (Besides BEPS): setting standards for information exchanges or collection (CRS, CbC
reporting, …);
• Data gathered ex ante a possible tax audit;
• US and Taxation:
• FATCA and FATCA-inspired agreements.
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15. “Either the Secrecy goes, or
the Bank goes”
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16. Information for Tax Purposes
• A Variable Scope;
• Any data relevant for tax purposes (Tax profiling ?):
• Financial data;
• Ownership of assets;
• Personal status (residence / domicile) and evidence of it;
• Commercial practices and standard;
• Example: Italy – Singapore Administrative Agreement
(signed on December 3rh 2016):
• Implementing Article 6, Convention of Strasbourg (1988, then
amended);
• Addressing essentially bank account data of the respective
taxpayers (individual and legal entities).
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17. Preliminary Findings
1. Sunset of the Revenue Rule;
• Towards a “Push” model of data exchange, covering any
aspect of taxpayer life allegedly relevant for tax
purposes;
2. No room for Privacy in taxation (?);
3. Privacy as “Avoidance in Disguise”;
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18. The Legal Framework
• Exchange of information possible according to (and
depending on) several legal frameworks:
• Hard law:
1. Double taxation conventions;
2. Tax Information Exchange Agreements (TIEA);
3. Multilateral Convention (aka Strasbourg Convention);
• In Singapore, entry into force on May 1st 2016;
• OECD Soft Law (mostly derived from BEPS13):
1. Country by Country Reporting implementation standards;
2. Model(s) for Competent authorities agreement;
3. XML Template for CbCR.
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19. In Search of Limits
• Statutory based:
• Forthcoming European Regulation on privacy protection 2016/679,
art. 23, § 1 let. (e);
• Reasonableness, foreseeability, proportionality, respect for a democratic
life;
• Article 8 ECHR (respect for private life);
• Principle based:
• Principle of foreseeability relevance (in Directives and Treaties).
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20. The Legal Pattern in Europe
20https://ec.europa.eu/taxation_customs/business/tax-cooperation-control/administrative-cooperation/enhanced-administrative-cooperation-field-direct-taxation_en

21. The data in DAC-6
• Legal reference: 2018/822/EU (passed in 2017);
• Target: EU intermediaries (such as accountants,
banks, lawyers, tax advisers) designing / promoting
cross-border tax planning arrangements;
• Content including:
• Mandatory reporting of certain schemes to the tax
authorities of EU member states;
• Specific list of Hallmarks
• Automatic exchange of information;
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22. In Search of Limits
• Statutory based:
• European Regulation on privacy protection 2016/679,
art. 23, § 1 let. (e);
• Reasonableness, foreseeability, proportionality, respect for a
democratic life;
• Article 8 ECHR (respect for private life);
• Principle based:
• Principle of foreseeability relevance (in Directives and
Treaties).
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23. Addressing the
“Foreseeably Relevance”
• Two possible interpretations:
1. Prevent redundant requests / queries (thus preserving
the activity of the requested Tax Administration);
2. Protect the individual (this is protection of taxpayers’
privacy).
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24. Case 1 - Sabou
• C-276/12 European Court of Justice (October 22nd
2013):
• No “Rights of the defence” of the taxpayer in the
Exchange of information procedure consistent with EU
law (if the limits are not in the domestic legislation):
1. No adversarial procedure;
2. No need for preliminary approval of the judiciary;
3. No right of cross examination of witnesses;
4. …
24

25. Case 2 – Berlioz
Investment Funds SA
• C-685/15 European Court of Justice (May 16th 2017):
• Request of information may be challenged in front of a Court
by the requested individual in the other State (failing to abide
by an information order issued by the authority);
• The request may be challenged on the ground of reasonable
relevance by the requested individual (taxpayer);
• Article 47 of the Charter of Fundamental Rights grants a
(restrained) access to the request of information to the
requested individual;
• Apparently, Berlioz overrules Sabou.
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26. Case 3 - Sommer
• N°73607/13 European Court of Human Rights (April
27th 2017):
• Article 8 (Respect of private ad family life) is a
countervailing factor against the exchange of
information;
• Tie break principle: reasonableness, proportionality, …
• Legal point: Human rights doctrine is limited in taxation only
where the Convention admits such a limit (example: Article 1,
first protocol);
• Privacy, eventually, protected.
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27. Case 4 – A. and B.
• N° 2C_1000 2017 Swiss Federal Court (March 17th
2017):
• Information may be denied if a violation of the Bona fides
principle occurred (Falciani Case);
• The Swiss legal system:
• Admits (restrained) judicial review on the exchange of
information requested;
• Taxpayer must be informed of the request;
• Individual rights and General principles of International Public
law (Good faith in the implementation of treaties) must be
considered.
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28. Concluding Remarks
• Evidence collected:
• Privacy must be considered in the EOI procedures;
• Both statutory based legislation and general
principles prevent an unrestrained flow of data
between Tax administrations;
• … as they prevent disproportionate domestic tax
profiling;
• Judiciary offers protection if qualified conditions are
met.
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29. The Road Ahead
• The need to strike a (delicate) balance:
• Combat tax evasion;
• Respect taxpayers’ fundamental rights;
• Possible solutions:
• Judicial review of the requests of information (possibly
with a fast tracking procedure);
• Reconsider the role of the Tax administration in this
respect.
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30. Thanks for your Attention
marco.greggi@unife.it
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