Tax Authority fined €3.7 million for violating privacy law with fraud blacklist

The Dutch Data Protection Authority (AP) fined the Tax Authority 3.7 million euros for using an illegal blacklist to track down possible fraudsters. For years, the tax office kept track of people's characteristics and personal data, including ethnicity and origin, on its fraud signaling facility (FSV) and thereby violated the privacy law on many points, the watchdog said. This is the largest fine ever imposed by the AP.

According to the watchdog, the Tax Authority had no legal basis for processing citizens' data on the FSV. The data recorded was also often incorrect, resulting in people being wrongly registered as possible fraudsters. The security around the FSV was also not in order.

The AP imposed the record-high fine due to the seriousness of the violations, the impact on large numbers of people, and the fact that the violations continued for so long. "With the FSV, the Tax AUthority violated the rights of 270,000 people who were on that list in an unprecedented way. For over six years. People were often wrongly labeled as fraudsters, with dire consequences," said AP chairman Aleid Wolfsen. People on the FSV were sometimes denied payment arrangements or were disqualified for debt restructuring. "The Tax Authorities have turned lives upside down with FSV."

Wolfsen also condemned the discriminatory nature of the characteristics registered on the FSV. "Do you have a Turkish, Moroccan, or Eastern European nationality? Then you'd be examined further without good reason. This discrimination is unacceptable. The Tax Authority also used gifts to mosques and high medical costs of people with Eastern European-sounding surnames as risk factors for fraud."

He pointed out the enormous responsibility the Tax Authority has towards the people of the Netherlands. "You cannot decide to apply for your benefits or file your tax returns somewhere else. People must be able to trust that the Tax Authority will handle their data with care. That turned out not to be the case with the FSV."

This is the second fine the watchdog imposed on the government in a week. Last week, the AP also fined the Ministry of Foreign Affairs 565,000 euros for not having proper security around visa applications.