The Amendments to the Directive on Administrative Cooperation (DAC) and Taxpayers’ Rights: The Way Forward?

2.1 General overview

As mentioned, the DAC has been configured to be a multilateral and consistent instrument of tax cooperation within the EU. Thus, the DAC provides for “the rules and procedures under which the Member States shall cooperate with each other with a view to exchanging information that is foreseeably relevant to the administration and enforcement of their domestic laws” (Article 1).

In particular, the DAC lays down three procedures of exchange of information namely, on request, automatic and spontaneous, while also providing for other cooperation procedures. These methods of exchange are broadly in line with the standards agreed at international level, notably at the OECD level.4 Although criticized for creating ultimate dependence on the policies of non-EU legal operators,5 according to the Directorate-General for Taxation and Customs Union,6 “[t]he various policy measures consolidated in the DAC have their counterparts in the OECD framework, in which most EU Member States also participate. It is therefore essential […] that the EU and OECD obligations on administrative cooperation are and remain closely aligned”. Furthermore, “[t]he OECD documents, and particularly the OECD Commentary, are considered as relevant guidance for applying the DAC. This is possible because the DAC and the OECD framework not only provide for similar, when not identical, material obligations for the Member States, but also include the same legal definitions and standards (e.g. foreseeable relevance, taxes)”.

Broadly speaking, none of the three methods of information exchange prevails over the others as each one pursues a different purpose.7 Consequently, each has its own normative singularities and, in some cases, specific problems. Nevertheless, in the last years the DAC has boosted automatic exchange as the most effective tool to fight against illegitimate tax structures.8 In fact, at the beginning, automatic exchange of information was restricted to a few categories of income, nevertheless, its scope has been widely expanded over the years. Thus, the DAC 1 has been modified six times (plus an upcoming modification) and the information subject to exchange has been extended in an impressive way. Nowadays, the Directive is structured into seven Chapters and thirty-one Articles. Additionally, five Annexes have been added along with some of the amendments.

2.2 Objective

The DAC aims to address three closely interrelated but different needs, arising from the negative effects of globalization on the internal market. In the first place, the rise of tax evasion or tax avoidance structures which originate from the misalignment between the increasing internationalization of the economy and the national dimension of taxes.9 In the second place, the tax decisions with limited transparency, namely, cross-border advanced tax rulings and pricing agreements, which lead to harmful tax practices.10 As a result, financial flows and the location of companies may be affected leading to an unfair play for enterprises. Finally, the deviations in the enactment of commitments made at the G20/OECD level as some Member States may decide to act, while others not.11 From this perspective, a set of uniform and common rules enables Member States’ authorities to trust each other’s mechanisms.

Considering these needs, the Directive is aimed at, firstly, contributing to the proper functioning of the internal market, which comes directly from the legal basis of the DAC (Article 115 TFEU). Thus, all the amendments to the DAC highlight the aim of obtaining an “efficient administrative cooperation between Member States under conditions compatible with the proper functioning of the internal market”. Secondly, safeguarding Member States’ tax revenues, as the need to combat illegitimate tax structures constitutes the very raison d’être of exchange of information;12 in this regard, it shall be noted that, if the different amendments of the DAC are compared, the emphasis has gradually shifted from tax evasion to tax avoidance and in the DAC6 to also tackling other forms of tax minimization (e.g. aggressive tax planning). Thirdly, contributing to the improvement of the perceived fairness of the tax system13, which despite being of a political nature, is mentioned both by the Commission14 and the Council initiatives.15 Overall, the DAC is expected to achieve an enhanced ability to fight cross-border tax minimization structures by large taxpayers and, particularly, MNEs; less scope for harmful tax competition; and a “deterrent effect” to achieve spontaneous tax compliance in a timely manner.16

2.3 Scope of application

As Article 1 states, the Directive applies to all types of taxes levied by a Member State or its territorial or administrative subdivisions, but VAT, customs duties and excise duties covered by other EU legislation on administrative cooperation. The Directive neither applies to rules on mutual assistance in criminal matters nor to compulsory social security contributions.

Regarding the substantive scope of application, DAC applies to any person, with or without legal personality resident in an EU Member State.17 Particularly, according to the Directive, “person” means a natural person; a legal person; an association of persons recognized as having legal capacity; or any other legal arrangement of whatever nature, form or legal personality, owning or managing assets or income derived therefrom, subject to any of the taxes covered by the directive.

