CJEU restricts the possibility of being prosecuted twice for the same offence
- Trochę o VAT
- 4 minuty
In the judgment of 4 May 2023 in Case C-97/21 MV – 98, the CJEU found that provisions of the Member States that allow the imposition of both a fine and another penalty on a taxpayer for the same offence are inconsistent with EU law – to the extent in which it is impossible to coordinate between the procedures by which these penalties were imposed. This means that it is not possible to penalise a taxpayer twice for the same offence in a situation where each of the penalties applied is imposed under a different procedure and is appealable by complaint under different rules. In such a situation, it is impossible to impose a penalty in line with the principle of proportionality with regard to the seriousness of the offence committed.
What the case is about?
The case concerns the Bulgarian company MV-98, which operated a business premises where it sold, among others, cigarettes. As a result of inspection activities undertaken at the business premises, the tax authority stated that the Company failed to record on the fiscal cash register the sale of one packet of cigarettes worth BGN 5.20 (which amounted to approximately €2.60) without issuing fiscal receipt in connection with this transaction.
For this violation, the Bulgarian tax authority imposed both a fine on MV-98 and an administrative coercive measure in the form of sealing the company’s business premises for a period of 14 days. The authority stressed the need to protect the interests of the state treasury as justification for these measures.
The company filed a complaint with the national court against the applied measure in the form of sealing the premises, in which it pointed out that the measure exercised was disproportionate in view of the minimal value of the sale involved. Moreover, the company argued that it was the first time it committed an offence of this nature.
The national court raised doubts as to whether such double punishment of the taxpayer is consistent with EU law and therefore referred questions to the CJEU for a preliminary ruling. Thence, the provisions of Bulgarian law provide for the possibility of imposing two penalties on the entrepreneur in a cumulative manner – a fine and a coercive measure in the form of sealing the premises. Yet, the court noted that each of these measures may be challenged by appeal, but that they fall under the jurisdiction of different courts (the district court for the fine and the administrative court for sealing the premises) and that there is no coordination mechanism between these procedures to ensure that the principle of proportionality in relation to the seriousness of the offence committed is met.
Position of the CJEU
The Court highlighted that administrative penalties imposed by national tax authorities in the scope of VAT should comply with the fundamental right guaranteed by Art. 50 of the Charter of Fundamental Rights, i.e., the prohibition of being prosecuted twice for the same act.
The Court held that although the measures applied (the fine and the sealing of the premises) are classified as administrative penalties under Bulgarian national law, these measures are essentially punitive in nature (performing both a preventive and a repressive function) and are characterised by a high degree of severity – especially in a situation where the entrepreneur has just one business premises and the measures applied make it impossible for him to operate, thus depriving him of income.
The CJEU recalled that Member State’s legislation must contain clear and precise rules that enable the taxpayer to determine what acts and omissions may be subject to cumulation of proceedings and penalties, then ensure the coordination of the proceedings to limit the additional disadvantage to what is absolutely necessary, and make it possible to guarantee that the severity of all of the penalties imposed is commensurate with the seriousness of the offence concerned.
As a result, the CJEU concluded that national legislation under which two different measures, liable to challenge to different courts, may be imposed for the same tax-related offence is inconsistent with EU law, including Art. 50 of the Charter of Fundamental Rights – to the extent that the national legislation does not ensure that the procedures by which the measures imposed are coordinated, making it possible that the measures applied match the seriousness of the offence concerned.
Potential impact of the CJEU judgment
The CJEU judgment may provide important interpretative guidance in cases where, in addition to penal (penal fiscal) measures, the legislation also provides for the possibility of measures of an administrative nature. If national law provides for the possibility of applying two repressive measures for the same tax offence, then these proceedings – under which these measures are imposed on a taxpayer – should be properly coordinated and correlated with each other. The severity of the cumulative sanctions thus determined should be commensurate with the offence concerned and in line with the EU principle of proportionality.
The CJEU judgment stresses how important the EU Charter of Fundamental Rights is in tax matters. Polish taxpayers (and their attorneys) should bear in mind that the Polish authorities serves also as “EU authorities” and their decisions should not violate any of the main principles and civil rights regulated by EU law.