Decision
Ms X and Department of Finance
From Office of the Information Commissioner (OIC)
Case number: OIC-111041-M7W4K2
Published on
From Office of the Information Commissioner (OIC)
Case number: OIC-111041-M7W4K2
Published on
Whether the Department was justified in refusing access to records concerning amendments made in 2010 to arrangements regarding withholding tax on royalties
4 August 2022
The applicant made an FOI request jointly to the Department and the Office of the Revenue Commissioners (the Revenue) on 30 November 2020. She referred to section 55 of the Finance Act 2010, which she said provided that withholding tax was not to apply to royalties paid by a company in the course of a trade or business to a company resident in a treaty country. She also referred to a statement of practice issued by Revenue in 2010, which she said provided for no withholding tax on patent royalties in certain circumstances. Her request sought records relating to:
The Department’s decision dated 19 January 2021 covered 25 records, of which it fully withheld one, released three in full and released the rest in part. It relied on sections 29(1) (deliberative process), 33(1)(d) (international relations), 33(2)(b)(ii) (certain Government or ministerial communications), 35(1)(a) (confidential information) and 37(1) (personal information) of the FOI Act in relation to the withheld information.
The applicant sought an internal review on 8 February 2021. The Department’s internal review decision of 25 February 2021 released further extracts from some of the records. It sought to rely also on section 36(1)(b) (commercially sensitive information) in relation to part of one record and otherwise affirmed its decision on the request.
On 30 July 2021, the applicant applied to this Office for a review of the Department’s decision. Her application also sought a review of Revenue’s decision on her request and is dealt with in my decision in Case No OIC-111047-X4W8J6.
I have now completed my review in accordance with section 22(2) of the FOI Act and I have decided to conclude it by way of a formal, binding decision. In carrying out my review, I have had regard to the above exchanges and correspondence between this Office, Revenue and the applicant and to the contents of the withheld records. I have also had regard to the provisions of the FOI Act.
The scope of this review is confined to the sole issue of whether the Department’s refusal to fully grant the applicant’s request was justified under the provisions of the FOI Act. In making my decision, it should be noted that it would not be appropriate for me to make a finding on whether or not any particular contacts constitute lobbying.
I see no reason to direct the release of any details redacted by the Department from certain records which it or Revenue has released from copies of the same records. Finally, for reasons set out in Case No OIC-111047-X4W8J6, it is not practicable to identify the different parts of each record under review that fall under the various exemptions claimed. I confirm that I have examined all of the withheld details.
The applicant says that she made her request so as to understand the process whereby a statutory amendment was soon followed by an exercise of executive discretion to remove an Irish tax obligation. However, section 13(4) of the FOI Act requires me not to take into account any reasons that the applicant has for making her FOI request.
Section 18(1) provides, that "if it is practicable to do so", access to an otherwise exempt record shall be granted by preparing a copy, in such form as the head of the public body concerned considers appropriate, of the record with the exempt information removed. Section 18(1) does not apply, however, if the copy provided for thereby would be misleading (section 18(2) refers). Whilst the Department has granted partial access to most of the records, the Commissioner takes the view that, generally, neither the definition of a record nor the provisions of section 18 envisage or require the extracting of particular sentences or occasional paragraphs from a withheld record for the purpose of granting access to those particular sentences or paragraphs.
Section 25(3) of the FOI Act requires me to take all reasonable precautions in the course of a review to prevent the disclosure of information contained in an exempt record or that would cause the record to be exempt if it contained that information. The Department’s schedule describes the withheld material in general terms. I must therefore limit the level of any further detail I can give about the records and also parts of the Department’s submission because of the requirements of section 25(3).
The release of records under FOI is generally understood to have the same effect as publishing them to the world at large.
The applicant refers to two Supreme Court judgements from 2020, which she says confirm that the statutory presumption is in favour of release of information and that it is not enough for an FOI body to assert an exemption. One of these judgements is The Minister for Communications, Energy and Natural Resources and the Information Commissioner & Ors, [2020] IESC 57 [59] (the eNet judgment). The Supreme Court said “it is the FOI body that must explain and justify a conclusion that the records are exempt by reference to the relevant provisions of the Act, and equally, it is the FOI body that must explain why the public interest does not justify release in the public interest.”
