Flashback on ECJ Cases – C-617/10 (Åkerberg Fransson) – A Member State can impose a tax penalty and a criminal penalty

On February 26, 2013, the ECJ issued its decision in the case C-617/10 (Åkerberg Fransson).

Context: Charter of Fundamental Rights of the European Union – Field of application – Article 51 – Implementation of European Union law – Punishment of conduct prejudicial to own resources of the European Union – Article 50 – Ne bis in idem principle – National system involving two separate sets of proceedings, administrative and criminal, to punish the same wrongful conduct – Compatibility

Article in the EU VAT Directive

Article 22 in the Sixth VAT Directive (Article 273 of EU VAT Directive 2006/112/EC).

Article 273

Member States may impose other obligations which they deem necessary to ensure the correct collection of VAT and to prevent evasion, subject to the requirement of equal treatment as between domestic transactions and transactions carried out between Member States by taxable persons and provided that such obligations do not, in trade between Member States, give rise to formalities connected with the crossing of frontiers.

Charter of Fundamental Rights of the European Union

Article 50 of the Charter of Fundamental Rights of the European Union (‘the Charter’), which is headed ‘Right not to be tried or punished twice in criminal proceedings for the same criminal offence’, reads as follows:

‘No one shall be liable to be tried or punished again in criminal proceedings for an offence for which he or she has already been finally acquitted or convicted within the Union in accordance with the law.’

Article 51 defines the Charter’s field of application in the following terms:

1. The provisions of this Charter are addressed to the institutions, bodies, offices and agencies of the Union with due regard for the principle of subsidiarity and to the Member States only when they are implementing Union law. They shall therefore respect the rights, observe the principles and promote the application thereof in accordance with their respective powers and respecting the limits of the powers of the Union as conferred on it in the Treaties.
2. The Charter does not extend the field of application of Union law beyond the powers of the Union or establish any new power or task for the Union, or modify powers and tasks as defined in the Treaties.

Facts

Mr Åkerberg Fransson was summoned to appear before the Haparanda tingsrätt (Haparanda District Court) on 9 June 2009, in particular on charges of serious tax offences. He was accused of having provided, in his tax returns for 2004 and 2005, false information which exposed the national exchequer to a loss of revenue linked to the levying of income tax and value added tax (‘VAT’), amounting to SEK 319 143 for 2004, of which SEK 60 000 was in respect of VAT, and to SEK 307 633 for 2005, of which SEK 87 550 was in respect of VAT. Mr Åkerberg Fransson was also prosecuted for failing to declare employers’ contributions for the accounting periods from October 2004 and October 2005, which exposed the social security bodies to a loss of revenue amounting to SEK 35 690 and SEK 35 862 respectively. According to the indictment, the offences were to be regarded as serious, first, because they related to very large amounts and, second, because they formed part of a criminal activity committed systematically on a large scale.
By decision of 24 May 2007, the Skatteverket had ordered Mr Åkerberg Fransson to pay, for the 2004 tax year, a tax surcharge of SEK 35 542 in respect of income from his economic activity, of SEK 4 872 in respect of VAT and of SEK 7 138 in respect of employers’ contributions. By the same decision it had also imposed for the 2005 tax year a tax surcharge of SEK 54 240 in respect of income from his economic activity, of SEK 3 255 in respect of VAT and of SEK 7 172 in respect of employers’ contributions. Interest was payable on those penalties. Proceedings challenging the penalties were not brought before the administrative courts, the period prescribed for this purpose expiring on 31 December 2010 in relation to the 2004 tax year and on 31 December 2011 in relation to the 2005 tax year. The decision imposing the penalties was based on the same acts of providing false information as those relied upon by the Public Prosecutor’s Office in the criminal proceedings.
Before the referring court, the question arises as to whether the charges brought against Mr Åkerberg Fransson must be dismissed on the ground that he has already been punished for the same acts in other proceedings, as the prohibition on being punished twice laid down by Article 4 of Protocol No 7 to the ECHR and Article 50 of the Charter would be infringed.

Questions

1. Under Swedish law there must be clear support in the [ECHR] or the case-law of the European Court of Human Rights for a national court to be able to disapply national provisions which may be suspected of infringing the ne bis in idem principle under Article 4 of Protocol No 7 to the ECHR and may also therefore be suspected of infringing Article 50 of the [Charter]. Is such a condition under national law for disapplying national provisions compatible with European Union law and in particular its general principles, including the primacy and direct effect of European Union law?