These limits regarding the scope of application are applicable to all the DACs, as amendments of the DAC 1.

2.4 Types of exchange of information

2.5 Other forms of administrative cooperation

As stated above, the DAC also regulates other forms of administrative cooperation besides from exchange of information, in particular: the Presence in Administrative Offices and Enquiries (PAOE); Simultaneous Controls (SC); Joint Inspections (JI) and Access on Anti Money Laundering (AML) information.

The PAOE enables in Article 11, if agreed by authorities, the presence of the officials of the requesting Member State in the offices and during administrative inspections of the other Member State. Further, the officials may also have the opportunity of examining records and interviewing individuals. Member States can also carry out SC on taxpayers of common or complementary interest under Article 12. To this aim, each Member State shall identify the concerned persons and communicate that to the other Member State together with the proposed controls and timing. If the requested States declines participation, such refusal must be reasoned. In addition, under the provisions of the DAC 7, JI may be carried out by the tax administrations of the Member States with respect to taxpayers of common interest. In this sense, a Member State may contact another Member State for the initiation of a joint inspection. Such a request must be answered within one month and may only be rejected if justified. In any case, the applicable legislation is the one of the hosting Member State, but the tax authorities will have to agree beforehand on the practical implementation of the inspection, for example, the applicable language regime. Finally, the conclusions derived from the inspection may be included in a final report that has to be notified to the interested parties.

Finally, the DAC 5 (Directive 2016/2258/EU) provisions require Member States to grant tax authorities access to selected information held by financial institutions as of 1 January 2018 under Article 5. In particular, the data concerns beneficial ownership (i.e. the persons who ultimately own or control a company, trust, or other legal entity) and other information collected under AML rules (i.e. Directive 2015/849/EU).

2.6 General provisions and organizational structure

In accordance with the principle of loyalty, cooperation duties under the DAC are of a mandatory nature.26 Nevertheless, cooperation might be refused in the five cases listed in Article 17. Particularly, if the provision of the information leads to the disclosure of commercial, industrial or professional secrets or if it is contrary to public order (i.e. if the general interest of the community is severely undermined). This may, for example, be the case if the information is collected illegally.27 In this regard, Article 18(2) expressly lays down that banking and ownership secrets are not under this waiver.

On the other hand, the DAC also includes some horizontal provisions to enhance administrative cooperation in its entirety by using standardized forms and channels of communication. Thus, to ensure security, the Common Communication Network (CCN)28 was developed. In addition, as required by Articles 20 and 21, exchanges of information shall be performed using standard and computerized formats (“e-forms”). In order to achieve a more direct and efficient communication between administrative services, Member States’ tax authorities shall appoint a Central Liaison Office and, if wanted, Liaison Departments and/or Competent Officials as required by Article 4. Moreover, the DAC highlights the importance of sharing experiences and best practices to ensure the coordinated running of the cooperation (Article 15).

Finally, to monitor the proper functioning of the Directive, Member States are required to provide annual statistics on the volume of exchanges; the costs and benefits relating to AEOI; and any other relevant information for evaluating the effectiveness of DAC provisions. Based on those statistics an evaluation Report and a proposal directed to the Council to strengthen the efficiency and the functioning of the exchange of information were already delivered.29 A second Report is expected in 2024.

3.1 Fundamental rights at the EU level

While the European Charter of Human Rights (CFR) does not include specific tax safeguards, several provisions might play a key role in protecting taxpayers’ interests. Similarly, general principles of EU law might be relevant for guaranteeing taxpayers’ rights.30 Admittedly, as Baker and Pistone greatly describe, “all taxpayers are persons and persons are holders of rights”.31 Therefore, a proper balance between the interest of the tax administration and the taxpayers’ rights is required.

