updated 2:57 PM CEST, Sep 21, 2023

Accidental Americans Ass'n files legal actions over FATCA data transfers in two EU countries

 The Paris based Association des Américains Accidentels (Association of Accidental Americans, or AAA) has filed two legal complaints simultaneously in Belgium and Luxembourg, in which it demands the “immediate halt to the transfer of European citizens’ personal data to the United States”.

The complaints are the latest in a series of legal actions the group has taken since it was founded in 2017 by a U.S.-born French citizen Fabien Lehagre, and comes as so-called accidental Americans across Europe in particular are facing what their banks say are final deadlines to either produce U.S. tax identification numbers or prepare to have their bank accounts closed.

Fabien Lehagre croppedAnnouncing the AAA's latest legal actions, for which it has retained the international law firm NautaDutilh to represent it, AAA president Lehagre noted that they were being initiated more than a year after the AAA had asked the European Commission to initiate an infringement procedure against the way it says France is enforcing FATCA , "since the country's highest administrative court, the Council of State, refused to recognize the illegality of these transfers", in a ruling on July 19, 2019.

As reported, the Conseil d'Etat declared at that time that it saw no legal basis to support the AAA's claims that the way France currently implements FATCA violated the privacy of dual French/American citizens.

Focus on 'illegal' use
of personal data 

The AAA's legal claims in Belgium and Luxembourg relate to the neighboring countries' compliance with the Foreign Account Tax Compliance Act  (FATCA), a 2010 U.S. anti-tax evasion law which obliges non-U.S. financial institutions to report to the U.S. on any accounts they hold on behalf of American citizens. According to the AAA, the way FATCA is enforced, and the data it requires of the non-U.S. financial institutions, is “illegal” and breaches European privacy laws.

As this and other publications have been reporting, similar actions have been filed recently, and in some cases have shown that the U.S. authorities may in fact be forced to revisit the legislation – for example, a European Union Court of Justice ruling in July, dubbed Schrems II, after one of the earliest plaintiffs in the long-running legal battle, Maximillian Schrems – was declared a "potential game-changer for FATCA challenges in Europe" by some lawyers and campaigners.

Another case that has received widespread publicity has involved an effort by a U.S.-born British woman known to the media only as "Jenny", who has been challenging the way her data is being shared with the U.S. authorities under FATCA by Britain's HM Revenue & Customs. As reported, she filed her crowd-funded lawsuit last year, helped by the London-based Mishcon de Reya law firm, but in June of this year the UK's Information Commissioner's Office failed to uphold her complaint, and HMRC then declined to agree to her request  to waive any so-called "adverse party costs" in the event that she were to attempt to pursue her complaint and lose again, leaving her to consider which steps to take next.

Citizenship-based tax regime  

The problem for individuals like Lehagre and other "accidental Americans", the AAA and other advocacy groups argue, is that when FATCA is enforced alongside the unique U.S. system of citizenship-based taxation, such individuals find themselves deemed American citizens and thus having tax-filing obligations and potential tax-paying obligations to Uncle Sam, even though they may never have lived in the States nor benefited in any way from the programs their taxes would be used to support. 

In a statement announcing its latest legal action, the AAA begins by noting that most of the countries that have agreed to implement FATCA on behalf of the U.S. have signed bilateral intergovernmental agreements (IGAs) with the U.S. in order to do so, with the result that "in most cases, those countries’ tax authorities are in charge of transferring the data," which transfers, it notes, are "massive and automatic in nature.

"This means that the financial institutions and tax authorities of European Union member states are violating European and national legislation on the protection of personal data and privacy," the statement continues.

It then quotes Lehagre as saying: "The violation of these fundamental rights is particularly detrimental to accidental Americans, who did not choose to be American citizens.

"The bottom line is that the European Member States [are] violating European and their own national legislation in order to enforce [legislation] of the United States.

"This is just one example of the pernicious impact of the extraterritoriality of U.S. law."

In its statement, the AAA said that the most likely outcome of the actions it's bringing in Belgium and Luxembourg would be for the courts in these respective countries "to present preliminary questions to the Court of Justice of the European Union".

According to Lehagre, the AAA currently has more than 1,200 members.

As reported earlier this month, the organization – along with 20 so-called accidental Americans of 10 different nationalities – filed a crowd-funded legal complaint against the U.S. State Department, in which they allege that the US$2,350 fee that the U.S. currently charges those wishing to renounce their American citizenship violates the U.S. Constitution and international law, and is “essentially forcing U.S. citizens to remain U.S. citizens against their will." One of the 20 accidentals involved in the case is Lehagre himself.