I also note that, in the Supreme Court case of Sheedy v the Information Commissioner ([2005] 2 I.L.R.M. 374, [2005] 2 IR 272, [2005] IESC 35) Kearns, J. made it clear that a general prediction without any supporting evidence is not sufficient to satisfy the requirement that access to the record could reasonably be expected to result in the outcome envisaged. He stated that “[a] mere assertion of an expectation of [prejudice] could never constitute sufficient evidence in this regard”.
However, while FOI bodies must justify their decisions, as highlighted in the eNet judgment in particular, this Office has an inquisitorial remit, which means that a failure by an FOI body to do so does not lead to an inevitable or statutorily mandated outcome. Rather, the Commissioner must adjudicate the merits of the decision to refuse by reason of an analysis of the records and the interests engaged, which might suggest either disclosure or refusal.
Section 35(1)(b) – duty of confidence
Section 41(1)(a) – disclosure prohibited by an enactment
The Department withheld record 15 under section 35(1)(a), which its schedule describes as relating to a conversation with a stakeholder. It withheld parts of a letter included in record 21 (the letter) under section 36(1)(b) of the FOI Act. It does not describe the letter in its schedule.
Having regard to the details concerned and the confidentiality requirements of the Taxes Consolidation Act 1997 (the TCA), in the overall circumstances I intend to consider record 15 and the letter under sections 35(1)(b) and 41(1)(a) of the FOI Act. I note that this Office’s Investigator put the applicant on notice of this possibility.
To put my findings into context, I set out below some general details of sections 35(1)(b), 41(1)(a), and section 851A of the TCA, and a summary of my findings on the application of section 41(1)(a) in Case No OIC-111047-X4W8J6.
Section 35(1)(b)
Section 35(1)(b) of the FOI Act requires the refusal of a record where disclosure of the information concerned would constitute a breach of a duty of confidence provided for by a provision of an agreement or enactment (other than a provision specified in column (3) in Part 1 or 2 of Schedule 3 of an enactment specified in that Schedule) or otherwise by law.
In particular, a duty of confidence provided for “otherwise by law” is generally accepted to include a duty of confidence arising in equity. The Commissioner accepts that breach of an equitable duty of confidence is comprehended by section 35(1)(b).
In the Supreme Court decision in the case of Mahon v Post Publications Ltd [2007] 3 I.R. 338 Fennelly J. confirmed that the requirements for a successful action based on a breach of an equitable duty of confidence, at least in a commercial setting, are found in the judgment of Megarry J. in Coco v. A. N. Clark (Engineers) Ltd. [1969] R.P.C. 41, at 47: “[T]hree elements are normally required if, apart from contract, a case of breach of confidence is to succeed. First, the information itself ... must 'have the necessary quality of confidence about it'. Secondly, that information must have been imparted in circumstances importing an obligation of confidence. Thirdly, there must be an unauthorised use of that information to the detriment of the party communicating it."
Fennelly J. summarised or restated the requirements of what he called “the contours” of the equitable doctrine of confidence as follows: “1. the information must in fact be confidential or secret: it must ... “have the necessary quality of confidence about it”; 2. it must have been communicated by the possessor of the information in circumstances which impose an obligation of confidence or trust on the person receiving it; 3. it must be wrongfully communicated by the person receiving it or by another person who is aware of the obligation of confidence.” The Commissioner has adopted this approach in considering whether disclosure of information would constitute a breach of an equitable duty of confidence.
In considering whether disclosure under FOI may be an unauthorised use of details detrimental to the party communicating it, the Commissioner understands that release of information without consent is enough for detriment to arise.
Section 35(1)(b) is not subject to the general public interest balancing test in section 35(3). However, it is established that the action for breach of confidence is itself subject to a public interest defence and the Commissioner may consider the public interest defence in the context of section 35(1)(b).
Furthermore, under section 35(2), the confidentiality exemption at subsection (1) does not apply to a record which was prepared by a head, director or staff member of an FOI body or a service provider, in the course of the performance of his or her functions, unless disclosure would constitute a breach of a duty of confidence that is owed to a person other than an FOI body, head, etc. of an FOI body.