In this regard, the European Court of Justice (ECJ) has repeatedly stated that “[a] directive must, like all secondary legislation, be interpreted in the light of the Treaty rules”,32 which undoubtedly includes fundamental rights. When it comes to the DAC and its amendments, considering the massive amount of sensitive information that tax administrations possess, concerns arise as to the potential infringement of taxpayers’ rights, such as privacy, confidentiality, data protection and the procedural rights necessary to protect the former rights. In fact, the unprecedented amount of data exchanged leaves taxpayers more vulnerable to abuse of power by authorities. This is especially worrisome in the automatic exchange of information procedure where, apparently, the individual circumstances of taxpayers are no longer relevant, as opposed to the right of the administration to obtain information.33 Against this background, there can be privacy concerns when tax authorities exchange sensitive taxpayer information (i.e. taxpayers may worry about the misuse or mishandling of their personal data). In this regard, it shall be made clear that even though privacy, confidentiality and data protection are usually grouped together, they are, however, separate fundamental rights. In particular, the former relates to the stage of collecting information, while the latter come into play at a later stage once the information is in the hands of the tax administration. Thus, although the three rights are rather intertwined, all of them have their own substantive nature and trigger different legal effects when exercised. In the case at stake, confidentiality and data protection issues are common to all the DAC while the right to privacy might only affect those versions of the DAC where the information is directly provided by the taxpayer.34

Against this background, as advanced, the DAC points out that “this Directive respects the fundamental rights and observes the principles recognised in particular by the Charter of Fundamental Rights of the European Union”. Similarly, all the amendments to the DAC use exactly the same formula in their preamble. However, it might be questioned whether this statement is accurate. Therefore, in the following pages the protection of these rights under the DAC will be analyzed, paying special attention to the case law of the ECJ on the matter.35

Prior thereto, it shall be reminded that fundamental rights might be subject to limits. Proportionality as a general limitation clause is codified in Article 52(1) CFR which establishes that any restriction on a fundamental right shall i) be provided for by law; ii) be necessary and genuinely meet EU objectives of general interest or the need to protect the rights and freedoms of others; and iii) respect the essence of those rights. However, as Gutiérrez-Fons36 observes, proportionality “does not apply in the same fashion” to any fundamental right but it is a “variable geometry” that considers different elements such as the fundamental right at issue, the nature of that right, the seriousness of the infringement, or the object pursued.37

3.2 The right to privacy

Privacy is described as “the right to keep one’s affairs secret”.38 It is a right to a personal sphere which entails respect for private and family life, home and correspondence.39 It also protects the economic information of natural persons inter alia, that relating to their economic status, or that enclosed in the tax returns.40 The DAC1, as advanced, notes that fundamental rights are respected under the Directive. However, it further clarifies that the right to privacy is limited under its scope, because this is “necessary and proportionate in view of the potential loss of revenue for Member States and the crucial importance of information covered by this Directive for the effectiveness of the fight against fraud”. Even though this reference to privacy is made, the DACs do not regulate any specific safeguards to protect this right. To frame it differently, this protection has been left at the discretion of EU Member States which, in every and each case, shall respect the limits deriving from EU law.

The CFR acknowledges the right to respect for private and family life in Article 7 in the following terms: “Everyone has the right to respect for his or her private and family life, home and communications”.41 The ECJ has ruled on this provision on numerous occasions. Thus, in Bara,42 the ECJ ruled that the collection and transfer of tax data in relation to the income and assets of natural persons constituted “information relating to an identified or identifiable natural person” and was regarded as personal data. Following the Court, the right to privacy is restricted to activities carried out in the private or family life of individuals, regardless of whether the information is sensitive, the affected individuals have been inconvenienced, or the way in which the information is subsequently used.43 Similarly, in Tele2 Sverige,44 it was ascertained that economic data (i.e. information referring to professional activities) was also part of the right to privacy. According to the Court that data allowed to draw very precise conclusions concerning the private lives, “such as everyday habits, permanent or temporary places of residence, daily or other movements, the activities carried out, the social relationships of those persons and the social environments frequented by them”, and therefore constituted an interference in Article 7 CFR.

Particularly relevant for these purposes is the case Orde van Vlaamse Balies and Others45 where the ECJ addressed the issue of whether the DAC 6 was aligned with Articles 7 and 47 CFR (right to a fair trial). Following the conclusions of AG Rantos and the case law of the ECtHR, the ECJ concluded that the rights of defense are not undermined under the DAC but that the right to respect for private life may indeed be infringed. To reach this conclusion the ECJ recalled that all correspondence between individuals, including that between lawyers and their clients, is protected by the right of privacy. The protection of this provision covers legal advice both regarding its existence and content. Accordingly, when consulting a lawyer, it can be reasonably expected that such communication is private and only in extraordinary circumstances the lawyer will disclose, without consent, that he is being consulted. In view of the above the Court went on further by arguing that whenever an intermediary is waived from his reporting obligations under the DAC 6 due to professional secrecy but at the same time he is obliged to notify other intermediaries of their reporting obligations, those other intermediaries become aware of the identity of the notifying intermediary, of his assessment that the arrangement is under the scope of the DAC 6 and, of his having been consulted. Indirectly, the tax authorities also become aware of that information. This entails an interference with Article 7 CFR.

