For a long time, the victims of FATCA (introduction in Dutch) have been trying to draw attention to how the US government violates their fundamental rights. It finally looks like a positive development is underway thanks to the decision by the Belgian data protection supervisor.

Hopefully the other European data protection supervisors will follow.

The Belgian data protection authority

Press release: Belgian DPA prohibits the transfer of tax data of Belgian “Accidental Americans” to the USA, 24 May 2023:

Belgian DPA prohibits the transfer of tax data of Belgian “Accidental Americans” to the USA

The Belgian Data protection authority today declared unlawful, and decided to prohibit, the transfers of personal data of Belgian “Accidental Americans” by the Belgian Federal Public Service Finance (FPS Finance) to the US tax authorities under the intergovernmental FATCA agreement. According to the Belgian DPA, the data processing carried out under this agreement does not comply with all the principles of the GDPR, including the rules on data transfers outside the EU. It also asks the FPS Finance to alert the competent legislator of the shortcomings identified by the DPA.

Generalized tax data sharing under FATCA

The intergovernmental agreement commonly called “FATCA” (“Foreign Account Tax Compliance Act”) provides for the communication of data relating to Americans residing abroad to the American tax authority (IRS) for the purpose of combating tax fraud. Domestic financial institutions are required to forward this data to the tax authority of the country of residence (in Belgium: the FPS Finance), which, under the agreement, will in turn transfer the data to the IRS.

At the end of 2020, the Belgian DPA received a complaint from a person with dual Belgian and American citizenship and from the “Accidental Americans Association of Belgium”. The complainants believe that the exchange of information with the IRS under the agreement does not comply with all the principles of the GDPR and should be stopped. The FPS Finance invokes an exception provided for in Article 96 of the GDPR, according to which international agreements existing before the implementation of the GDPR may nevertheless remain in force, provided that they complied with the law applicable at the time they were concluded.

The Litigation Chamber of the Belgian DPA notes that the generalized and undifferentiated transfer of tax data provided for in the agreement does not respect the principle of purpose limitation (the agreement does not contain exact objectives for the transfer of data); nor the principle of proportionality and data minimisation (only data strictly necessary for the purposes sought, in this case combatting tax fraud, can be processed). The Litigation Chamber also notes that the “stand still” effect of article 96 GDPR is limited in scope.

Moreover, the Litigation Chamber recalls that this article 96 has to be read in a restrictive way.

Hielke Hijmans, Chairman of the Litigation Chamber: “Tomorrow we celebrate the 5th year of application of the GDPR. Article 96 cannot be intended to allow that international agreements remain contrary to the GDPR over time. The exception provided for international agreements concluded before the implementation of the GDPR does not exempt EU member states from (re)negotiating an agreement to make it GDPR compliant.”

The Litigation Chamber also finds that the FATCA agreement does not contain appropriate safeguards to ensure that exported personal data is afforded a similar level of protection as data within the EU.

Conclusions of the Litigation Chamber

The Litigation Chamber concludes that the transfers of data of Americans residing in Belgium to an authority located in a country outside the EU (which cannot offer an adequate level of data protection) are unlawful. For this reason, the Belgian DPA prohibits the FPS Finance from processing the complainants’ data and asks it to alert the competent legislator of this prohibition and of the shortcomings found.

The Belgian DPA also orders the FPS Finance to inform in a complete and accessible manner the data subjects of the data processing carried out as part of the FATCA agreement and of its modalities. It also asks to carry out a “DPIA” which is an analysis of the risks associated with this data processing.

The parties can appeal this decision.

Hielke Hijmans, Chairman of the Litigation Chamber, concludes: “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. This principle has been confirmed in the rulings known as the “Schrems rulings”.

Decision (in French).

Association des Américains Accidentels (AAA)

This organisation has supported the compliants filed with the Belgian DPA. See on twitter,

24 May:

📰 Our press release following today’s decision of the @APD_GBA

👉 This decision is great news for the tens of thousands of accidental Americans and Americans who live in Belgium.

