EU Faces Tax Avoidance Law Rewrite With Looming Legal Challenge

European Union policymakers could be forced to rewrite parts of the EU’s far-reaching tax reporting directive, if Europe’s highest court decides the rules are invalid.

The European Court of Justice is considering the constitutionality under EU law of the directive known as DAC6, including whether its language is too vague and whether the rules cast too wide a net. The questions were referred up from Belgian’s Constitutional Court.

If the court rules against the directive, member states would be able to keep the DAC6 laws they’ve already enacted—but those rules would be vulnerable to challenges domestically, EU-based lawyers said. A ...