FATCA and IGA further explained I: the intended amendment of the National Ordinance Personal Data

Publication

12 May 2015

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The Foreign Account Tax Compliance Act ("FATCA") is a US law, enacted in 2010 with the aim to combat tax evasion by United States persons ("U.S. persons") holding investments in offshore accounts. On 16 December 2014, the Minister of Finance of Curacao signed an intergovernmental Agreement with the Minister of Finance of the United States of America ("IGA") to capacitate the obligations of the FATCA. The IGA however is not sufficient for Curacao to comply with the obligations of the FATCA. Existing legislation, such as the National Ordinance Protection Personal Data ("Ordinance Personal Data"), has to be amended. The IGA provides a legal basis for the existing legislation to be adjusted*. In this first part of this article we will discuss the intended amendment of the Ordinance Personal Data.

Legislation Ordinance Personal Data
The personal data of U.S. persons that must be provided to the United States Internal Revenue Services ("IRS") on the basis of the FATCA and IGA is personal data as defined in the Ordinance Personal Data. The Ordinance Personal Data is therefore applicable. The Ordinance Personal Data applies only to natural persons and does not cover legal entities. The gap in the Ordinance Personal Data for legal entities is covered by the State Ordinance Agreements via Electronic Channels. This Ordinance applies for both natural persons as well as legal entities. Pursuant to article 10 of this Ordinance it is prohibited to provide third parties (such as the IRS) with personal data without the express consent of the person or legal entity concerned, unless this takes place based on a statutory obligation (such as the IGA). This exemption is however not included in the Ordinance Personal Data. Pursuant to article 51 of the Ordinance Personal Data, personal data that is subjected to processing or that is intended for processing following transmission, shall be sent to another country only if that country guarantees an appropriate level of protection. From this prohibition can be deviated: personal data may be transmitted abroad when:

  1. the person concerned has granted unambiguous consent;
  2. the transmission is necessary for the execution of an agreement between the person concerned and the responsible party; or
  3. the Minister has given a license for the transmission of the personal data***.

The United States of America does not guarantee an appropriate level of protection and the transmission of personal data to the IRS is also not necessary for the execution of the agreement between the person concerned and the responsible party. This implies that the personal data of the U.S. persons that must be provided to the IRS on grounds of the FATCA and IGA can only be provided if the person concerned has given his unambiguous consent or if the Minister has given a license for the transmission of the personal data****. Another option is to amend the Ordinance Personal Data. On 17 April 2015, the Ministry of Finance, in cooperation with CBA, CBIA, IFG, IBA, ACCUR and CIFA have organized a FATCA Information Session. During this session we understood that the legislator intends to amend the Ordinance Personal Data. The legislator intends to add a paragraph to article 51 of the Ordinance Personal Data. This paragraph will make it possible to comply with article 51 on the basis of an international agreement. If the existing laws are adjusted there is no longer a legal basis for financial institutions not to comply with the obligations of the FATCA and IGA. It should be noted that the other obligations of the Ordinance Personal Data still apply. This means, among others, that the party that will provide the personal data to the IRS must inform the person concerned.

We will be happy to assist financial institutions in organizing their procedures in such a way as to comply with both the Ordinance Personal Data as the FATCA and IGA. In the second part of this article practical information with regard to the obligations of the FATCA and IGA will be discussed.

This publication is also available as a printable version.

* In this article we will only take a detailed look at the National Ordinance Personal Data. Other legislation such as the National Ordinance International Assistance Levying on Taxes Act (which will be in force as of August 2015) will not be taken into consideration in this article.
** Personal data is all data concerning an identified or identifiable natural person.
*** It is also possible to deviate from this prohibition with regard to transmission of personal data abroad when (iv) the transmission is necessary for the contracting or execution of an agreement contracted or to be contracted between the responsible party and a third party, in the interest of the person concerned, (v) the transmission is necessary due to a serious general interest or for the establishment, exercise or the defence of any right in court, (vi) the transmission is necessary to protect a vital interest of the person concerned; or (vii) the transmission takes place from a register installed by law and that can be viewed publicly, or by any person that can invoke a justified interest, to the extent that in the case concerned, the statutory requirements for viewing have been met.
**** The other grounds for deviation are not applicable here.