The ECJ issued the preliminary ruling in the case C-544/24 (Nekilnojamojo turto valdymas).
Context:
Summary
he case C-544/24 involves a reference for a preliminary ruling from the Tax Disputes Commission under the Government of Lithuania. The case was lodged on August 12, 2024, and concerns a dispute between BUAB Nekilnojamojo turto valdymas (the Applicant) and the State Tax Inspectorate of Lithuania (the Defendant).
Key Facts and Background:
- Dispute Origin: The dispute arose from the Inspectorate’s decision not to exempt the Company from VAT late payment interest and fines, totaling significant amounts.
- Legal Framework:
- EU Law: Involves Articles 273 of the VAT Directive, Articles 49 and 50 of the Charter of Fundamental Rights, and Article 4(1) of Protocol 7 to the European Convention on Human Rights.
- National Law: Includes provisions from the Lithuanian Law on Tax Administration (LTA) regarding late payment interest, fines, and principles of equality and fairness.
- Company’s Argument:
- The Company argues that the imposition of late payment interest and fines violates the ne bis in idem principle (prohibition of double jeopardy) and the principle of proportionality.
- They claim that the penalties are excessive and overlap with criminal proceedings for the same acts.
- Inspectorate’s Position:
- The Inspectorate maintains that the late payment interest is calculated according to law and is not a criminal penalty.
- They argue that the interest serves as a method to ensure tax obligations are met.
- Legal Questions Referred:
- Whether EU law precludes national legislation that imposes penalties without ensuring coordination to limit additional disadvantages from duplicate proceedings.
- Whether fixed penalty rates for late payment interest are compatible with EU principles of proportionality and fairness.
- CJEU’s Role:
- The Court of Justice of the European Union (CJEU) is asked to interpret relevant EU laws to determine if the national legislation aligns with EU principles.
This case highlights issues of tax law enforcement, penalties, and fundamental rights within the EU legal framework.
Articles in the EU VAT Directive
Article 273 of the 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.
The option under the first paragraph may not be relied upon in order to impose additional invoicing obligations over and above those laid down in Chapter 3.
Articles 49 and 50 of the Charter of Fundamental Rights, and Article 4(1) of Protocol 7 to the European Convention on Human Rights.
Facts & Background
- Exemption Request Denied: The national tax authority denied the Company’s request to be exempted from VAT late payment interest and fines, totaling over EUR 4 million, on the basis that the conditions for exemption under national law were not met.
- Company’s Argument on Penalties: The Company argued that the penalties imposed are excessive and violate the principle of ne bis in idem (prohibition of double jeopardy) since they are facing criminal proceedings for the same acts.
- Proportionality and Fairness: The Company claimed that the penalties are disproportionate to the infractions and lack fairness, infringing on Articles 49 and 50 of the EU Charter of Fundamental Rights.
- Authority’s Justification: The tax authority maintained that the late payment interest is a legal enforcement mechanism, not a criminal penalty, and is necessary to ensure compliance with tax obligations.
- Legal Interpretation Sought: Due to the conflicting positions, the matter was referred to the CJEU to interpret whether the national legislation aligns with EU law regarding penalty coordination and proportionality.
Questions
- Are Article 325 TFEU, Article 273 of the VAT Directive and Article 50 of the Charter to be interpreted as precluding national legislation which makes it possible to impose interest on late payment of tax, a part of which has the effect of a penalty in respect of the same tax infringements which are the subject of a criminal prosecution, without laying down any rules ensuring coordination which limits to what is strictly necessary the additional disadvantage which results, for the persons concerned, from a duplication of proceedings or making it possible to
ensure that the severity of all of the penalties imposed is limited to what is strictly necessary in relation to the seriousness of the offence concerned? - Are Article 325 TFEU, Article 273 of the VAT Directive and Article 49(3) of the Charter to be interpreted as precluding a procedure for applying interest on late payment of taxes which, irrespective of the nature and severity of the infringements, sets a fixed penalty part of interest on late payment of taxes, without making it possible to reduce that penalty part, that is to say, to impose a rate of late payment interest which is lower than the rate provided for by the law or to waive the penalty part of late payment interest?
Similar ECJ Cases
- Nidera Handelscompagnie BV v Valstybinė mokesčių inspekcija (C-385/09) – Discusses the role of the Tax Disputes Commission as a court or tribunal under EU law.
- MV-98 (C-97/21) – Relates to the principle of ne bis in idem and proportionality in VAT penalty cases.
- bpost SA v Autorité belge de la concurrence (C-117/20) – Explores the application of criminal and administrative penalties under the principle of ne bis in idem.
- Menci (C-524/15) – Concerns cumulative conditions for prosecution and penalties, and the criminal nature of certain penalties.
- Latvijas Republikas Saeima (Penalty points) (C-439/19) – Examines the criminal nature of penalties and the proportionality principle.
Source
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