The Luxembourg tax office had tried to use lawyers cited in the Panama Papers to get more information on how many companies had been created through the Mossack Fonseca law firm, the beneficiaries of these companies, transactions carried out and other details.

The Luxembourg bar association at the time had slammed the practice as a “fishing expedition” and had urged lawyers not to reveal any information under their professional secrecy obligations.

The Panama Papers are leaked documents detailing information on offshore entities used for tax avoidance and optimisation. The deals were organised through law firm Mossack Fonseca, which was active in 42 countries and headquartered in Panama. The company was dissolved in 2018.

More than 10,000 companies set up through the law firm were connected to Luxembourg. The Financial Sector Supervisory Commission (CSSF) in 2017 fined nine financial institutions a total of €2m after investigations based on the leaks. 

The papers were published in 2016 and the Luxembourg lawyers took their complaint to court last year, saying they had increasingly been pressured by the tax office for failing to provide the requested information.

In a 30-page verdict, the tribunal said the tax administration can only request information specific to an ongoing investigation or audit. It dismissed the demands made in the wake of Panama Papers, saying they did not meet either of those criteria.

The judges likened the tax administration’s behaviour to an abuse of power.  

The bar association on Thursday welcomed the verdict--which is up for appeal--saying it upheld the rule of law.

This article was originally published in French on Paperjam.