2. Does the admissibility of a charge of tax offences come under the ne bis in idem principle under Article 4 of Protocol No 7 to the ECHR and Article 50 of the Charter where a certain financial penalty (tax surcharge) was previously imposed on the defendant in administrative proceedings by reason of the same act of providing false information?

3. Is the answer to Question 2 affected by the fact that there must be coordination of these sanctions in such a way that ordinary courts are able to reduce the penalty in the criminal proceedings because a tax surcharge has also been imposed on the defendant by reason of the same act of providing false information?

4. Under certain circumstances it may be permitted, within the scope of the ne bis in idem principle …, to order further sanctions in fresh proceedings in respect of the same conduct which was examined and led to a decision to impose sanctions on the individual. If Question 2 is answered in the affirmative, are the conditions under the ne bis in idem principle for the imposition of several sanctions in separate proceedings satisfied where in the later proceedings there is an examination of the circumstances of the case which is fresh and independent of the earlier proceedings?

5. The Swedish system of imposing tax surcharges and examining liability for tax offences in separate proceedings is motivated by a number of reasons of general interest … If Question 2 is answered in the affirmative, is a system like the Swedish one compatible with the ne bis in idem principle when it would be possible to establish a system which would not come under the ne bis in idem principle without it being necessary to refrain from either imposing tax surcharges or ruling on liability for tax offences by, if liability for tax offences is relevant, transferring the decision on the imposition of tax surcharges from the Skatteverket and, where appropriate, administrative courts to ordinary courts in connection with their examination of the charge of tax offences?

AG Opinion

(1) In the current state of the process of European integration, Article 50 of the Charter of Fundamental Rights of the European Union must be interpreted as meaning that it does not preclude the Member States from bringing criminal proceedings relating to facts in respect of which a final penalty has already been imposed in administrative proceedings relating to the same conduct, provided that the criminal court is in a position to take into account the prior existence of an administrative penalty for the purposes of mitigating the punishment to be imposed by it.

It falls to the national court to assess whether, in the present case, and in the light of the national provisions which govern the matter, it is necessary to take into account the prior administrative penalty which would mitigate the decision of the criminal court.

(2) The Court of Justice lacks jurisdiction to rule on the compatibility with the European Convention on Human Rights of a requirement of Swedish law pursuant to which there must be ‘clear support’ in order for national courts to disapply a domestic provision.

European Union law must be interpreted as meaning that it does not preclude a national court from assessing, prior to disapplying a national provision, whether a provision of the Charter of Fundamental Rights of the European Union is ‘clear’, provided that that requirement does not hinder the national courts in exercising the powers of interpretation and disapplication assigned to them under European Union law.

Decision

1. The ne bis in idem principle laid down in Article 50 of the Charter of Fundamental Rights of the European Union does not preclude a Member State from imposing successively, for the same acts of non‑compliance with declaration obligations in the field of value added tax, a tax penalty and a criminal penalty in so far as the first penalty is not criminal in nature, a matter which is for the national court to determine.

2. European Union law does not govern the relations between the European Convention for the Protection of Human Rights and Fundamental Freedoms, signed in Rome on 4 November 1950, and the legal systems of the Member States, nor does it determine the conclusions to be drawn by a national court in the event of conflict between the rights guaranteed by that convention and a rule of national law.

European Union law precludes a judicial practice which makes the obligation for a national court to disapply any provision contrary to a fundamental right guaranteed by the Charter of Fundamental Rights of the European Union conditional upon that infringement being clear from the text of the Charter or the case-law relating to it, since it withholds from the national court the power to assess fully, with, as the case may be, the cooperation of the Court of Justice of the European Union, whether that provision is compatible with the Charter.

Summary

National rules under which the same wrongful conduct can be punished according to two separate procedures, one administrative and one criminal.

The ne bis in idem principle, enshrined in Article 50 of the Charter of Fundamental Rights of the European Union , does not preclude a Member State from having successively imposes a tax penalty and a criminal penalty in so far as – at the discretion of the national court – the first penalty is not a criminal penalty.

EU law does not regulate the relationship between the European Convention on Human Rights ( ECHR ) and the fundamental freedoms and legal systems of the Member States, nor does it determine what consequences the national court must draw from a conflict between the rights and a rule of national law.

EU law precludes a judicial practice which makes the obligation for national courts to disapply a provision contrary to a fundamental right guaranteed by the Charter of Fundamental Rights of the European Union subject to the condition that such contradiction is clear from the wording of the Charter or the relevant case-law, since that practice deprives the national court of the power, where appropriate in cooperation with the Court, to fully assess the compatibility of that provision with the Charter.

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