Belgium will cease sharing data of "accidental Americans" with US tax authorities after the country's Data Protection Authority deemed the transfers unlawful. The sharing was required under the US Foreign Account Tax Compliance Act (FATCA), but accidental Americans argue they are unfairly affected. The Belgian authority found the information-sharing violated the EU's GDPR.
According to Bloomberg, Belgium halts “unlawful” sharing of accidental Americans’ data. The question is whether the Belgian government and the banks will comply with this.
In a recent development, Belgium has announced that it will no longer share the data of “accidental Americans” with US tax authorities. This decision comes after Belgium’s Data Protection Authority deemed the transfer of such information to be unlawful. The announcement was made by the government on Wednesday 24th of May.
The sharing of data of “accidental Americans” was taking place under the US Foreign Account Tax Compliance Act (FATCA), which serves as an anti-tax evasion measure. As per FATCA, foreign banks are required to send information about accounts held by Americans to their respective governments, which are then obligated to share with the IRS.
Although the law was primarily enacted to catch American tax evaders who stash their funds overseas, it also unintentionally affects “accidental Americans.” These individuals possess US citizenship by birth but are primarily established overseas. They argue that they are unfairly included in a disclosure process that has little relevance to their connection with the country. The consequences faced by some of these accidental Americans include denial of banking services and various bureaucratic hassles in their home countries.
Belgium’s Data Protection Authority concluded that the sharing of information violates the European Union’s General Data Protection Regulation (GDPR). The investigation into this matter was initiated after a group of accidental Americans and a dual Belgian-American citizen filed a complaint in 2020. This was revealed in a statement released by the government.
Under Article 96 of the GDPR, international agreements that were in effect before the implementation of the EU regulation are allowed to stand if they complied with the law at the time of their conclusion.
However, both the data authority and the Belgian Litigation Chamber found that the US-Belgian FATCA agreement’s transfer of tax data lacked specificity and failed to meet the requirements outlined in international agreements. These agreements necessitate clear objectives for data transfer and mandate the processing of only “strictly” necessary data for the intended purposes.
Hielke Hijmans, the chairman of the Litigation Chamber, stated in the government’s statement, “Article 96 cannot be intended to allow that international agreements remain contrary to the GDPR over time.” He emphasized that the exemption for pre-existing international agreements does not relieve EU member states from renegotiating agreements to ensure compliance with GDPR.
Furthermore, the Litigation Chamber determined that FATCA did not include adequate safeguards to ensure that exported personal data receives a similar level of protection as data within the EU. Hijmans stated that while ordering the cessation of data flows to the United States under the FATCA agreement might appear severe, it is their obligation to halt such flows when they find non-compliance with the applicable law. The decision is subject to appeal, as noted by the authority.
The US Treasury and the Internal Revenue Service have declined to comment at this time.
Americans Overseas is in contact with various governments and is following this news closely. Unfortunately, it does nothing with the tax return obligation that everyone has, but it does make clear how much power America has in relation to other countries.
We, the founders of Americans Overseas, were born in the Netherlands and obtained American nationality through our (American) mother. When we heard about this for the first time around 2013, we were in total disbelief (it can’t be true!), anger (how can they do this?), fear (am I going to get fined or pick up other problems?), and panic (what should I do?).
It is (unfortunately) true that there is an additional American tax levy. But there’s no information from the local government, and when approached, the consulate referred us to the IRS, and the IRS was impenetrable.
That’s why we started this initiative to help people from all over the world by providing proper information to avoid unnecessary panic and offering help free of obligation and free of charge. If needed, we have a network of affordable professionals (accountants) who can help you with your tax obligations.
If you have more questions about the US exit tax and the US tax obligation, you can contact us at Americans Overseas.
Understanding the US tax system, the obligations, and all the additional terms can be difficult. Especially if one lives outside of America. Is your question not answered? Contact us.
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