Tax office fined €2.75 million for privacy violations in benefits scandal

The Tax Authority will be fined 2.75 million euros for the childcare allowance scandal, reported the Dutch Data Protection Authority, the government's privacy watchdog. According to the regulator, the Tax Authority "for years processed the (dual) nationality of applicants for childcare allowance in an unlawful, discriminatory, and therefore improper manner," according to the regulator.

State Secretary Alexandra van Huffelen (Benefits) finds the fine "very painful" and will not oppose it, she wrote to the lower house of Dutch parliament. "The government should not treat people in equal situations unequally." She again apologized to the victims and promised to do everything she could to prevent violations of the privacy legislation in the future.

The Tax Authority kept track of which childcare allowance recipients had dual nationality. That information should have been removed from the Tax Authority's systems in January 2014, but in 2018 the data was still there, said the Dutch Data Protection Authority.

The regulator considers it discriminatory to keep such information: "For the right to childcare allowance, it does not matter what nationality someone has, only whether they reside lawfully in the Netherlands." The Tax Authority stopped keeping track of that data last year.

The money for the fine comes from the treasury and will eventually go back to the treasury but will be deducted from the Tax Authority's budget. "In addition, it is a public punishment. It also sets a standard for other organizations," according to the Dutch Data Protection Authority.

The Tax Authority could receive even more fines for the allowance affair. In October, the Dutch Data Protection Authority concluded that the Tax Authority's "blacklist" violated the law. People often ended up on that list incorrectly, were labeled as potential fraudsters, applications were sometimes wrongly rejected, and there was nothing they could do to get off that list. The Dutch Data Protection Authority will decide later on a penalty for that.

Lawyer Vasco Groeneveld, who represents a large group of victims in the childcare allowance scandal, applauds the fine. He does not expect it to have significant consequences for his case against the Tax Authority. Last month, Groeneveld, on behalf of 152 victims, asked the Court of Appeal in The Hague to prosecute the Tax Authority after the Public Prosecution Service previously waived this.

The fine now imposed is because the Tax Authority processed the nationality of applicants "in an unlawful, discriminatory, and therefore improper manner." Groeneveld also wants the Tax Authority punished for, among other things, professional discrimination.

"But discrimination is not the main part" of the Article 12 procedure which the lawyer had initiated. That is "gagging," which means that a civil servant claims, receives, or does not pay out money in violation of the rules because it is said to be owed "to any public treasury."

The court may now rule that "the discrimination file" no longer requires a punishment, Groeneveld explained. But on the other hand, this decision by the Dutch Data Protection Authority may actually be an encouragement that it must also reach a ruling on other points, such as gagging.

The court aims to make a ruling before the end of the year on whether or not to prosecute the Tax Authority.