Henceforth, it was examined whether those interferences were in line with Article 52(1) CFR. To this aim, firstly, it was concluded that the principle of legality was complied with as the DAC 6 expressly lays down the obligation to notify other intermediaries of their reporting obligations. Secondly, the ECJ ascertained that such an obligation met an objective of general interest recognized by the EU (i.e. “preventing the risk of tax avoidance and evasion”). Following the ECJ, however, this obligation could not be regarded as being strictly necessary as “the purpose of the reporting and notification obligations […] is not to check that lawyer-intermediaries operate within those limits, but to combat potentially aggressive tax practices, by ensuring that the information concerning the reportable cross-border arrangements is filed with the competent authorities.” As a result, it was considered that the DAC 6 infringes the privacy right as enshrined in Article 7 CFR.46

In a nutshell, the cases previously discussed demonstrate that, despite the lack of regulation in the DAC, under the domain of EU law, as a general rule, disclosure of tax information is a breach of the right to privacy. However, “cooperation duties are an integral part of tax systems in rule of law states”.47 Collection of taxes per se involves the provision of information by taxpayers and that does not violate the right to privacy if it is in accordance with the law; serves a legitimate purpose; and is necessary in a democratic society. Notably, in the tax area, limitations on the right to privacy might be justified while protecting the economic well-being of a country or for the prevention of tax evasion and avoidance. Therefore, the provision of information under the DAC does not imply prima facie a disproportionate infringement of this right, except in specific cases (i.e. DAC 6 and professional secrecy).

3.3 The right to confidentiality

Confidentiality provisions expressly prohibit the disclosure to the information exchanged to an unrelated third party whether on purpose or by accident. Thus, confidentiality is a personal duty of the tax authorities that obtain such information to keep it secret. In the domain of the DAC, taxpayers also shall be assured that the information “is used and disclosed only in accordance with the agreement on the basis of which it is exchanged”.48 As a result, these rules prevent the information obtained for purposes other than those established by the Directive.49 To this aim, the DAC outlines specific safeguards for the exchange of information, ensuring that data is transmitted securely and in accordance with confidentiality requirements.

According to Article 16(1), the information obtained under the DACs is protected by confidentiality rules and must be granted protection under the legislation of the receiving state.50 Therefore, the level of secrecy depends on the standards of the receiving jurisdiction. Further, the information exchanged under the provisions of DAC may only be used for the administration and enforcement of national regulations related to the taxes under the scope of the directive. However, since the approval of the DAC 7, the possibility of using the information obtained by means of the Directive for other taxes, such as VAT or other indirect taxes, has been opened up.51 Additionally, any information or documents obtained under the DAC may be invoked as evidence by the requesting Member State during judicial proceedings that may result in penalties due to the infringement of tax regulations.

Originally, information and documents received pursuant to DAC could be used for other purposes only if allowed by the Member State communicating information and “if the information can be used for similar purposes in the Member State communicating the information” (Article 16(2)). However, under the provisions of the DAC 7, the use of the information obtained through the DAC for other purposes is allowed, not only under the specific authorization of the Member State providing the information, but also under a new and discretionary system. This system creates a list of purposes authorized in advance by the Member States, so that individualized permission does not have to be requested in each case.

Finally, under Article 16(3) information might be transmitted to a third Member State if deemed to be useful for that State. In such a case, the Member State of origin of the information has the possibility to deny such exchange of information within a period of ten days.

In view of the foregoing, it can be observed that while it is true that the DAC regulates some aspects of the right of confidentiality, the lack of comprehensive regulation means that the safeguarding of these rights is left, again, to the discretion of each Member State, which have not made a uniform recognition of them.52 This situation might create distortions from the standpoint of taxpayers’ rights.

3.4 Data protection

On the other hand, data protection entails specific procedural safeguards as data quality requirements.53 Data protection is an area of EU law that has undergone major changes in recent years. In 2016, the General Data Protection Regulation (GDPR)54 was adopted with the aim of improving the overall framework for the processing of personal data to keep up with the challenges of the digital world.55 The GDPR lays down rules relating to the protection of processed data of natural persons56 and to the free movement of personal data. Safeguards related to the right to the protection of personal data are also recognized in Article 8 CFR as follows: “1. Everyone has the right to the protection of personal data concerning him or her. 2. Such data must be processed fairly for specified purposes and on the basis of the consent of the person concerned or some other legitimate basis laid down by law. Everyone has the right of access to data which has been collected concerning him or her, and the right to have it rectified”.

