The revelation of scandals involving offshore accounts, as well as the economic crisis, has created a new momentum in the fight against tax evasion. The EU has already put in place instruments for the exchange of bank information such as the Savings Directive, albeit with Luxembourg and Austria opting instead for an anonymous withholding tax on interest incomes.
Bilateral agreements between some EU Member States (MS) and the United States (US) on the automatic exchange of bank information have led to five MS concluding a similar agreement using models drawn up under the US Foreign Account Tax Compliance Act (FATCA). While many have welcomed such initiatives, arguing that they are the only effective instrument in the combat against tax evasion and fraud, others claim that data protection rights are being violated.
The Article 29 Working Party evaluated the obligations under the US FATCA for their compatibility with EU data protection law. It pointed to the need for these types of measures to be built on a proper legal basis, to observe the principle of proportionality regarding the amount and nature of the data exchanged, as well as to respect all requirements to notify national data protection authorities.
Read the complete briefing here.
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