THIRD SECTION
DECISION
Application no. 65320/09
DEA 7.CO
against Albania
The European Court of Human Rights (Third Section), sitting on 27 June 2023 as a Committee composed of:
Georgios A. Serghides, President,
Darian Pavli,
Oddný Mjöll Arnardóttir, judges,
and Olga Chernishova, Deputy Section Registrar,
Having regard to:
the application (no. 65320/09) against the Republic of Albania lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) on 9 December 2009 by “Dea 7.Co” shpk, a limited liability company incorporated in Albania (“the applicant company”) and represented by Mr I. Alushi, a lawyer practicing in Tirana;
the decision to give notice of the application to the Albanian Government (“the Government”), represented by their then Agent, Ms. L. Mandija, and subsequently by Mr O. Moçka, General State Advocate;
Having deliberated, decides as follows:
SUBJECT MATTER OF THE CASE
1. The applicant company operates in the field of transport of passengers. The case concerns its right of access to court under Article 6 § 1 of the Convention to challenge a tax liability notice.
2. Following a tax inspection, on 3 January 2008 the General Tax Directorate (“GTD”) reassessed the applicant company’s tax liability and delivered to it a “notice of tax liability” (“tax notice” - njoftim-vlerësimi tatimor). The GDT ordered the applicant company to pay 3,828,759 Albanian Lek (ALL) (approx. 31,140 euros (EUR) at the material time) in respect of under-reported tax obligations. In addition, it imposed on the applicant company an amount of 1,766,938 ALL (approx. 14,371 EUR) in respect of surcharges and penalties.
Administrative proceedings3. On 1 February 2008 the applicant company challenged the tax notice before the Directorate of Tax Appeals, which on 3 March 2008 declared the challenge inadmissible, without examining its merits. It held that the applicant company had failed to comply with section 43 of the Tax Procedures Act (law no. 8560 of 22 December 1999, as amended) according to which, before challenging a tax obligation, a taxpayer must pay the principal of the disputed amount.
4. Following the applicant company’s appeal before the second-instance administrative body, namely the Commission of Tax Appeals, on 23 April 2008 that body refused on the same grounds to examine the merits of the appeal.
Judicial proceedings5. On 21 May 2008 the applicant company started a legal action before the Mat District Court against the regional tax office. It challenged the notice of tax liability and the administrative decisions that had rejected its appeals. It argued that the tax notice was in violation of the applicable tax legislation.
6. On 17 July 2008 the Mat District Court discontinued the procedure due to non-exhaustion of administrative remedies. It held that the applicant company had failed to comply with the obligation to pre-pay the disputed tax amounts before challenging them, and as a result, the administrative bodies of the first and second instances had not examined the merits of its appeal.
7. On 21 July 2008 the applicant company lodged an appeal on points of law with the Supreme Court. It submitted that it had challenged the tax reassessment in due time before the administrative bodies. Moreover, it argued that it was not a “taxpayer” in the sense of the applicable tax legislation, therefore it had no obligation to pay any of the amounts imposed by the tax administration.
8. On 2 October 2008 the Supreme Court rejected the appeal and upheld the reasoning of the first instance court.
9. On 2 April 2009 the applicant company lodged a constitutional appeal reiterating its previous arguments (see paragraph 7 above).
10. On 5 July 2009 the Constitutional Court declared the appeal inadmissible as it raised issues that concerned the interpretation of law and assessment of evidence, which it considered to be outside the scope of its jurisdiction.
11. Before the Court, the applicant company complained under Article 6 § 1 of the Convention about a denial of access to a court for the purpose of challenging its tax obligations. Under Article 1 of Protocol No. 1 to the Convention, it also complained that the tax liability imposed an excessive burden on the peaceful enjoyment of its possessions.
THE COURT’S ASSESSMENT
A. Article 6 § 1 of the Convention
12. Tax matters such as the ones that are now before the Court form part of the hard core of public-authority prerogatives, with the public nature of the relationship between the taxpayer and the community remaining predominant, despite the pecuniary effects which tax disputes necessarily produce for the taxpayer. It follows that Article 6 § 1 of the Convention is not applicable under its civil limb (see, most recently, Vegotex International S.A. v. Belgium ([GC], no. 49812/09, § 66, 3 November 2022).
