FOURTH SECTION
DECISION
AS TO THE ADMISSIBILITY OF
Application no. 60619/00
by Nils-Inge ROSENQUIST
against Sweden
The European Court of Human Rights (Fourth Section), sitting on 14 September 2004 as a Chamber composed of:
SirNicolas Bratza, President,
MrM. Pellonpää,
MrL. Garlicki,
MrJ. Borrego Borrego,
MrsE. Fura-Sandström,
MsL. Mijović,
MrD. Spielmann, judges,
and Mr M. O’Boyle, Section Registrar,
Having regard to the above application lodged on 17 May 2000,
Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant,
Having deliberated, decides as follows:
THE FACTS
The applicant, Nils-Inge Rosenquist, is a Swedish national, who was born in 1955 and lives in Spain. He is represented before the Court by Mr Bengt-Inge Björkhem, a lawyer practising in Kristianstad. The respondent Government are represented by their Agent, Mrs Inger Kalmerborn of the Ministry of Foreign Affairs.
A. The circumstances of the case
The facts of the case, as submitted by the parties, may be summarised as follows.
I.
In the beginning of the 1990s the applicant was carrying out his business through some private limited companies in Sweden. He emigrated from Sweden to Spain on 6 November 1995.
As to the income year 1991, the applicant failed to fulfil his obligation to file his tax return. Thus, in 1992 the Tax Authority in Kristianstad made a discretionary assessment, that the applicant for the said year had had 55,124 Swedish kronor (SEK) as income from employment, SEK 295,401 as income from capital, and that his taxable property amounted to SEK 1,032,755. At the same time, pursuant to the Taxation Act (Taxeringslagen 1990:324) a tax surcharge of SEK 43,801 was imposed on the applicant, which he did not appeal against.
In 1995, a search was carried out at the premises of the applicant’s auditor. In this connection information was found, which indicated that the applicant’s taxable income for 1991 had been considerably larger than the Tax Authority has assessed in 1992. Accordingly, the Tax Authority carried out an additional assessment. By decision of 30 October 1995 the applicant’s income from employment, capital, and taxable property was increased by respectively SEK 702,800, SEK 6,442,283, and SEK 3,087,721, resulting in an additional tax calculated at SEK 2,336,723. By decision of 15 November 1995 an additional tax surcharge was imposed pursuant to chapter 5, section 2 of the Taxation Act, amounting to SEK 934,683 equal to 40 per cent of the additional income tax levied.
The applicant appealed against the Tax Authority’s decision of 30 October 1995 to the County Administrative Court in Skåne (Länsrätten i Skåne Län), which rejected his appeal by judgment of 28 October 1999. On 13 December 2002, the Administrative Court of Appeal in Gothenburg (Kammarrätten i Göteborg), confirmed this decision. Leave to appeal was refused by the Supreme Administrative Court on 8 March 2004.
II.
In the meantime, by indictment of 11 January 1999 the applicant was charged inter alia pursuant to sections 2 and 4 of the Tax Offences Act (Skattebrottslagen, 1971:69) with aggravated tax fraud in that he had failed to file his tax return for the fiscal year 1991 allegedly with the intent of evading tax.
On 4 April 2000 before the District Court in Kristianstad (Kristianstad Tingsrätt) the prosecution applied for the detention of the applicant on remand in absentia. The applicant, being absent but represented by counsel, applied for the criminal trial against him to be dismissed by invoking Article 4 of Protocol no. 7 to the Convention. By decision of the same day the court found against the applicant.
On 27 April 2000, on appeal, the Court of Appeal (Hovrätten över Skåne ock Blekinge) upheld the decision and the Supreme Court (Högsta Domstolen) refused the applicant’s request for leave to appeal on 8 May 2000.
The applicant reported himself voluntarily to the police in Kristianstad in August 2001, whereupon the criminal trial against him commenced before the District Court in Kristianstad.
