Information Note on the Court’s case-law No. 121
July 2009
Joubert v. France - 30345/05
Judgment 23.7.2009 [Section V]
Article 1 of Protocol No. 1
Article 1 para. 1 of Protocol No. 1
Deprivation of property
Legislation disposing retrospectively and finally, without justification on general-interest grounds, of tax litigation: violation
Facts: After the applicants sold all their shares in a company, the National and International Tax Audit Department (DVNI) of the Department of Revenue served the applicants with a supplementary tax demand in respect of the capital gains resulting from the transaction. The applicants applied to the tax authorities and then, in 1995 to an administrative court, arguing that the DVNI had not been authorised to make the assessment. However, while the proceedings were still pending, the Finance Act 1997 was published. Under that Act, inspections by the tax authorities that were challenged on the ground that the body carrying them out had not been authorised to do so were deemed to be lawful if they had been carried out in conformity with the new rules governing such authorisation. In 1999 the administrative court made an order cancelling the tax surcharges and related penalties, on the ground that the DVNI had not been empowered to investigate the applicants’ tax affairs. But in 2004 the administrative court of appeal reversed that judgment. It applied the Finance Act and held that the DVNI had been empowered to inspect the applicants’ tax affairs, but granted them full relief from the penalties. The Conseil d’État dismissed an appeal on points of law.
Law: According to the courts’ decisions and the case-law of the administrative courts, the applicants had had a pecuniary interest amounting to a “possession”. In determining the substance of the dispute once and for all, the Finance Act had interfered with the applicants’ exercise of their right to the peaceful enjoyment of their possessions, resulting in a deprivation of property. The interference had been “provided for by law”. However, the aim had not been that relied on by the Government, namely to reduce the number of potential actions brought by taxpayers, but rather to protect the financial interests of the State by reducing the number of tax proceedings annulled by the administrative courts. Furthermore, the revenue of which the State would have been deprived through court findings that the tax authorities had acted outside their powers would not have had so great an impact on its budget as to affect the general interest. The introduction of the legal provision which had settled the dispute between the applicants and the tax authorities irrevocably and retroactively had therefore not been justified by any general interest. So whether it had been in the public interest was open to doubt. The legal provision complained of had irrevocably prevented the applicants from raising before the administrative courts their complaint that the DVNI had acted outside its powers, and had thus deprived them of a possession which they might have expected to have reimbursed. An individual and excessive burden had been placed on the applicants and the interference with their possessions had been disproportionate, upsetting the fair balance that must be struck between the demands of the general interest and the protection of the individual's fundamental rights. As a result the margin of appreciation available to the authorities, although broader in a dispute concerning taxes, had been overstepped.
Conclusion: violation (unanimously).
Article 41: The finding of a violation afforded sufficient just satisfaction for the non-pecuniary damage suffered by the applicants.
The applicants had admitted to having made a serious mistake in their tax declaration. Their appeal had concerned a formal defect in the proceedings because the authorities at the origin of the supplementary tax demand had acted outside their powers and the applicants had been unable to lodge a complaint because a retroactive law had been passed. The Court pointed out that it was not its task to speculate about the outcome of the applicants’ supplementary tax assessment, or whether the tax authorities should be able to order a new assessment if the first one were to be annulled.
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This summary by the Registry does not bind the Court.
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