13. However, the criminal limb of Article 6 § 1 has been found to apply to tax surcharges which are not intended as pecuniary compensation for damage but as a punishment to deter re-offending (Jussila v. Finland [GC], no. 73053/01, § 38, ECHR 2006‑XIV).
14. In the present case, besides the reassessed tax obligations, the authorities imposed on the applicant a number of surcharges and penalties (see paragraph 2 above), which prima facie appear to have had a punitive nature. However, it is not necessary to examine in detail the legal framework and nature of those surcharges and penalties as, in any event, the applicant’s complaint is inadmissible for the reasons set out below.
15. The right of access to a court is not absolute. It may be subject to limitations permitted by implication, particularly regarding the conditions of admissibility of an appeal. However, these limitations must not restrict the exercise of the right in such a way or to such an extent that the very essence of the right is impaired. They must pursue a legitimate aim and there must be a reasonable proportionality between the means employed and the aim sought to be achieved (see Omar v. France ([GC] no. 24767/94, § 34, 29 July 1998).
16. In the present case the limitation to the applicant company’s right of access to a court derived from the requirement to pre-pay the principal amount of the reassessed tax debt before challenging the debt reassessment. The applicant company did not argue – and the Court has no reason to hold - that that requirement did not pursue a legitimate aim (compare with the reasoning in Leduc v. France, (dec.) [Committee], no. 16382/16, § 28, 17 October 2017, and the decisions cited therein).
17. As regards proportionality, in its submissions before the domestic courts and the Court the applicant company relied solely on the argument that, under national law, it was not required to pay any of the reassessed tax liabilities. However, the applicant company did not argue before the domestic authorities that the amount it was required to pre-pay was excessive or that it imposed an unreasonable or prohibitive barrier to the exercise of its right of access to court. In other words, it complained of the very obligation to pay derived from domestic law, and not of its inability to comply with that obligation (see, for a similar situation, Tcaciuc and Others v. Romania (dec.) [Committee], nos. 43695/05 and 5 others, § 28, 4 September 2018, with further references; and contrast with Loncke v. Belgium, no. 20656/03, § 51, 25 September 2007, where the applicant did raise an access to court argument). In the absence of any argument to that effect, the Court is unable to find that the applicant company’s limitation of the right of access to court was disproportionate.
18. Lastly, as regards the argument that the domestic authorities erred in law by holding that the applicant was required to pre-pay the relevant amount before lodging a challenge against it, the Court does not discern any reason to hold that that finding was arbitrary or manifestly unreasonable (see Moreira Ferreira v. Portugal (no. 2) [GC], no. 19867/12, §§ 83 and 85, 11 July 2017).
19. In the light of the above, in particular considering that the applicant company did not argue that the statutory limitation of its right of access to court was disproportionate, the Court finds that the case does not disclose any appearance of a violation of the applicant company’s right of access to court under Article 6 § 1 of the Convention.
B. Article 1 of Protocol No. 1 to the Convention
20. Where an applicant has failed to comply with the domestic admissibility requirements, his or her application before the Court should in principle be declared inadmissible for failure to exhaust domestic remedies (see Vučković and Others v. Serbia (preliminary objection) [GC], nos. 17153/11 and 29 others, § 72, 25 March 2014).
21. In the present case, the applicant’s domestic claim was declared inadmissible because it did not exhaust administrative remedies before going to court and that outcome was not inconsistent with the applicant company’s right of access to court (see paragraph 19 above). It follows that the complaint under Article 1 of Protocol No. 1 to the Convention before the Court is inadmissible for non-exhaustion of domestic remedies pursuant to Article 35 §§ 1 and 4 of the Convention.
For these reasons, the Court, unanimously,
Declares the application inadmissible.
Done in English and notified in writing on 20 July 2023.
Olga Chernishova Georgios A. Serghides
Deputy Registrar President