Having heard inter alia the applicant’s auditor as a witness, by a judgment of 24 October 2001 the District Court in Kristianstad convicted the applicant of aggravated tax fraud as it found it established that he had failed to file his tax return for the income year 1991 with the intent of evading part of the tax due, amounting in total to SEK 2,336,723. The applicant was sentenced to one year’s imprisonment.
On appeal, by judgment of 24 April 2003 the Court of Appeal upheld the conviction but increased the sentence to two years’ imprisonment.
Leave to appeal against the judgment to the Supreme Court was refused on 22 October 2003.
B. Relevant domestic law
1. Taxes and tax surcharges
Income tax and property tax are determined by the county tax authorities, to which taxpayers are obliged to submit information relevant to the assessment of taxes. For the purpose of securing timely, sufficient and correct information, there are provisions stipulating that, under certain circumstances, the tax authorities may impose administrative sanctions in the form of special charges - tax surcharges and delay charges – on the taxpayer. The said charges were introduced into Swedish tax legislation in 1971 (up till then a taxpayer’s submission of incorrect information could only be sanctioned within the penal system). According to the preparatory notes (Government Bill 1971:10) the main purpose of the reform was to create a more effective and fairer system of penalties than the old one, which was based entirely on criminal penalties determined by the ordinary courts following police investigation and prosecution. Unlike sanctions for tax offences, the administrative charges are determined solely on objective grounds, without regard to any form of intent or negligence on the part of the taxpayer.
A tax surcharge is imposed on a taxpayer in two situations: if he or she, in a tax return or in any other written statement, has submitted information of relevance to the tax assessment which is found to be incorrect (chapter 5, section 1 of the Taxation Act) or if, following a discretionary assessment, the tax authority decides not to rely on the tax return (chapter 5, section 2). It is not only statements expressly submitted that may lead to the imposition of a surcharge; concealment, in whole or in part, of relevant facts may also be regarded as incorrect information. However, incorrect claims are not penalised; if the taxpayer has given a clear account of the factual circumstances but has made an incorrect evaluation of the legal consequences thereof, no surcharge is imposed. The burden of proving that the information is incorrect lies with the tax authority. A discretionary tax assessment is made if the taxpayer has submitted information which is so inadequate that the tax authority cannot base its tax assessment on it or if he or she has not filed a tax return despite having been reminded of the obligation to do so (chapter 4, section 3). In the latter case the decision to impose a tax surcharge will be revoked if the taxpayer files a tax return within a certain time-limit. The surcharge amounts to 40 per cent of either the income tax which the Tax Authority would have failed to levy if it had accepted the incorrect information or the income tax levied under the discretionary assessment (the corresponding provisions on value-added tax and employer’s contributions stipulate that the surcharge equals 20 per cent of the supplementary tax levied on the taxpayer. In certain circumstances, the rates applied are 20 per cent or 10 per cent respectively, for the various types of tax).
Notwithstanding the fact that the taxpayer has furnished incorrect information, no tax surcharge will be imposed in certain situations, for example when the tax authority has corrected obvious miscalculations or written errors by the taxpayer, when the information has been corrected or could have been corrected with the aid of certain documents that should have been available to the tax authorities, such as a certificate of income from the employer, or when the taxpayer has corrected the information voluntarily (chapter 5, section 4).
Moreover, in certain circumstances, a tax surcharge will be remitted. Thus, taxpayers will not have to pay a surcharge if their failure to submit correct information or to file a tax return is considered excusable owing to their age, illness, lack of experience or comparable circumstances. The surcharge should also be remitted when the failure appears excusable by reason of the nature of the information in question or other special circumstances, or when it would be manifestly unreasonable to impose a surcharge (chapter 5, section 6). The phrase “the nature of the information” primarily covers situations where a taxpayer has had to assess an objectively complicated tax question. According to the preparatory documents (Government Bill 1991/92:43, p. 88), the expression “manifestly unreasonable” refers to situations in which the imposition of a tax surcharge would be disproportionate to the fault attributable to the taxpayer or would be unacceptable for other reasons. If the facts of the case so require, the tax authorities must have regard to the provisions on remission, even in the absence of a specific claim to that effect by the taxpayer (chapter 5, section 7). In principle, however, it is up to the taxpayer to show due cause for the remission of a surcharge.
