This concerns three judgments of the Supreme Court of February 24, 2017, which were brought by three motorists:
Driver 1,
Driver 2, and
Driver 3.
's statement of no private use of a car The dispute concerns three motorists who used their company cars for private purposes while in possession of a statement from the Tax and Customs Administration stating that they did not use their cars for private purposes (a so-called "statement of no private use of a car"). On the basis of this statement, the motorists paid less tax.
Automatic Number Plate Recognition
The Tax and Customs Administration compared the mileage records submitted by motorists with photos from highway cameras equipped with number plate recognition technology, also known as Automatic Number Plate Recognition (ANPR) technology. This revealed that the motorists had been using their cars for private purposes without justification, whereupon the Tax and Customs Administration imposed additional tax assessments on the motorists. These additional tax assessments related to the periods 2010, 2011, and 2012.
Agreement between the Tax and Customs Administration and the police regarding the joint use by the Tax and Customs Administration of the police's ANPR cameras
Based on the agreement between the Tax and Customs Administration and the police regarding the joint use by the Tax and Customs Administration of the police's ANPR cameras, the ANPR cameras are "jointly used" by the Tax and Customs Administration, in addition to the National Police Services Agency (KLPD). In practice, this means that the KLPD forwards the photos and accompanying data to the Tax and Customs Administration without any processing. The Tax and Customs Administration filters the ANPR data and destroys the irrelevant ANPR data (no hits) immediately, according to its own statements. In the proceedings before the Court of Appeal in Den Bosch, the Tax and Customs Administration argued that approximately 60% of the ANPR data is destroyed and 40% is used for control purposes. The ANPR data used for verification purposes is stored by the Tax and Customs Administration for a period of no less than seven years.
Legal assessment
The District Court of Breda and the Court of Appeal of Den Bosch ruled that the use of ANPR photos by the Tax and Customs Administration was permissible. The Court of Appeal considered it relevant that the aforementioned retention period stems from the statutory additional assessment period of five years, that it is up to the legislator to synchronize provisions from the General Tax Act and the Personal Data Protection Act, that the government has a budgetary interest in the approach taken, and that a certain selection of ANPR data is immediately destroyed.
In the aforementioned judgments, however, the Supreme Court considers the approach taken by the Tax and Customs Administration to be contrary to the fundamental right to protection of privacy and therefore inadmissible.
Tax authorities' actions violate the right to privacy
According to the Supreme Court, this constitutes an invasion of motorists' privacy:
After all, the manner in which data is collected, recorded, processed, stored, and used by ANPR cameras affects the privacy of those concerned.
The Supreme Court goes even further by ruling that this constitutes a systematic violation of Article 8 of the European Convention on Human Rights (ECHR):
It should be noted that this does not concern one or a few observations in public spaces, but rather the systematic collection, recording, processing, and storage of data on the movements of vehicles at various locations in the Netherlands for many years, in such a way that the data can be traced back to a specific vehicle and thus (in principle) to a specific person on the basis of the license plate number, and where the purpose is (in part) to obtain a picture of the movements of each vehicle over the course of a year by analyzing that data (see ECHR September 2, 2010, Uzun v. Germany, no. 35623/05, para. 44 et seq.).
The circumstances that the Tax and Customs Administration deletes data that it considers irrelevant within a short period of time and that motorists themselves choose not to have tax deductions made do not alter that conclusion, according to the Supreme Court.
Infringement not justified
The next question is whether the restriction is justified. The Supreme Court answered this question in the negative. A restriction on the right to privacy under the ECHR can only be justified if it (1) is provided for by law, (2) pursues the aims set out in the article, and (3) is necessary in a democratic society.
The Tax and Customs Administration cites various grounds:
Article 2(1) of the Tax Administration Implementation Regulations 2003 (the general remit of the Tax and Customs Administration),
Article 20 of the General Tax Act (the basis for additional tax assessment),
Article 55 of the General Tax Act (the basis for the provision of data by other government agencies), and
Article 13bis of the 1964 Wage Tax Act (the regulation on taxation for private use of cars).
According to the Supreme Court, these articles do not provide a sufficiently precise legal basis for the Tax and Customs Administration's approach to comply with the condition that a restriction on a fundamental right protected by the ECHR must be provided for by law. The Supreme Court considers:
2.3.5 It remains unclear whether the Inspector obtained the data recorded by the ANPR cameras from the KLPD on the basis of Article 55 of the AWR, as the Court of Appeal assumed, or whether he obtained that data without the intervention of the KLPD, as the State Secretary argues in his statement of defense in cassation. In both cases, there is insufficiently precise legal basis for the Inspector to collect, record, store, process, and use that data.
The lack of the required legal basis means that the Tax and Customs Administration should not have used the ANPR data to base the additional tax assessments on. In the case of motorist 1, the Supreme Court settled the case itself and annulled the additional tax assessments and the associated fines and tax interest. With regard to motorists 2 and 3, the Supreme Court referred the case, which means that a new assessment will have to follow. In this new assessment, the "referral court" will not be allowed to base its decision on the ANPR data.
The Supreme Court has (rightly) given the Tax and Customs Administration a stern reprimand. After all, not only must the authority to impose an additional tax assessment be based on an adequate legal provision, but the same applies to the prior collection of information on which the additional tax assessment is based (the procedure followed). This is logical in itself.
The approach taken with regard to ANPR data immediately raises the question of whether the Tax and Customs Administration, or other government agencies, exchange data collected for other purposes in the same way. For example, cameras are not only installed on highways, but also in various other locations, and a person's movements can also be tracked online (traffic data on the internet).
On August 19, 2014, the Court of Appeal in Den Bosch ruled that the parking company SMSParking had to provide parking data to the Tax and Customs Administration. In that case, as in this one, the (same) Court of Appeal[1] wrongly disregarded the case law of the ECHR. The Court of Appeal should have already determined that the overly broad powers of the Tax and Customs Administration under the AWR do not meet the requirements developed in the case law of the ECHR with regard to the legal basis.[2] In the meantime, the Tax and Customs Administration no longer appears to be using the parking data.[3]
Earlier this year, a report by Zembla also revealed that the Tax and Customs Administration had failed to adequately secure the data of 11 million taxpayers for three years and that in 2016 it became apparent that the security measures had not been implemented.
The ruling therefore serves as an important deterrent in similar cases where one government agency allows another government agency to share certain surveillance tools without an adequate legal basis for doing so.
[1] Of the three judges, one also took part in the ANPR proceedings discussed in this article.
[2] See also the annotation by T.H.A. Wisman to this judgment, which clearly shows that SMSParking's defense had not invoked the relevant case law of the ECHR: Computerrecht 2014/182.
[3] Former Director General of the Tax and Customs Administration Hans Blokpoel (who left on December 1, 2016, and now works for the General Administrative Service) stated in an interview with De Correspondent in April 2015 that the program had since been discontinued.
