Banned: Fishing in the Data Tax Lake?

Abstract

Data gathering and analysis are valuable tools in the global fight against tax fraud. However, their use raises significant legal questions, particularly regarding the extent to which it could qualify as a prohibited fishing expedition. Previous research identified two main characteristics of fishing expeditions: speculation and excessiveness. Judges and scholars claim fishing expeditions are prohibited even though a specific legal ground for this prohibition is lacking. Therefore, it is crucial to examine the legal grounds that can be relied upon to assess the legitimacy and limitations of (big) data tax audits in relation to the prohibition of fishing expeditions.By analysing case law from the Council of Europe, the European Union, Belgium and the Netherlands, this article identifies the implicit legal grounds that support the prohibition of fishing expeditions. It demonstrates how the prohibition is incorporated into the human rights framework, the general principles of good governance and the relevance criterion embedded in European and national legal provisions with regard to investigative powers of tax administrations, providing a comprehensive perspective on their rationale to prohibit fishing expeditions.