SECOND SECTION
CASE OF SIKUTA v. HUNGARY
(Application no. 26127/11)
JUDGMENT
STRASBOURG
27 January 2015
This judgment is final but it may be subject to editorial revision.
In the case of Sikuta v. Hungary,
The European Court of Human Rights (Second Section), sitting as a Committee composed of:
Helen Keller, President,
András Sajó,
Robert Spano, judges,
and Abel Campos, Deputy Section Registrar,
Having deliberated in private on 16 December 2014,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1. The case originated in an application (no. 26127/11) against the Republic of Hungary lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Hungarian national, Mr Péter Sikuta (“the applicant”), on 19 April 2011.
2. The applicant was represented by Mr A. Kádár, a lawyer practising in Budapest. The Hungarian Government (“the Government”) were represented by Mr Z. Tallódi, Agent, Ministry of Public Administration and Justice.
3. The applicant complained under Article 1 of Protocol No. 1 – read alone and in conjunction with Article 14 of the Convention – that the imposition of 98% tax on the upper bracket of his severance payment constituted an unjustified deprivation of property, or else taxation at a disproportionate rate, with no remedy available.
4. Moreover, he submitted under Article 8 that the legal presumption of the impugned revenues contravening good morals represented an interference with his right to a good reputation. Lastly, he argued that the tax in question – in reality, of a punitive character – had not been imposed in judicial proceedings conducted before the civil or the criminal courts – which, in his view, amounted to a breach of Article 6 of the Convention.
5. On 19 February 2014 the application was communicated to the Government.
THE FACTS
I. THE CIRCUMSTANCES OF THE CASE
6. The applicant was born in 1964 and lives in Budapest.
7. On 1 July 2002 the applicant concluded an employment contract with a State-owned financial institution.
8. On 6 May 2010 the applicant’s employment was terminated by mutual agreement with effect from 30 July 2010. Under this agreement, on 17 May 2010 the employer paid the applicant, after payroll burdens, a net amount of 4,997,020 Hungarian forints (HUF) (approximately 16,100 euros (EUR)), including his salary due until the termination of his employment, payment for unused annual leave and an additional five months’ salary.
9. Under new legislation (see paragraph 10 below) the gross amount corresponding to the above payment was subsequently taxed at a 98% rate in its part exceeding HUF 3.5 million; the income tax and social security contributions already paid (see paragraph 8 above) were deducted from the tax payable. Thus, the applicant had to pay an additional HUF 2,144,160 (approximately EUR 6,900) as special tax, until 20 May 2011.
II. RELEVANT DOMESTIC LAW
10. For relevant domestic law, see the judgments N.K.M. v. Hungary (no. 66529/11, §§ 8-19, 14 May 2013); Gáll v. Hungary (no. 49570/11, §§ 8-18, 25 June 2013) and R.Sz. v. Hungary (no. 41838/11, §§ 8-17, 2 July 2013).
THE LAW
ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL NO. 1 TO THE CONVENTION
11. The applicant complained in essence about the imposition of 98% tax on part of his remuneration due on termination of his employment. He relied on Article 1 of Protocol No. 1 as well as Articles 6, 8 and 14 of the Convention.
The Government did not dispute the applicant’s allegations.
12. The Court notes that the application is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.
13. The Court considers that the application falls to be examined under Article 1 of Protocol No. 1 alone (see R. Sz., cited above, §§ 62 to 70). It observes that virtually identical circumstances gave rise to a violation of that provision in that case (see R. Sz., cited above, §§ 54-62); and is satisfied that there is no reason to hold otherwise in the present application.
It follows that there has been a violation of Article 1 of Protocol No. 1.
14. Relying on Article 41 of the Convention, the applicant claimed 8,000 euros (EUR) in respect of pecuniary and EUR 3,000 in respect of non-pecuniary damage.
15. The Government contested these claims.
16. On the basis of equity, the Court awards the applicant EUR 6,600 in respect of pecuniary and non-pecuniary damage combined.
17. The applicant also claimed EUR 4,430 for the costs and expenses incurred before the Court.
18. The Government contested this claim.
19. Regard being had to the documents in its possession and to its case-law, the Court considers it reasonable to award the sum of EUR 3,000 under this head.
20. The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.
FOR THESE REASONS, THE COURT, UNANIMOUSLY,
1. Declares the application admissible;
2. Holds that there has been a violation of Article 1 of Protocol No. 1 to the Convention;
3. Holds
(a) that the respondent State is to pay the applicant, within three months, the following amounts, to be converted into the currency of the respondent State:
(i) EUR 6,600 (six thousand six hundred euros), plus any tax that may be chargeable, in respect of pecuniary and non-pecuniary damage combined;
(ii) EUR 3,000 (three thousand euros), plus any tax that may be chargeable to the applicant, in respect of costs and expenses;
(b) that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;
4. Dismisses the remainder of the applicant’s claim for just satisfaction.
Done in English, and notified in writing on 27 January 2015, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
Abel CamposHelen Keller
Deputy RegistrarPresident
Full & Egal Universal Law Academy