DAC 1 recognizes in relation to data protection that all exchange of information under the DAC is subject to Directive 95/46/EC (repealed by GDPR)57. This is recognized in Article 25 DAC which, after consultation with the European Data Protection Supervisor, makes clear references to the EU data protection instruments. However, according to the Recitals of the DAC limitations of certain rights and obligations provided by the data protection instruments might be considered to safeguard objectives of general interest. In particular, that is the case of Articles 10, 11, 12 and 21 of Directive 95/46,58 which lay down, respectively, the right of natural persons to be informed of a personal data processing operation where those data are obtained from them; the right of natural persons to be informed of those operations where those data have not been obtained from them; the right of access to those data; and the publicizing of personal data processing operations. According to the DAC, “such limitations are necessary and proportionate in view of the potential loss of revenue for Member States and the crucial importance of information covered by this Directive for the effectiveness of the fight against fraud”. DAC 5 Recital 6 goes one step further by establishing that, “[w]here this Directive requires that access to personal data by tax authorities be provided by law, this does not necessarily require an act of parliament […]. However, such a law should be clear and precise, and its application should be clear and foreseeable to persons subject to it”. Nevertheless, Article 25 DAC does not constitute a clear legal basis for the limitation of these rights59 and, further, it does not clarify to what extent the rights might be limited.

In this regard, even though the ECJ has rendered some cases on the legality of measures of treatment and retention of personal data in the context of cooperation procedures, no specific decision has been delivered as regards the compatibility of automatic exchange of information with data protection safeguards.

As an example, according to the ECJ in Puškár,60 EU law does not preclude the processing of personal data by the authorities of a Member State for the purpose of collecting tax and combating tax fraud such as that affected by drawing up of a list of persons, without the consent of the data subjects, provided that all of the conditions for the lawfulness of that processing of personal data required by Directive 95/46 be satisfied. Conversely, in Digital Rights Ireland61 the Data Retention Directive (Directive 2006/24/EC) was declared invalid. In this case, the Court held that the obligation to retain data in relation to a person’s private life without the user being informed constituted serious breach of Articles 7 and 8 CFR as that lack of notification was “likely to generate in the minds of the persons concerned the feeling that their private lives are the subject of constant surveillance”. Further, the data were subjected to automatic processing being, according to the Court, a significant risk of unlawful access.62 Even though the ECJ observed that the data was particularly important for the fight against organized crime, it was noted that the Directive retained data “without any differentiation, limitation or exception” and that no limitation on the access of competent authorities was granted. Recently, in Facebook Ireland and Schrems,63 the ECJ concluded that the instruments for the international exchange of tax information from the EU to the USA (Privacy Shield) violated the right to data protection under Article 8. The issue in the case at stake was that the limitations on the protection of personal data arising from US domestic legislation on access to and use by US authorities of transferred data (mainly in the context of law enforcement investigations) were not regulated by guarantees substantially equivalent to those required under EU law.

When it comes to the administrative cooperation procedure those safeguards might be subject to stricter limits. Thus, in Bara64 the ECJ found that, as a general rule, the subjects of the data shall be informed of the purposes of that processing and the categories of data concerned. However, according to the Court, that right could be limited if a legal basis exists, and appropriate safeguards were established, although those safeguards were not specified. For this reason, scholars argued that the relationship between taxation and data protection rules under the DAC was uncertain65 and that taxpayers’ rights were not sufficiently protected.

However, the situation improved slightly under the DAC 7 which extends the scope of protection of the rules of the GPDR for the purposes of the DACs by adding a new section to Article 25. Under this section, in the event of a breach of personal data, competent authorities of Member States may, as joint data controllers, ask the Commission to suspend exchanges of information with the Member States where the breach occurred. The rationale is to mitigate the risks of data breaches in the context of the exchange of information. According to the DAC 7, “This is in particular important for the purpose of ensuring legal certainty for data controllers and data processors […] while ensuring the protection of the rights of data subjects”. Thus, it can be observed that the DAC 7 to some extent widens the level of safeguards of data protection for taxpayers whose information is exchanged under the DACs.

