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Accidental Americans, FATCA, The GDPR And The Netherlands Decision Of July 25, 2025

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Part A – Prologue – It’s not about FATCA. It’s about U.S. citizenship taxation

U.S. citizenship taxation is a mechanism that is used by the United States to:

1. Capture the residents of OTHER countries and claim they are really U.S. residents; and

2. Impose U.S.taxation on the non-US source income actually received (or in the case of GILTI, transition tax, foreign trust rules, etc. not actually received) by those residents of other countries.

In simple terms:

U.S. citizenship based taxation is when the U.S. imposes worldwide taxation on (1) people who live in other countries and (2) on the non-U.S. source income received by those residents of other countries.

FATCA is a mechanism used by the United States to force other countries to search for and locate their own residents who are (because of a U.S. birth place) effectively the property of the United States. In practical terms, the mechanism used is the “FATCA IGA” and the countries who sign the “FATCA IGA” are partner countries. The job of the partner country is three-fold:

(i) to locate and determine which of their residents are either U.S. citizens or are suspected to be U.S. citizens

(ii) to report their financial information to the Internal Revenue Service of the United States

(iii) to deny bank services to those individuals who do not cooperate with the FATCA inquisition.

In effect, (as the court decision makes clear) the purpose and effect of FATCA is to assist with exporting U.S. citizenship taxation into other countries. In the same way that modern extradition treaties are used to export U.S. criminal law around the world, FATCA is used to export U.S. citizenship taxation around the world. The following post also argues that U.S. citizenship taxation (if it matters) is a violation of international law.

Toward An Argument That US Citizenship Taxation Violates International Law

On July 25, 2025 a Dutch court confirmed its view that the Netherland’s FATCA IGA with the United States is NOT subject to any provisions of the GDPR. In other words, U.S. citizens, who are residents of the Netherlands and call the Netherlands home do NOT have the same rights as citizens of other countries!

In paragraph 7 of its decision, the court confirms that Accidental Americans in the Netherlands are NOT afforded the same rights as other Dutch residents as follows:

Beoordeling door de rechtbank

7. De rechtbank stelt voorop dat zij begrip heeft voor de op zitting door eisers geuite gevoelens van frustratie en onvrede. Eisers hebben duidelijk gemaakt dat zij door het hebben van een dubbele nationaliteit nadelige gevolgen ondervinden als gevolg van Amerikaanse wetgeving. De rechtbank kan begrijpen dat de uitwisseling van financiële gegevens van eisers met de VS door de Belastingdienst een zekere impact kan hebben op eisers. Dat laat onverlet dat de rechtbank de beroepen moet beoordelen aan de hand van de aangevoerde beroepsgronden en de toepasselijke wet- en regelgeving (het toetsingskader).

An English translation of Paragraph 7 is:

7. The court first of all states that it understands the feelings of frustration and dissatisfaction expressed by the plaintiffs at the hearing. The plaintiffs have made it clear that they suffer adverse consequences as a result of American legislation due to their dual nationality. The court understands that the exchange of the plaintiffs’ financial data with the US by the Dutch Tax Authorities may have a certain impact on the plaintiffs. Nevertheless, the court must assess the appeals on the basis of the grounds for appeal put forward and the applicable laws and regulations (the assessment framework).

The decision of the Dutch court underscores the simple reality that U.S. citizenship is indeed a disability in the 21st Century.

Part B – A brief summary of the decision – Accidental Americans in the Netherlands do NOT have rights under Article 18 of the GDPR

In summary:

Because the Netherlands has signed a FATCA IGA with the United States, individuals described in the IGA (U.S. Citizens) have NO rights under Article 18 of the GDPR!

https://uitspraken.rechtspraak.nl/details?id=ECLI:NL:RBGEL:2025:5881

A podcast with former KLM Captain Ronald Aries, describing the circumstances leading up to the court hearing is in Appendix A of this post.

Part C – Commentary from Mr. Aries’s lawyer Ellen Timmer

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Toward An Argument That US Citizenship Taxation Violates International Law

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Introduction – Why FATCA Litigation Fails …

(Well, most of the time!)*

In September of 2024, I wrote a blog post about FATCA litigation.

Q. Why Does FATCA Litigation Fail? A. Because, It Focuses On The Symptom And Not The Cause

That post was discussed on an IRS Medic podcast here:

In that post, I suggested that FATCA litigation fails because it has to date focused on certain results of FATCA (privacy breaches, discrimination, etc.) No FATCA litigation (to date) has focused on the reality that U.S. “citizenship taxation” is the reason for FATCA and therefore the cause of all the FATCA related problems. The effect of FATCA and the FATCA IGAs is to enforce U.S. citizenship taxation on the world (including and PRIMARILY on individuals who are tax residents of other countries). A principal purpose of FATCA is to export U.S. tax laws into other countries. By signing the FATCA IGAs, these countries agree to assist the United States in identifying which of their country’s residents (and often citizens) are also U.S. citizens and should therefore be subject to U.S taxation. Put another way: the purpose of the FATCA IGAs is to expand the U.S. tax base into other countries.