Section 41(1)(a)
Section 41(1)(a) requires the refusal of a record the disclosure of which is prohibited by law of the European Union or any enactment, other than a provision specified in column (3) in Part 1 or 2 of Schedule 3 of an enactment specified in that Schedule. It is a mandatory provision and must be applied where its terms are met. There is no public interest test in section 41.
Section 851A of the TCA
Section 851A(1) of the TCA defines taxpayer information as “information of any kind and in any form relating to one or more persons that is -
Section 851A(2) of the TCA provides that all taxpayer information held by Revenue or by a service provider is confidential and may only be disclosed in accordance with section 851A or as is otherwise provided for by any other statutory provision. Except as authorised by section 851A, it is an offence for any person to whom taxpayer information is disclosed to further disseminate the information concerned (section 851A(3) refers). Section 851A(8) lists various grounds under which Revenue may disclose taxpayer information. Further to section 851A(8)(g) in particular, Revenue may disclose taxpayer information to the Department solely for the purposes of the formulation or evaluation of fiscal policy.
Schedule 3 to the FOI Act
Schedule 3 to the FOI Act excludes certain enactments from the application of sections 41 and 35 but does not list section 851A of the TCA as one of the excluded enactments/ provisions.
Case No OIC-111047-X4W8J6
Amongst other issues, Case No OIC-111047-X4W8J6 considered information that Revenue considered to be taxpayer information for the purposes of section 851A of the TCA, and to which it argued that section 41(1)(a) applied. The relevant details included copies of the letter referred to above. Mindful of section 25(3), the letter was sent to Revenue by a professional services firm. It concerns the matters the subject of the request and refers to the client entity’s business activities.
One of the applicant’s arguments was that section 851A (and in turn section 41(1)(a)) cannot apply to information given by companies or professional services firms to the Revenue to advocate for changes to taxation laws, or to correspondence from a party in advance of it becoming a taxpayer, because these do not comprise taxpayer information as defined by the TCA.
I accepted that confidentiality requirements apply to information voluntarily provided to Revenue by parties who are seeking amendments to, or clarifications of, tax laws and who refer to their own (or their client’s) business and/or tax affairs in this regard. I also accepted that the confidentiality requirements of the TCA apply to information that a person or entity may provide to Revenue in advance of becoming a taxpayer. I found that such information comprises taxpayer information which is covered by section 851A of the TCA and, in turn, section 41(1)(a) of the FOI Act. I adopt the relevant analysis and findings for the purposes of this review.
Applicant’s submission
This Office’s Investigator informed the applicant that it was open to me to consider the letter and record 15 under sections 41(1)(a) and/or 35(1)(b). The applicant’s response outlines that the judgment in DPP v the Information Commissioner [2021] IEHC 752 (the DPP case) is relevant. In the DPP case, the High Court found that access to a record could not be refused “simply on the basis that it is said to be merely a copy of a record held elsewhere” and “the right to access is not confined to the original”. The applicant says that the judgment also held that Minister for Justice v Information Commissioner ([2001] IEHC 35) supported this conclusion, in which it was held that duplicate documents held by another FOI body would be accessible. She says that Revenue may seek to rely on section 851A TCA 1997 but argues that this legislative provision only applies to Revenue and cannot be transferred to other public bodies.
In relation to the letter in particular, the applicant notes that the Department has released the client entity’s name and the fact that it was stated as being agreeable to the inclusion of its name in the professional services firm’s correspondence. I note that the Department has also released other information from the record, including some details in relation to the client entity. The applicant says that there is no claim in the letter that the correspondence concerned was provided to Revenue confidentially, and argues that correspondence from a party in advance of it becoming a taxpayer is not entitled to protection under section 41(1)(a).
Analysis and findings
The judgment in the DPP case is not, in my view, relevant to this case. Section 42(f) of the FOI Act provides that the Act does not apply to a record held or created by the DPP, other than a record relating to general administration. The DPP case concerned whether a copy of a record sent to the DPP by an FOI body, as held by that FOI body, is itself covered by section 42(f) of the FOI Act and therefore not subject to FOI.
The judgment found that the DPP and the FOI body held separate records for the purposes of the Act and that the FOI body could not rely on section 42(f) in relation to its copy of the record it sent to the DPP. It said that access could only be refused by the FOI body if some other exclusion or exemption applied.
