This is a good week in which to speak about another group of people – apart from non-domiciled peers of the realm – who are currently having problems with taxes in different parts of Europe. Lawyers have their tax problems, too.First, there is VAT. For a long time, French lawyers have been pushing for a reduced rate of VAT for legal services, on the grounds that the tax impedes access to justice. The Council of Bars and Law Societies of Europe has taken up the matter with the European Commission in the past, but without success. It may surprise you to know that not all lawyers in Europe are in any case subject to VAT. In Belgium and Greece, there is no VAT payable on legal services. Soon it will be Belgium alone, since one of the measures introduced by the Greek government in response to its current severe economic crisis is to levy VAT on legal services. Belgium negotiated an opt-out for lawyers from a long-ago VAT directive. And there are, of course, different rates applicable to legal services in the various member states, depending on the national VAT rate.

Interestingly, there is now a case (C-492/08) before the European Court of Justice on the intersection between VAT and access to justice. The case is brought by the commission against France, because France levies a reduced VAT rate of 5.5% in relation to services rendered by lawyers in the context of partial or full legal aid. France says that such a reduction guarantees access to justice, but the commission says, among other things, the following: first, access to justice is not an argument which relates to VAT but rather to the amount of legal aid which the government chooses to grant; and second, the social nature of lawyers’ activities is not sufficient for them to fall within the those social categories which benefit from VAT reductions.

Unfortunately for France and for those who support its arguments, the advocate general has just published his opinion, and it supports the commission and not France. He rejects the argument that a lower rate of VAT would aid access to justice. On the contrary, he says, a higher rate would enable the French government to collect additional resources that could be made available for legal aid. Second, he does not support the argument that lawyers can be ‘organisations recognised as being devoted to social well-being’, which the VAT directive requires for a reduced rate in this category. He argues that, in order to qualify, the organisation must do such work as its main activity and on a fairly permanent basis, whereas lawyers are able to provide a range of other services which clearly would not fall within the category.

The long analysis of ‘social well-being’ and lawyers’ activities makes interesting reading, particularly for legal aid lawyers – but, unfortunately, at present only for those who can follow an eclectic selection of EU official languages other than English, because the opinion is not yet translated into English. For instance, at one point he says a legal aid lawyer’s work is not different to the usual assistance given to any client, but just complements it – in other words, it gives a ‘social coloration’ (to translate the phrase literally) to the lawyer’s traditional function, and therefore does not qualify it for reduction under this part of the directive. The court usually follows the advocate general’s opinion.

In Serbia, they have other tax problems. The Serbian government – presumably to maximise tax collection – is considering introducing legislation which would require everyone, including lawyers, to collect fees through what is called a fiscal cash register: in other words, a cash register just like that in a supermarket. The legal profession is opposed to such a move on a variety of grounds, including confidentiality and the fact that the legislation as originally drafted would give the tax authorities the power to close down a law firm that did not comply. The government in the Former Yugoslav Republic of Macedonia (FYROM) is considering using the same methods against its lawyers, too. The CCBE has pointed out EU norms to the Serbian government.

So, tax problems are the flavour of the month all round, it seems.