Should personal financial data be sent to foreign tax authorities?

AMERICA’S ONGOING assault on firms from China, spurred by worries about its citizens’ personal data being passed to the Chinese government, will have put wry smiles on some faces—not least those of activists who for years have used similar arguments to try to stop their governments passing individuals’ financial data to America and other countries. Their legal challenges against transfers of tax-related data have had little success so far. But a recent ruling by the European Court of Justice (ECJ), the EU’s top court, could change that.

War on tax evasion was officially declared in 2010, when America passed the Foreign Account Tax Compliance Act (FATCA) in response to scandals involving rich Americans stashing undeclared money offshore. The law requires foreign banks and other financial firms to send data on American account-holders to the Internal Revenue Service. FATCA spawned a global version. Under the Common Reporting Standard (CRS), overseen by the OECD, more than 100 territories swap data on their financial firms’ foreign clients.

Who, apart from tax-dodgers, could complain about this? Quite a few people, it turns out. Critics say the sweeping arrangements favour transparency over privacy and data-protection rights. The transfers, they note, do not depend on there being any indication of tax evasion; all account-...