This is not a case concerning whether information held by the Department is covered by the FOI Act. Rather, it concerns whether disclosure of the information by the Department is prohibited by a law for the purpose of section 41(1)(a), or whether the information is otherwise exempt under the provisions of the FOI Act. Thus, if for instance section 851A applies to taxpayer information in the hands of the Department, then section 41(1)(a) must be found to apply.
I accept that the letter contains taxpayer information and that Revenue disclosed it to the Department in accordance with section 851A(8)(g) of the TCA. In these circumstances, one would reasonably expect the Department to be bound by the confidentiality requirements of section 851A of the TCA, such that section 41(1)(a) applies to such information in the hands of the Department. One would also reasonably expect that section 35(1)(b) applies on the basis that disclosure constitutes a breach of a duty of confidence owed to the party to whom the information relates, as provided for by a provision of an enactment.
However, this is not a straightforward issue. While section 851A(2) refers to the confidentiality of taxpayer information held by Revenue and service providers, it does not specifically include any party to which Revenue may disclose information further to section 851A(8) of the TCA. At the same time, as noted above, it would seem to be an offence for Revenue to further disseminate the relevant information.
I do not need to determine this matter however. It seems to me that, in any event, the Department’s disclosure of the relevant details would amount to a breach of an equitable duty of confidence owed to the client entity to which the information relates, for the purposes of section 35(1)(b).
I note, in this regard, the applicant’s description of the details released from the letter and her view that finding an equitable duty of confidence to apply would eviscerate the statutory presumption in favour of disclosure as per the eNet judgment. However, as I have explained, this Office is required to consider whether a record is exempt further to an analysis of the records and the interests engaged, and that this exercise might suggest either disclosure or refusal.
I acknowledge that the client entity was agreeable to have its name included by the professional services firm (i.e. its agent) in the letter to Revenue. However, I do not consider this to indicate that the client entity was agreeing to any further dissemination of the relevant details, except where necessary for the purposes of responding to the letter and/or as provided for under the Taxes Acts. I accept that the withheld details are confidential, secret and have the necessary quality of confidence about them. Given the overall context set out above, I accept that they were communicated to the Department by Revenue in circumstances imposing an obligation of confidence or trust on the Department. I am not aware that the client entity to which the letter relates has otherwise consented to disclosure of the details concerned to the world at large.
I am satisfied that the three relevant tests have been met and that the Department owes an equitable duty of confidence to the client entity to which the information relates. While the Department has released the letter in part, I do not consider this to give me any basis to direct the release of the remainder. I find that the remainder of the letter is exempt under section 35(1)(b), subject to consideration of the public interest defence.
The Commissioner has acknowledged that the public interest grounds which may justify or excuse a breach of a duty of confidence are quite narrow and include, for example, the revelation of wrongdoing or danger to the public. While certain information may be of interest to the public in the sense that it may satisfy public curiosity, this does not necessarily mean that there is a public interest in disclosing the information. Having considered the public interest defence, I am not satisfied that I have any basis for finding that a breach of the duty of confidence owed may be excused in this case.
Again, bearing in mind the requirements of section 25(3), record 15 is a note of a conversation with a particular entity regarding the tax matters the subject of the request. It contains details that I accept reflect that entity’s own operations. I accept that the details are confidential, secret and have the necessary quality of confidence about them. Given the overall context of the communication, I accept that the details were communicated to the Department by the entity in circumstances imposing an obligation of confidence or trust on the Department. I am not aware that the entity has consented to the Department’s disclosure of the details.
I am satisfied that the three relevant tests have been met and that the Department owes an equitable duty of confidence to the party to whom the information relates. For the same reasons as set out above, I am not satisfied that I have any basis for finding that a breach of the duty of confidence owed may be excused in this case. I find that record 15 is exempt under section 35(1)(b) and I find also that section 35(2) does not apply.
I make the same findings regarding any other details that identify particular companies as contained in excerpts of other withheld records.
Section 33(1)(d) – international relations
The Department has withheld various details under section 33(1)(d), which provides that a head may refuse to grant an FOI request in relation to a record if, in the opinion of the head, access to it could reasonably be expected to affect adversely the international relations of the State. This provision does not require consideration of the public interest.
