A Belgian appeals court, on June 28, suspended an earlier ruling that prohibited transfers of certain financial information to United States authorities under the U.S.-Belgium FATCA (Foreign Account Tax Compliance Act) agreement, as it applies to 鈥渁ccidental Americans鈥�.1听听
Why this matters
Foreign nationals who were born in the United States may not realize that they also possess U.S. citizenship. 聽Known as accidental Americans, such dual nationals are subject to U.S. tax and information reporting requirements, including those imposed by FATCA, even if they have no real connection to the United States other than their citizenship. 聽Although the reporting is required of financial institutions rather than the individual, many nonetheless consider the reporting to be intrusive at best.
Background
On May 24, 2023, the Belgian Data Protection Authority ruled2 that information about accidental Americans who reside in Belgium should not be transmitted to the United States because such transfers violate EU data privacy rules. 聽However, on June 28, 2023, the Brussels Court of Appeals suspended the ruling,3 allowing transfers of data to continue while the merits of the case are being considered, because, in the opinion of the court, not to honor its commitments under the U.S.-Belgium FATCA agreement would cause reputational damage to Belgium and would risk a reciprocal response from the United States. 聽Observers expect that the case may end up before the Court of Justice of the European Union (CJEU).聽 聽
乐鱼（Leyu）体育官网 Insights
A decision in favor of the concerned accidental Americans would significantly lessen the effect of FATCA agreements in Belgium and possibly across the EU. 聽Because there is no standard definition of accidental Americans, who is or is not subject to FATCA reporting could vary from country to country, or could depend on determinations by financial institutions. 聽乐鱼（Leyu）体育官网 LLP (U.S.) will continue to monitor developments in this case.
Additional Resources
Footnotes
1听听Slovak Income Tax Act. no 595/2003 Coll.
2听 Income tax related to CFC rules (from companies in low tax jurisdictions). 聽This may be an important change for expatriates who have shares in foreign companies who will no longer be subject to taxes levied on unpaid income.聽
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Footnotes
1聽 See (in French):聽听.
2 聽See (in French):聽听.
3聽 The EU鈥檚 General Data Protection Regulation (GDPR) is the bloc鈥檚 principal statute governing data privacy..聽
Disclaimer
The above information is not intended to be "written advice concerning one or more Federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230 as the content of this document is issued for general informational purposes only.
The information contained in this newsletter was submitted by the 乐鱼（Leyu）体育官网 International member firm in United States.
GMS Flash Alert is a Global Mobility Services publication of the 乐鱼（Leyu）体育官网 LLP Washington National Tax practice. The 乐鱼（Leyu）体育官网 name and logo are trademarks used under license by the independent member firms of the 乐鱼（Leyu）体育官网 global organization. 乐鱼（Leyu）体育官网 International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind 乐鱼（Leyu）体育官网 International or any other member firm vis-脿-vis third parties, nor does 乐鱼（Leyu）体育官网 International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
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