POLITICS & INSTITUTIONS - JUSTICE

Fatca

Court confirms accidental American’s data transfer



Second failure for accidental Americans in Luxembourg, who are waiting for a third decision. (Photo: Shutterstock)

Second failure for accidental Americans in Luxembourg, who are waiting for a third decision. (Photo: Shutterstock)

The Luxembourg administrative court has rejected a request to prevent the transfer of data of a so-called accidental American to the US tax authorities, as provided for by the Fatca agreement.

Around 300,000 Europeans are considered accidental Americans. Although they were born in the US they have only tenuous links to the country. However, a person born in the US must declare his or her income there and under the Foreign Account Tax Compliance Act (Fatca), banks throughout the world must transmit data of persons with US ties (holding an American passport or green card, place of birth, etc.) to tax authorities.

The Association of Accidental Americans (AAA), based in France, has been waging a battle against the rules, saying they don’t comply with the EU’s General Data Protection Regulation (GDPR) and even indirectly prevent certain European citizens born in the US from opening a bank account. The rule only applies to assets over $50,000 (€43,120).  

Second Luxembourg refusal

After several actions in France, the association tried to make itself heard in Luxembourg last December, by asking the tax administration, via the law firm NautaDutilh, to stop data transfers to the United States provided for by the Fatca agreement. This was refused and the AAA lodged an appeal with the administrative court, which has now again been rejected.

“We are defending the AAA, but also an individual accidental American. This French resident with dual French and American citizenship was informed in May 2020, by a Luxembourg banking institution, that the Luxembourg tax authorities would share his bank account data with the relevant US authorities, although he had less than $50,000 in his account,” said lawyer Vincent Wellens. “The banks are not obliged to share his data, but do so because they would have to change all their procedures and because they don't want to take any risks regarding Fatca. They were to be transferred by 30 September,” said Wellens. To speed up the procedure and have a return before that date, “we tried to introduce an administrative summary procedure,” he said.

Global request pending

The Luxembourg administrative court in September “rejected the request for interim measures concerning the transfer of personal data by the Luxembourg tax administration to the US authorities under Fatca, considering that the alleged violations of the GDPR invoked by the applicant were not sufficiently serious.” The individual's data was therefore sent to the US tax authorities.

“We knew we had a 20% chance of winning, but we took a chance,” the lawyer said. Although he did not obtain the requested interim measures, he is still waiting for a decision on the AAA's global request to stop the transfer of data under the Fatca agreement altogether. The hearing is not expected to take place before the end of 2022, according to Wellens.

This story was first published in French on Paperjam. It has been translated and edited for Delano.