On 2nd of February 2018, the court of first instance in Antwerp announced a ruling prohibiting the Belgian investigative tax authority Bijzondere Belastinginspectie (BBI) from obtaining information about payment transactions from payment service providers without a specific evidence of tax fraud.
The background of the case
The Belgian payment processor Wordline N.V. together with other five large Belgian payment service providers, including Alpha Card Merchant Services and Ingenico Financial Solutions, were requested by the BBI to reveal electronic data about purchases that were made in Belgium in 2015 and 2016 by using foreign payment credit and debit cards through various payment portals. The case was brought to the court because Wordline did not reveal the requested data by referring to their customers’ right to privacy, confidentiality of banking information, and the disproportionality of BBI’s request. The BBI solicited not only Worldline’s payment information but also a payment of EUR 10.000 for each day following the deadline of the request.
Investigation of tax fraud
The purpose of requests made by the BBI is to investigate which Belgian tax residents buy goods and services by using money associated with hidden assets stored in Luxembourg, Switzerland, Monaco, and other low tax jurisdictions. The information requested by the BBI includes the country that issued the card, the name of the bank, the time of the transaction, and the retailer that accepted the payment.
The fight against tax dodging initiated by the BBI takes place in several phases. In the first phase, the BBI gathers electronic data about the payments without explicitly identifying the cardholders. The payments that are made by Belgian taxpayers are qualified as ‘suspicious’. In the second phase, the BBI identifies the holder of the payment card by using the digital payment data and the information obtained from the retailer that accepted the payment. In the third phase, the authorities initiate a fiscal investigation of Belgian and foreign companies in which the cardholder participates to confirm the alleged tax fraud.
The decision of the court
The court has ruled out that the BBI cannot obtain payment data because the information requested by the BBI was not specific enough and there was too little fiscal relevance in the request. Belgian taxpayers initiate only a part of the 1,8 million transactions processed by Worldline each year. The court pointed out that non-Belgian taxpayers, including tourists and diplomats, also pay for goods and services in Belgium with foreign payment cards. Therefore, the disclosure of the requested payment information would be comparable to a large-scale screening of payment transactions. Nevertheless, the court leaves a possibility to the BBI to propose clear criteria for pre-selecting the suspicious payment cards and, on the basis of such pre-selection, request the payment service providers to specify the payments related thereto.