The Dutch tax office practice of blacklisting people for alleged tax fraud has been ruled a major contravention of EU privacy laws by the Dutch privacy watchdog Autoriteit Persoonsgegevens (AP).

The tax office’s Fraud Sign Prevention (FSV) was in use from 2013 until 2020 when newspaper Trouw and RTL Nieuws blew the whistle on the existence of the secret list. The AP has since found that a precursor of that system had been in place since 2001.

The lists contained the names of 270,000 alleged perpetrators of income tax fraud, including minors and the parents innocently caught up in the childcare benefit scandal.

‘Of course fraud needs to be tackled but we found that the tax office registered and used signals of fraud in a way that is absolutely against the rules. Innocent people have been duped,’ AP chairman Aleid Wolfsen said at the presentation of the report.

Reasons for ending up on the list could be making large tax deductions, a request for information from benefit organisations or even a random tip off.

‘Tip offs from neighbours, or from an angry ex partner could get people onto that list. And once you were on it, you were assumed to have fiddled your taxes,’ Wolfsen said.

The tax office didn’t stop there, the AP found. Too many members of staff had access to the files and data was kept too long. Information about the health of some 20,000 people was also included in their files.

Reasons

The tax office is currently looking at the files to find out what the reason for the blacklisting was in each case, but it is thought that in half of them, the reason will never become clear.

The impact of being on the list for people and businesses is currently being looked at by consultancy PWC. The finance ministry has already said some 15,000 people experienced adverse financial effects. They were, for instance, denied personal payment schemes or their tax returns came under extra scrutiny.

The practice also contributed to the ‘unparalleled wrong’ suffered by families who were caught up in the tax office child benefits scandal, which eventually led to the collapse of the government.

The AP is considering fining the tax office but wants to wait for a reaction from caretaker finance minister Wopke Hoekstra first.