To which extent should the tax authorities respect my privacy?
The tax authorities should respect the privacy of the tax payers. On 1 January 2013 new legislation enters info force introducing some exceptions to the principle. The tax payer is then less well protected against the tax authorities. Should we worry?
Protecting through the privacy law
The privacy law of 1992 imposes rules for everyone who gathers, manages and processes personal data in a database. These rules apply for private companies constructing commercial databases with client data, but also for the government itself.
When gathering, processing etc. personal data, the three following principles apply:
purpose principle: your data can only be gathered for a specific, explicitly described and just goal. The data can only be used and exchanged for that purpose. Next to that the database should process the data in a fair and just way, which implies keeping you updated what happens with your data.
proportionality principle: your data can only be processed when it is really necessary. Gathering and managing data because they can be useful afterwards is not allowed.
transparency: when your data are processed, you have the right to know what happens with these data. You can always ask why your data are being processed, where the data come from and for whom they are destined.
Next to this, you have three other very important rights: (1) leave to inspect the data, (2) the right to correct the data when they prove to be wrong and (3) resist against the use of the data when these are incomplete or not relevant.
Also the tax authorities are bound by the privacy legislation
Since the privacy law applies to everyone, the tax authorities should also respect this law.
Now for the first time some specific legal measures are foreseen. Since 2009 several tax administrations have already obtained a broader possibility to gather data and spontaneously (so not longer on demand of a colleague of another administration) exchange these data. These exchanges between tax administrations are from now more clearly defined.
Exchanging and processing data by the tax authorities
Obtaining and exchanging data became easier for the tax authorities. This implied a disadvantage for the tax payer, since these arrangements were not in line with the privacy law.
Internal data exchange with the tax authorities
The new law defines how the tax authorities can exchange data internally: e.g. between the VAT administration and the income tax administration. A department service line will be established (within the tax authorities) deciding which data can be exchanged.
External data exchange with other governmental bodies
The tax authorities can communicate your data to other governmental bodies or authorities. In that case they need the permission of a committee of the Privacy Commission.
The tax authorities can also obtain data from other governmental bodies or authorities. This is allowed when the data relate to the legal mission of the tax authorities and when the competent committee of the Privacy Commission has given permission hereto.
The tax authorities can group all data gathered within their legal mission in one big database (data warehouse). In this database they can perform 'data mining'. This means that they will use statistical techniques to analyze data. On the basis of the results the tax authorities can then make more punctual audits.
Also the operation of the data warehouse is supervised by a committee of the Privacy Commission. The tax authorities cannot do whatever they want.
The rights of the tax payer are partially harmed
As explained above you have the right to leave to inspect and correct your data and the right to resist to the use of them. These rights however cease to exist when you are the subject of a tax audit (or of the preparation of a tax audit). The legislator found it not opportune to give the tax payer access to his file during a tax audit. He believed that leave to inspect could have a negative effect on the proceeding of an audit (the tax payer may perform evasive actions).
After the tax audit you have again right to leave to inspect, correction and resist.
Or is there a limited leave to inspect?
Besides the privacy law there is also the law on the publicity of government. Based on this law you have the right to leave to inspect, explanation and copies of governmental documents. Also your tax file falls within the scope of governmental documents. As a consequence you still have right to leave to inspect your file, even during the audit.