Access to the File and Equality of Arms: The Glencore Line

The administration knows its file. Defence begins when you know it too.

Assessments under Section 25f of the German VAT Act are rarely built from what was audited at the affected company itself. They are imported: from audit reports on suppliers, from criminal files against third parties, from control notices, from data analytics run through the Eurofisc networks — material from proceedings in which the taxpayer never participated and whose making he could not control. That is efficient, and administrative cooperation against fraud networks is legitimate. But it has a hard EU-law limit, drawn by the Court of Justice in Glencore: whoever is burdened with the results of other people’s proceedings must be given access to the evidence, must be heard, and must be able to have the use of that material reviewed by a court. Equality of arms is not a favour granted by the authority — it is a fundamental right. And in practice it is the most frequently overlooked defence line in the entire field of VAT fraud attribution.

What the Glencore line holds

In Glencore, the Hungarian tax administration denied an agricultural trader’s input VAT deduction by relying on findings it had made in proceedings against his suppliers — proceedings to which the trader was not a party and whose files he did not know. The Court of Justice accepted the principle of using such material, but tied it to three conditions that have set the standard ever since: the administration may not be bound by findings from related proceedings without the taxpayer being able to contest them in his own procedure; the taxpayer must be given access to the evidence on which the decision is based and the opportunity to comment on it; and the court must be able to review effectively the legality of how that evidence was obtained and used. In short: use, yes — black box, no.

The line has not remained an episode. In late 2025 the Court expressly carried it forward: evidence from criminal proceedings against other persons may be examined in the tax case only “provided that the rights guaranteed by EU law, in particular by the Charter, are observed — including the principle of equality of arms and the rights of the defence”. On the hearing, the Court is unambiguous: the right to put one’s position “effectively and meaningfully” before an adverse decision is taken forms an integral part of the rights of the defence — together with a statement of reasons specific and concrete enough for the addressee to understand and attack. And equality of arms under Article 47 of the Charter requires that each party can present its evidence “under conditions that do not place it at a clear disadvantage vis-à-vis its opponent”.

Why this decides cases in the data age

The weight of this line grows with every expansion stage of digital enforcement. E-invoicing, ViDA and CESOP give administrations a data view of supply chains that no single company has; risk selection is prepared algorithmically, and findings travel across Member States through Eurofisc. This produces precisely the structural asymmetry Glencore is aimed at: the assessment cites “findings of the tax administration” whose sources, data foundations and error rates the addressee cannot see. Whoever does not press for disclosure is defending against a phantom. Nor are the defence rights an end in themselves: the burden of establishing knowledge or means of knowledge lies with the authority and presumptions are prohibited — but those burden-of-proof rules can only be policed if the evidence is on the table. Access to the file is the enforcement condition of the burden of proof.

The German gap — and how EU law closes it

In candour: the German tax procedure knows no general, statutorily guaranteed right of access to the file. The Fiscal Code does not provide for it; the case law grants only a claim to a discretionary decision free of error — and the practice of the tax offices is unambiguous: before the decision on the objection, access to the file does not, in fact, take place. The consequence is an imbalance that must be named plainly: those affected frequently learn the actual foundations of the allegation — audit reports on the supplier, control notices, evaluations from data analytics — only once a criminal case is running in parallel and defence counsel obtains access to the file there under Section 147 of the German Code of Criminal Procedure (StPO) in conjunction with Section 385 AO. By then, the tax case has often long been assessed, enforced, frozen. This is exactly the gap EU law closes: where the denial of input VAT deduction or exemption rests on EU law — as it invariably does with Section 25f UStG — the defence rights of the Glencore line apply directly in the objection and court procedure as well: access to the decision-relevant evidence, a hearing before issuance, effective judicial review. Procedurally, this becomes a triad that must be set early: the documented application for access and disclosure already at the hearing stage and in the objection (based on the Glencore line and Section 364 AO); in the court proceedings, production of the authority’s files under Section 78 of the Fiscal Court Code (FGO) — and where the authority withholds documents on grounds of confidentiality, the in-camera procedure under Section 86(3) FGO, which makes the refusal judicially reviewable; in parallel, defence counsel’s access to the file under Section 147 StPO, whose findings are fed into the tax case in a controlled manner. Whoever does not combine these routes defends against a file he does not know.

Section 364 AO, Section 78 FGO: the national anchors of disclosure

EU law is the strongest lever, but not the only one. German procedural law contains two frequently unused anchors. In the objection stage, Section 364 of the Fiscal Code obliges the authority to disclose the assessment documents to the parties on request — and, where the grounds of the objection give cause, of its own motion; whoever attacks the assessment with substance creates exactly that cause. The provision does not carry a full right to inspect the file, but it forces disclosure of the foundations on which the assessment rests — and documented gaps between the assessment’s reasoning and the disclosed documents become an argument in themselves. In the court stage, the picture reverses completely: before the fiscal court, the parties have a statutory right under Section 78 of the Fiscal Court Code to inspect the court files and the authority files submitted to the court — the authority must produce its procedural files, and what it withholds the court cannot use. At the latest here, the objection placed early pays off: whoever applied for disclosure in the administrative procedure and documented the refusals demonstrates the asymmetry to the court — and shifts the weighing of the evidence. Together, the two anchors turn a discretionary practice into a duty of justification on the administration’s side.

The toolbox: from objection to application

The case law translates into a concrete application programme that belongs in every Section 25f case. Identification: the authority is to name all items of evidence and sources of knowledge on which it bases the denial — including third-party audit reports, criminal files, information requests and data analyses. Access: inspection of exactly that material, not a curated selection; redactions must be justified. Hearing: an opportunity to comment before the assessment is issued and before any worsening — an objection decision that introduces new facts or legal grounds without a prior hearing is challengeable under the Court’s recent case law. Use control: objection to the use of material to which no effective access was given; on the logic of the Glencore line, the court must leave such material out of account or restore access. Documentation: every application, every refusal, every partial grant goes on record — for the fiscal court proceedings and a possible reference to Luxembourg.

The second half of equality of arms lies in your own house: whoever can put a complete Evidence Pack of his own against the authority’s file — checks, timestamps, sources, approvals as of the relevant date — negotiates not as a supplicant but as a party with material of equal weight. In the special audit, in the objection, in the interim battle over suspension of enforcement: the combination of disclosure applications and one’s own evidence architecture is the core of modern fraud-attribution defence. The VSK team of German attorneys and tax advisers deploys both levers from the first procedural stage — because equality of arms can later only be criticised, no longer created.

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