👉 #FATCA violates #GDPR, it’s now confirmed !@CNIL @toezicht_AP @GPDP_IT @EP_Petitions pic.twitter.com/TeyFrAOQ1S

— Accidental Americans (@USAccidental) May 24, 2023

27 May:

💥 𝗕𝗿𝗲𝗮𝗸𝗶𝗻𝗴 𝗻𝗲𝘄𝘀 💥

The Accidental Americans Association (AAA) strikes a big blow today 👊

📝 This morning, 23 lawsuits have been filed with 🇪🇺 data protection authorities challenging the legality of #FATCA agreements!@afpfr @Reuters @AP pic.twitter.com/sLaxOVpLJP

— Accidental Americans (@USAccidental) May 27, 2023

More information:

• Press release AAA.
• Fabien Lehagre on LinkedIN, in this post announces the decision:

📢 Breaking News! [#FATCA] ✌

😊 🗣️ 7 years that I fight to denounce the illegality of FATCA and with Vincent Wellens and all the NautaDutilh team we have just obtained a huge legal victory in Belgium ⚖️

🔴 The Belgian Data Protection Authority (APD) has just declared the transfer of personal fiscal information of accidental American-Belgian citizens to the United States, as outlined in the Foreign Account Tax Compliance Act (FATCA) intergovernmental agreement, as illegal.

🔐 According to the APD, the data processing activities conducted under this agreement do not fully comply with the principles of the #GDPR, including rules regarding data transfers outside the European Union.

🔍 The Contentious Chamber has determined that the generalized and undifferentiated transfer of fiscal data, as outlined in the agreement, violates both the principle of purpose (as the agreement lacks precise objectives for data transfer) and the principles of proportionality and data minimization (only strictly necessary data for the intended purposes, in this case, combating tax fraud, may be processed). The Contentious Chamber also finds that the “stand-still” effect of Article 96 of the GDPR has limited scope.

More details on the decision
👇

and also published a press release:

[#FATCA – #GDPR]
📰 Our press release following today’s decision of the Autorité de protection des données – Gegevensbeschermingsautoriteit

👉 After the decision of the Irish authority to prohibit the transfers of data carried out by Facebook, it is the turn of the Belgian authority to take an equally important.

👉 This decision is great news for the tens of thousands of accidental Americans and Americans who live in Belgium.

👉 It will be interesting to see if the IRS applies the 30% penalties to Belgian banks on all their financial flows from the United States.

The Isaac Brock Society (Canadian FATCA-victims) mentioned the decision in an article on the site.

The media

Some articles:

• Bloomberg Tax: Belgium Stops ‘Unlawful’ Sharing of Accidental Americans’ Data.
• L’Echo, Le fisc viole le RGPD en transmettant des données aux USA.
• Americans Abroad, ACA’s statement on the recent Belgian Data Protection Authority ruling on FATCA.
• International Adviser: Belgium to stop sharing data on ‘accidental’ Americans to IRS.
• Virginia Tax Talk: Belgium Fights Back! No FATCA Info to IRS – Deep Dive the Belgian Decision, LinkedIn version.
• Kevin Pinner on Law360: Belgium To Stop Sharing Data On US Residents With IRS.

Twitter

Some posts.

Democrats Abroad:

FOR IMMEDIATE RELEASE – Response to Belgium’s suspension of #FATCA IGA #TaxTwitter #IRS@USTreasury #Taxation #RBT #CBT https://t.co/srBsQLLu7A

— Democrats Abroad Seniors Caucus (@DA_SeniorCaucus) May 30, 2023

A FATCA-victim:

Following this week’s decision by the Belgian Data Protection Authority, I am sure #FATCA is at the top of @EU_EDPB’s priorities to ensure a consistent application of #GDPR and end the Kafkaesque vicious circle. See today’s letter from my legal team👇🏻 pic.twitter.com/4Jx4Y9yYjS

— Jenny❤️🐱🐝 🇬🇧🏴󠁧󠁢󠁥󠁮󠁧󠁿 (@CrossBriton) May 26, 2023

The mother of a FATCA-victim:

As the mom of a now former Accidental American that had to renounce before I could secure the financing to buy their freedom from the US I can tell you that they do exist. My child had their savings account closed due to FATCA & only regained upon renunciation of US citizenship.

— Susanne DW (@Malichi2067) May 30, 2023

BACKGROUND: US law causing problems for its citizens abroad

The US has a different system of taxation from all other countries in the world, ‘Citizenship-Based Taxation’ (CBT), read my introduction in Dutch on FATCA and my articles in Dutch and English. Some recent articles in English:

• No ‘tax justice’ for US persons | FATCA, 26 November 2022.
• FATCA-report of the delegation of the European Parliament, visiting the US, 1 September 2022.
• European fundamental rights pretensions and sour reality, 1 December 2021.
• Fundamental change to international tax rules should include abolishment of Citizen Based Taxation | FATCA, financial fundamental rights, Europe, 23 April 2021.

The international exchange of tax information shows that governments may harm decent people in their efferts to ‘slash the scope for tax abuse’.

Fundamental rights are not only an issue in the relationship with the US. Read HMRC giving Hong Kong refugees’ financial details to China, the Telegraph.

Addition 13 June 2023
There are translations in Dutch and English available, look here.