The Accidental Americans Association (AAA) has brought evidence before the European Parliament to show that the US’ Foreign Account Tax Compliance Act (Fatca) is in breach of EU data protection rules.
When the legislation was first introduced, the European commission understood that it was potentially in conflict with EU law.
Fatca requires foreign financial institutions to share bank account data of US citizens with the Internal Revenue Service (IRS) for taxation purposes.
Filippo Noseda, partner at law firm Mishcon de Reya, who is looking after a legal challenge by an US expat against HM Revenue & Customs for its Fatca compliance, said that the EU acknowledged such conflicts at the time.
In letters to different ‘accidentals’ the EU Commission said it needed to “find a solution to make Fatca more proportionate and more workable”.
Change of mind
Additionally, a report published in June 2012 by the Article 29 Working Party 29 (WP29), now known as European Data Protection Board (EDPB) said: “WP29 doesn’t see how compliance with the [data protection] directive can be simultaneously achieved.”
The Commission’s position changed, however.
In 2018, it said it was not its role to evaluate inter-governmental agreements concluded by Member States, and that the Commission was not part of the negotiations between the states and the US.
In February 2019, the WP29 also refused to look into the legality of Fatca.
But Ismini Rigopoulou, legal and policy officer, international and European affairs at the National Commission for Information and Freedom in France, said that it is not up to the EDP to deal with individual complaints.
The EDPB issues general guidance and, as such, complaints should be directed towards national data protection authorities, she added.
Playing games
This prompted some members of the European Parliament (MEPs) to criticise the Commission.
Peter Jahr, MEP for Germany, said: “There are items of collateral damage that were not envisaged.
“For those concerned, too little has been done.”
MEP for the Netherlands, Sophia In ‘T Veld, accused the Commission of playing politics.
“We all have an obligation to stand up for [Accidental Americans’] rights and their interests.
“It is annoying that the European Commission and Member States put trans-Atlantic relations over the interests of EU citizens.”
Keep challenging
But this, said Fabien Lehargre, president of the AAA, is not just a fight against Fatca, but against the US’ extra-territoriality; especially considering the “lack of reciprocity” the EU has with the US.
“We are now awaiting for the European Commission not just to start infringement proceedings against France, but also to take action with the US to convince it to re-negotiate bilateral agreements with the Member States with a derogation for all dual nationals,” he added.
In October 2019, Lehagre and the AAA took legal action against France by taking the matter to the European Commission, after losing in France’s top court in the summer.
Lehagre told International Adviser: “I hope that my message to the Commission will be heard and that it will agree to open an infringement procedure against France.
“It is more than ever necessary for the Court of Justice of the European Union to decide on the compatibility of Fatca with European law.”