The Commissioner does not have to be satisfied that the adverse effect will definitely occur. It is sufficient for the FOI body to show that it expects such an outcome and that its expectations are reasonable, in the sense that there are adequate grounds for them. While an FOI body may have particular expertise in an area, the Commissioner has made it clear that, unless it is readily apparent how or why a harm could occur, he expects an FOI body making the claim to provide a specific and coherent explanation in support of its position.
Relevant factors include whether information is in the public domain or is otherwise available, the circumstances in which the record was compiled and developments since the date it was created. In considering other cases involving section 33(1)(d), the Commissioner has had regard to the expectations of the international community with regard to the information at issue, the sensitivity or confidentiality of the records and whether release of the records could result in a loss of trust or confidence in Ireland. I stress that each case is treated on its own merits.
Submissions
The Department’s decisions say that the government is actively negotiating and discussing reforms to international corporate tax rules at various international fora and also negotiating and engaging with existing and potential tax treaty partners. It says that disclosing the relevant information would gravely harm and undermine these negotiations and engagements. It says that it cannot provide further information because to do so would reveal the substance of the withheld details and therefore cause the harm that section 33 is designed to avoid.
The applicant’s submissions to this Office on section 33(1)(d) largely focus on Revenue’s reasons for applying the provision, which are set out in my decision in Case No OIC-111047-X4W8J6. In summary, Revenue referred to future international negotiations and other states’ expectations that Ireland will deal with such matters confidentially. The applicant says that, in the overall circumstances, there is no basis for a reasonable expectation that release of the relevant records would damage the State’s international relations. She says that the matter is primarily a question of domestic Irish law, not international relations. She acknowledges that there are important ongoing negotiations in relation to international corporate tax rules, led by the OECD and the EU, and that Ireland is recognised as having consistently and meaningfully engaged with other jurisdictions in relation to cross border taxation. She says, however, that the change in domestic law the subject of her request preceded these major developments and did not depend on any information provided in confidence to Ireland by other states. She says that the change was not secret and, for instance, was publicised by the IDA and professional service firms. She notes that the IDA was copied on correspondence from a professional services firm advocating for a change in law. She says that the changes were used by the State, via the IDA, to market Ireland as a destination for foreign direct investment.
The Department was invited to comment on the applicant’s arguments in its submission. It explains how release of the withheld information (details of which I cannot include here due to the requirements of section 25(3) of the FOI Act) could cause harm to the trust that exists between Ireland and certain other states, and in turn Ireland’s international relationship with such countries. It reiterates that sensitive negotiations are continuing with respect to international tax rules.
Case No OIC-111047-X4W8J6
My decision in this case said that I did not consider the matter to be a solely domestic issue. I noted that the information at issue concerned how international tax issues impact on Ireland’s strategic interests. I said that, although the relevant changes have been publicised, I had no reason to believe that the level of detail of the information at issue is in the public domain.
I accepted that bodies such as Revenue would normally inform other countries of its views on a particular matter in a measured manner, rather than by the disclosure of raw details of its analysis to the world at large. I accepted that diplomatic relations rely on trust between states and that a country’s international reputation is significant in this regard. I accepted that any country’s breach of such trust, even in relation to a specific matter, could cause difficulties in its wider relationship with the country or countries directly affected and also other states generally. Finally, I accepted that matters relating to international taxation can be contentious and can remain so even after passage of time.
Having regard to the overall circumstances, I accepted that the details at issue remain sensitive at this point in time. and that their disclosure to the world at large could cause difficulties between Ireland and other states in relation to international taxation and in turn other matters. I was satisfied that granting access to the records could reasonably be expected to affect adversely the international relations of the State. I found that the relevant information is exempt under section 33(1)(d) of the FOI Act.
Having considered the particular details at issue in this case, and for the same reasons set out above regarding my decision in Case No OIC-111047-X4W8J6, I am satisfied that granting access to them could reasonably be expected to affect adversely the international relations of the State. I find that section 33(1)(d) applies to the details concerned.
Section 37 - personal Information
Section 37(1)
The Department relies on section 37(1) in relation to names, contact information and other personal information of individuals (the identifying information), some of whom are personnel of companies that sought tax changes or clarity regarding taxes legislation. As in Case No OIC-111047-X4W8J6, the applicant takes particular issue with the redaction of names of personnel of companies or professional services firms and who wrote in such professional capacities to Revenue.
