Tax audits on big data: exploring the legitimacy and limits in light of the prohibition of fishing expeditions

Short description

The research project “Tax audits on big data: exploring the legitimacy and limits in light of the prohibition of fishing expeditions” is an FWO project and runs from 2019 to 2023. The main objective is to explore the legitimacy and limits of big data audits for tax purposes, induced from the principle of the prohibition of fishing expeditions in tax manners.

In our increasingly digitised society, tax administrations have started to explore the advantages of data that is gathered by companies, such as energy suppliers and providers of telecommunication and payment services. The availability of these so-called “big data” could make the global fight against tax fraud more efficient.

At the same time, this means that on a large scale often private information will be acquired by tax authorities, including information about individuals who do not act in a fraudulent manner at all. Moreover, tax authorities can share this information with other public authorities who can use the data for their own, unrelated purposes. Exploiting big data for tax purposes seems incompatible with the principle of prohibition of fishing expeditions in tax matters. According to this principle, tax authorities are in principle not allowed to search (“fish”) for information, the existence of which is uncertain. This principle seems generally accepted by tax legal scholarship, as well as by legislators and judges. Yet, the prohibition of fishing expeditions is not always interpreted in the same manner. Moreover, there is no explicit legal ground for this principle although it seems so generally accepted.

Therefore, the purpose of this research project is to explore the different meanings of the fishing principle to identify whether there is a(n implicit) legal basis and, ultimately, to assess if and under which conditions (keeping in mind the human rights scope) tax audits on big data are legitimate.