3.5 Procedural rights

Finally, the exchange procedure may result in an interference with the right of defense enshrined in Article 47 CFR (right to an effective remedy). This occurs with respect to the position and participation of the parties concerned during the exchange of information. In this regard, the OECD has identified three specific guarantees applicable to the exchange of tax information, inter alia, the rights of notification, hearing and challenge.66 Again, the DAC does not regulate any provision regarding the position of taxpayers in the procedure for the exchange of tax information, however, the situation has been addressed by the ECJ.

In the Sabou67 case, the ECJ held that Directive 77/799/EEC on administrative cooperation (the precedent to the DAC) was only aimed at coordinating cross-border information exchanges from the perspective of Member States. The Directive did not “confer specific rights on the taxpayer”, particularly, the right to be heard, the right to be informed of a request for information or the right to verify the correctness of the data exchanged. To reach this conclusion, the ECJ distinguishes two phases in the tax inspection procedure: the investigation phase, in which information is collected; and the contradictory phase, in which a proposal of tax assessment is made. According to the Court, when the Administration proceeds to collect information, it is not obliged to inform the taxpayer or request his observations on the matter. Insofar as the request for tax information under the DAC falls within the first of the above-mentioned phases, the taxpayer concerned has no right to be informed. Similarly, in WebMindLicences,68 it was ruled that EU law does not preclude the tax authorities from using evidence obtained in an administrative cooperation procedure in the context of a parallel criminal procedure without the taxable person’s knowledge. This lack of taxpayers’ guarantees was criticized as “disappointing” from a taxpayer perspective.69

Shortly thereafter, in Berlioz70 the ECJ ascertained that the information requested by tax authorities was not foreseeably relevant within the meaning of DAC. Following the Court, the notion of foreseeable relevance as inferred from the DAC, “enable the requesting authority to obtain any information that seems to it to be justified for the purpose of its investigation, while not authorising it manifestly to exceed the parameters of that investigation nor to place an excessive burden on the requested authority”. Thus, the ECJ underlined that a taxpayer has the limited right to an effective judicial remedy to challenge the legality of the information order if it fails to meet the requirement of “foreseeable relevance”, although the material characteristics of this requirement were not defined. In addition, it was confirmed that the tax authorities of the requested state bear the burden of verifying whether the information requested under the DAC is indeed relevant to the tax investigation.

Finally, the ECJ addressed the reporting obligations under the DAC and the right to an effective remedy in État luxembourgeois.71 In the case at stake the Court ruled that information is not manifestly devoid of any foreseeable relevance “where it states the identity of the person holding the information in question, that of the taxpayer concerned by the investigation, and the period covered by that investigation, and where it relates to contracts, invoices and payments which, although not specifically identified, are defined by criteria relating, first, to the fact that they were concluded or carried out by the person holding the information, secondly, to the fact that they took place during the period covered by that investigation and, thirdly, to their connection with the taxpayer”. Following the ECJ, considering the need for the speed and efficiency of that cooperation, the CFR does not preclude the possibility that a Member State obliges a person to provide personal information, with the aim to respond on a request for exchange of information made by another Member State. Thus, when a person is obliged to provide information that affects his right to privacy or data protection, he must be granted the right to an effective remedy guaranteed by Article 47 CFR. Conversely, if the taxpayer concerned is not forced to disclose the information and therefore, he is not exposed to the risk of receiving a penalty in the event of non-compliance with that legal obligation, such a taxpayer is not able to exercise that right. Following the ECJ “only the last stage of that investigation, which begins with the sending of a proposal for correction or adjustment to the taxpayer concerned […] that taxpayer is able to exercise his or her right to be heard”.

All in all, according to the ECJ tax authorities are enabled to obtain information from a third party without notifying the taxpayer if it is well-founded to do so having achieved a proper balance between the interests of the individual and of those of the community in general. Further, the cases above described, demonstrate that the right to effective remedy is severely restricted in the administrative cooperation procedure. Thus, the taxpayer might directly challenge the legality of the information exchange whenever it is not “foreseeably relevant” or indirectly at a later stage (i.e. tax correction procedure) if the information is provided by a third party. In view of the above, it would be advisable that future amendments to the DAC or the Member States provide for some procedure or participation mechanisms in which the taxpayer concerned could be heard before the information is transmitted in order to verify that their right to privacy is not disproportionately affected or that no commercial, industrial or professional secrets are disclosed.72