For background on the issue of the United States claiming the residents of other countries as U.S. tax residents see:

The Issue Is Not @CitizenshipTax. The Issue Is Whether The US Can Claim The Tax Residents Of Other Countries As US Tax Residents!

The conclusion of the September 2024 post was that:

Future FATCA litigation should focus on whether it is a violation of international law for the United States to impose citizenship taxation (the reason for FATCA) on the residents of other countries (who suffer the effects of FATCA).

The purpose of this post is to continue the analysis and to explore the specific question:

Is U.S. citizenship taxation – the process of claiming nonresidents as U.S. tax residents – a violation of international law?

Is it a violation of international law for the United States to:

1. Claim the residents of other countries as U.S. tax residents; and

2. Impose U.S. taxation on the non-U.S. source income of those individuals who do NOT live in the United States?

(I am introducing and developing the argument cannot impose U.S. citizenship taxation on the tax residents of OTHER countries. The United States, has of course the sovereign right, to impose citizenship taxation on U.S. residents.)

If U.S. citizenship taxation, as applied to the residents of OTHER countries, conflicts with the norms of international law, then the foundation for FATCA (as applied to non-U.S. residents) crumbles. In theory, this would provide courts and tribunals a justification for refusing to apply FATCA obligations in relation to individuals who are tax residents of other countries and are not residents of the United States. In addition, it might cause countries to give careful consideration to the effects of the “saving clause” which is part of all U.S. tax treaties.

How U.S. Citizenship Tax, The Treaty “Saving Clause” and FATCA Create A Fiscal Prison For Dual Tax Residents

It is my hope that this post will analyze this question by identifying and outlining “some” of the relevant issues. Perhaps, this post will “begin’ a discussion about this important issue. Should U.S. citizens, because and only because of their citizenship, become “dual tax residents” simply by moving from the United States?

For each issue I will suggest an answer and provide a backup source(s) for further inquiry.

Suggested conclusion:

This post is a “thought experiment”. I believe that a credible argument can be developed that U.S. citizenship taxation – as applied to those who are tax residents of other countries – is a violation of CIL (“Customary International Law”). What follows are the “individual components” of the argument, along with commentary on each. The individual components are organized in the following outline:

Outline

Part A – Some Theoretical Concepts

1. What is US citizenship taxation? U.S. citizenship taxation defined

2. What is meant by international law?

Part B – Tax Residency And International Law

3. Is the concept of “tax residency” generally subject to the rules of international law?

4. Concepts of tax residency as expressed through tax treaties including treaty tie breakers

Part C – Can The Method Of Taxation Violate Individual Rights As Expressed In Human Rights Documents?

5. Professor William Thomas Worster – Taxation and Human Rights

6. Barriers To Emigration Under International Law

Part D – U.S. Citizenship Taxation And the Tax Sovereignty Of Other Nations

7. U.S. Citizenship Taxation As A Method To Siphon Capital From Other Nations

8. The Common Law Revenue Rule As An Expression Of Tax and Territorial Sovereignty

Part E – U.S. Tax Treaties And The “Saving Clause” – Contracting Out Of The Principles Of International Law?

9. Taxation Perspective: Is the “saving clause” an agreed upon override to the “revenue rule” and other international norms?

10. Information Perspective: Can FATCA information extraction generally be used to refuse to provide information about a country’s tax residents?

11. Enforcement Perspective: Should exemptions from cooperation on enforcement of tax debts extend to the disclosure of FATCA information? The cases of Canada, Netherlands, France, Sweden …

Part F – Possible Conclusions …

For those who don’t want to read the rest:

The purpose of this post has been to develop a general theory of why U.S. citizenship taxation – to the extent that it claims the tax residents of other countries as U.S. tax residents – is a violation of international law. Theory aside, there is no other country in the world that uses an attribute (citizenship), that is often an immutable characteristic (place of birth), that bears no presumptive relevance to a physical or economic connection to a country, as a sufficient condition for tax residency. In so doing, the United States is defining tax residency in terms of the “circumstances of birth”, rather than the “circumstances of life”. The only effect is to claim the residents of other countries as tax residents of the United States (even when they are residents and often citizens of those other countries).

It is respectfully submitted that, for these reasons, that citizenship taxation is a violation of CIL (“Customary International Law” and should NOT be tolerated by the international community.

In developing my argument, I have included links to previous posts. The linked posts are NOT part of this post, but are supplied for further reading on each topic.

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