Section 37(1), subject to other provisions of section 37, requires the refusal of access to a record containing personal information. For the purposes of the FOI Act, personal information is defined as information about an identifiable individual that (a) would ordinarily be known only to the individual or members of the family, or friends, of the individual, or (b) is held by a public body on the understanding that it would be treated by it as confidential. The definition also includes a list of 14 non-exhaustive examples of what must be considered to be personal information, including (iii) information relating to the employment or employment history of the individual”. Where information can be classified as one of these 14 examples, there is no need for the requirements at (a) or (b) of the definition to also be met.
Section 37(2) of the FOI Act sets out certain circumstances in which 37(1) does not apply. Section 37(1) is also subject to section 37(5), of which only section 37(5)(a) is relevant in this case. This section provides that a request that would fall to be refused under section 37(1) may still be granted where, on balance, the public interest that the request should be granted outweighs the public interest that the right to privacy of the individuals to whom the information relates should be upheld.
Case No OIC-111047-X4W8J6
In summary, I found that information showing that an individual corresponded in a professional capacity with an FOI body about a particular matter is information relating to the individual’s employment or employment history. I found that information identifying such individuals comprises their personal information. I was also satisfied that the remaining details withheld under section 37 comprise personal information for the purposes of the FOI Act. I found that none of the circumstances set out section 37(2), further to which section 37(1) does not apply, arose.
In considering the public interest, I noted that the material released to date seemed to me to provide a reasonable amount of insight into the changes made in 2010 to the tax laws. I said that the disclosure of identifying information, including that concerning personnel of companies or professional services firms who contacted Revenue, would give minimal further insight into such matters, if indeed any insight at all. I said that, having regard to the nature of the information at issue, I was aware of no public interest factors in favour of its release that, on balance, outweighed the right to privacy of the individuals to whom it relates. I found that section 37(5)(a) does not apply.
I adopt the relevant analysis and findings in Case No OIC-111047-X4W8J6, for the purposes of considering sections 37(1) and (2) in the present review. Having examined the withheld identifying information, including that in relation to personnel of companies or professional services firms who contacted Revenue, I find that it is exempt under section 37(1) of the FOI Act. I also find that none of the circumstances set out section 37(2) arise.
In relation to section 37(5)(a), the Department says that there is a public interest in protecting the individual (or rather, I assume, the individual’s privacy). It says that, while the FOI Act provides for transparency and accountability of FOI bodies, this does not extend to personal information provided to the FOI body.
I understand the applicant to argue that there is a public interest in disclosing that an individual lobbied or engaged with an FOI body to either seek changes to or clarification of the law. However, and as noted at the start of this decision, I have no role in determining whether the contacts made in this case amounted to lobbying. Rather, the question is whether further details regarding the contacts should be disclosed under the FOI Act in the public interest. I do not consider it appropriate to direct the release in the public interest of third party personal information, effectively to the world at large, on the basis that the individuals concerned acted on behalf of companies that directly or indirectly contacted an FOI body in relation to tax laws.
I adopt the relevant analysis and findings in Case No OIC-111047-X4W8J6, for the purposes of considering section 37(5)(a) in this case also. Having regard to the nature of the information at issue, I am aware of no public interest factors in favour of its release that, on balance, outweighs the right to privacy of the individuals to whom it relates. I find that section 37(5)(a) does not apply.
Having regard to my findings above, there is no need for me to consider the other exemptions relied on in this case. I should also add that while some small excerpts may not of themselves meet the requirements of the particular exemptions that I have found to apply, I do not consider it in keeping with the Commissioner’s approach to section 18 to direct their release.
Having carried out a review under section 22(2) of the FOI Act, I hereby affirm the Department’s decision to withhold the remaining records under sections 33(1)(d), 35(1)(b) and 37(1) of the FOI Act.
Section 24 of the FOI Act sets out detailed provisions for an appeal to the High Court by a party to a review, or any other person affected by the decision. In summary, such an appeal, normally on a point of law, must be initiated not later than four weeks after notice of the decision was given to the person bringing the appeal.
Deirdre McGoldrick, Senior Investigator