Legal professional privilege and the Tax Authorities: the Spanish Bar Association questions the requirement for taxpayers to disclose due diligence reports

The Spanish Bar Association has expressly challenged the position upheld by the Central Economic-Administrative Court regarding the authority of the Spanish Tax Agency to require companies to submit due diligence reports, on the grounds that such practice may infringe the scope of legal professional privilege and, ultimately, the fundamental right of defence.

Due diligence reports—commonly prepared in the context of share purchase transactions, acquisitions or merger processes—are intended to assess a company’s legal, economic and tax situation. In its decision of 15 October 2025, the TEAC held that the tax authorities could request these documents directly from the taxpayer without the need for specific justification, arguing that legal professional privilege was not breached since the request was addressed to the client holding the documents rather than to the lawyer who prepared them.

In response to this approach, the Spanish Bar has issued a report advocating for a broad interpretation of legal professional privilege. According to this analysis, such protection is not limited to communications between lawyer and client, but also extends to documents produced within the professional relationship, even after they have been delivered to the client. Consequently, such documents should not be accessible to the authorities, even through requests addressed to the taxpayer.

The report emphasizes that legal professional privilege is not merely a personal right of the lawyer to refuse to testify, but a fundamental right belonging to the client, with an objective dimension that encompasses both communications and documents forming part of the legal relationship. From this perspective, the law does not distinguish based on who physically holds the documents, meaning that their transfer to the client does not result in the loss of their confidential nature.

It also highlights the structural role of confidentiality within the rule of law, as a fundamental element underpinning the trust-based relationship between lawyer and client. In this regard, it recalls that the case law of the Court of Justice of the European Union has reinforced the protection not only of the content of legal advice, but also of its very existence.

From a systemic standpoint, the Spanish Bar warns that allowing the authorities to access such reports via the client would create an internal contradiction within the legal system, effectively undermining the protection afforded by legal professional privilege. It therefore concludes that the tax authorities should not be able to obtain such documentation, whether directly or indirectly, as it is protected under the right of defence.

However, the report introduces an important qualification: such protection does not extend to third parties outside the lawyer-client relationship who may have received the reports.

Finally, the Spanish Bar considers that the TEAC’s position is insufficient in light of the current legal framework, particularly following the enactment of Organic Law 5/2024 on the Right of Defence, as it fails to adequately take into account the objective dimension of legal professional privilege and the inviolability of documents linked to legal defence. This position reinforces the role of legal professional privilege as a cornerstone of the right of defence in tax matters and within the legal system as a whole, which in practice requires particular caution in the preparation, handling and potential circulation of due diligence reports in complex corporate transactions.

In this regard, experience shows that legal and tax planning at an early stage of such transactions is crucial not only to ensure regulatory compliance, but also to properly safeguard protected areas of confidentiality. It is precisely at this point that specialized advice becomes particularly relevant, enabling both corporate and tax perspectives to be integrated from the outset. Under this approach, ILIA ETL GLOBAL advises companies and groups in acquisition, restructuring and due diligence processes, incorporating safeguards for legal professional privilege and the right of defence into the very structure of the transaction.