Belgium’s Court of Appeal Reverses Decision on Sharing Tax Data with US for Accidental Americans

As reported by the Brussels Times, the Brussels Court of Appeal has overturned a prior order from the Belgian Data Protection Authority (DPA), which had instructed Belgium to cease sharing the information of individuals known as “accidental Americans” with the US tax authorities.

Belgium’s Court of Appeal has overturned a previous order from the Belgian Data Protection Authority (DPA)that directed the country to cease sharing tax data of “accidental Americans” with the United States. The dispute revolves around the US Foreign Account Tax Compliance Act (FATCA), which mandates global financial institutions to provide the US tax authorities with financial account data of clients identified as US citizens.

“Accidental Americans” are individuals who hold American nationality due to being born in the United States but lack other ties to the country. Despite never residing in the US, they are required to pay American taxes because the US tax system is based on citizenship rather than residency.

Read our previous coverage of the decision of the data protection authority:

• Belgium’s Data Protection Authority forbids ‘Unlawful’ Sharing of Accidental Americans’ Data
• Suspension lifted: Belgian data exchange with the US under FATCA resumed

Brussels Court of Appeal overturned the decision

Belgium, having signed an intergovernmental agreement with the US to implement FATCA, acts as an intermediary for transferring information from banks to the US tax authority. In May 2023, the Belgian DPA declared such information transfers as “unlawful” and instructed the country’s tax authorities to halt them. This decision was welcomed by accidental Americans in Belgium, but the Brussels Court of Appeal has now overturned it.

FATCA involves extensive and automatic data transfers that violate European and national laws on personal data protection, including the EU General Data Protection Regulation (GDPR). The DPA’s initial prohibition was based on the “disproportionate character” of FATCA, as it required information transfers for nearly all Belgian Americans, most of whom posed no tax avoidance or evasion risk.

Belgian tax administration annulled DPA’s decision

Despite the annulment by the Court of Appeal, the merits of the case were not addressed. The Court has sent the case back to the Belgian DPA, urging a clearer explanation of its reasoning against FATCA-induced data transfers.

Beyond Belgium, the European Commission is awaiting a decision on whether to take France to the EU’s Court of Justice for not halting FATCA-induced data transfers. Similar cases are pending in France’s Conseil d’Etat, with Luxembourg expected to issue a judgment on such transfers in the first half of 2024.

More information about FATCA and tax data of Belgian-Americans

Americans Overseas informs local and European parliaments about the effects and issues European citizens face with these recently introduced laws. By continuously putting the topic on the agenda and giving it attention, several changes have been achieved.

We started Americans Overseas to assist people from all over the world by providing accurate information to prevent unnecessary panic and offering free and non-binding assistance. If necessary, we have a network of affordable professionals (accountants) who can help you with your tax obligations.

If you have more questions about the implications of FATCA data transfers for accidental Americans, you can contact us at Americans Overseas.

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Source: Brussels Times