Belgium stops 'unlawful' sharing of 'Accidental Americans' tax data with US

Belgium stops 'unlawful' sharing of 'Accidental Americans' tax data with US
The US flag and the Belgian flag. Credit: Belga/Eric Lalmand

Belgium will stop sharing the data of so-called "accidental Americans" with the US tax authorities under the intergovernmental FATCA agreement.

The Belgian Data Protection Authority declared on Wednesday that the information transfers were "unlawful."

Under the US Foreign Account Tax Compliance Act (FATCA) anti-tax evasion measure, financial institutions all over the world must transmit the financial account data of all their customers identified as US citizens to the country's authorities.

This includes the data of "accidental Americans" – those who acquired American nationality because they were born in the United States but have no other ties to the country. However, as the US tax system is based on citizenship rather than residency, they must still pay American taxes.

Belgium was among the countries that previously signed an intergovernmental agreement with the United States to implement FATCA, meaning the Belgian tax authorities essentially act as an intermediary for relaying the information from banks to the US tax authority.

"The basic problem is that EU Member States breach their own laws in order to comply with US law," Association of Accidental Americans (AAA) president Fabien Lehagre said in a statement.

The courage to act

In practice, it concerns large and automatic information transfers, which violate European and national laws on personal data protection and privacy, including the EU General Data Protection Regulation (GDPR). Several reports by the European Parliament's PETI committee have already evidenced this.

"We are so happy that, finally, the Belgian data protection authority is amongst the first authorities – if not the first – with the courage to halt these violations, which is the only logical outcome from a legal perspective," Lehagre said. "And this just one day before the fifth anniversary of the application of the GDPR."

After the Slovak data protection authority already cast doubt on the legality of FATCA-induced data transfers, the Belgian Data Protection Authority (DPA) became the first to prohibit Belgian tax authorities from processing such data and sending it to the US Internal Revenue Service (IRS) tax authority.

"Ordering the cessation of data flows to the United States under the FATCA agreement may seem harsh, but once we find that they do not comply with the applicable law, we are obliged to stop these data flows," said Hielke Hijmans, the chair of the Litigation Chamber of the Belgian DPA.

Related News

The DPA's main reason to prohibit the data sharing was its "disproportionate character," as the FATCA required the transfer of nearly all Belgian-Americans – most of whom "do not pose any risk" in terms of tax avoidance or tax evasion.

Outside of Belgium, the AAA is awaiting a decision from the European Commission on whether it will take France to the EU's Court of Justice for not halting the FATCA-induced personal data transfer.

A case is also pending before the French administrative supreme court (the Conseil d’Etat), and the AAA has also launched a case in the Netherlands and Luxembourg to call a stop to such transfers.

Copyright © 2024 The Brussels Times. All Rights Reserved.