If dissatisfied with a decision concerning taxes and tax surcharges, the taxpayer may, before the end of the fifth year after the assessment year, request the tax authority to reconsider its decision (chapter 4, sections 7 and 9). A decision concerning surcharges may also be reviewed at the taxpayer’s request after the expiry of this time-limit, if the decision on the underlying tax issue has not yet become final (chapter 4, section 11). The tax authority may also, on its own motion, decide to review its own earlier decision. A review to the taxpayer’s disadvantage must be made before the end of the year following the assessment year unless the taxpayer, inter alia, has submitted incorrect information during the course of the tax proceedings or has failed to file a tax return or to furnish required information, in which case the time-limit normally expires at the end of the fifth year after the assessment year (chapter 4, sections 7 and 14-19).
The tax authority’s decision may also be appealed against to a county administrative court. As with requests for reconsideration, an appeal has to be lodged before the end of the fifth year after the assessment year (chapter 6, sections 1 and 3), unless it concerns a tax surcharge based on a tax decision that has not yet become final (chapter 6, section 4). Following the appeal, the tax authority must reconsider its decision as soon as possible and, if it decides to vary the decision in accordance with the taxpayer’s request, the appeal will become void (chapter 6, section 6). If the decision is not thus amended, the appeal is referred to the county administrative court. If special reasons exist, an appeal may be forwarded by the tax authority to the county administrative court without reconsidering the assessment (chapter 6, section 7). Further appeals lie to an administrative court of appeal and, subject to compliance with the conditions for obtaining leave to appeal, the Supreme Administrative Court.
A tax surcharge is connected to the tax in respect of which it has been imposed in that a successful objection to the underlying tax has an automatic effect on the tax surcharge, which is reduced correspondingly (chapter 5, section 11). The tax surcharge may, however, be challenged separately, if grounds for reduction or remission exist (see above).
Decision concerning taxation can also be reconsidered on the tax authorities’ own initiative. A review to the taxpayer’s disadvantage must be made before the end of the year following the assessment year. However, in some situation such a review may be made until the end of the fifth year following the assessment year, so-called additional assessment (eftertaxering). This is the case, inter alia, if the taxpayer has provided incorrect information during the course of the tax proceedings or has failed to file a tax return despite the obligation to do so (chapter 4, sections 14-16 of the Taxation Act). An additional assessment shall only be made if an amount of some importance is at stake. When undertaking an additional assessment the tax authority has to decide about additional tax, i.e. tax that is imposed after the imposition of final tax has been concluded. It may also decide to impose a tax surcharge according to the principles above.
2. Criminal law provision
A taxpayer who has not fulfilled his obligation to submit correct and relevant information to the tax authorities or who, with the object of evading tax, has failed to file a tax return or a similar document may be subjected to a criminal charge according to provisions laid down in the Tax Offences Act. For the taxpayer to be convicted on such a charge it has to be established that the failure to submit correct information or to file a tax return is the result of criminal intent or gross negligence on his part. A charge under the provisions of the Tax Offences Act is brought in accordance with the rules governing criminal proceedings in general, which means among others things that a taxpayer can only be convicted upon prosecution and trial by the general courts and that the burden of proof is on the prosecutor. It follows from sections 2-4 of the Tax Offences Act that a taxpayer who intentionally submits incorrect information in writing to the tax authorities or who fails to file a tax return, thereby causing risk of an erroneous taxation to his advantage, shall be sentenced to a penalty ranging from a fine for petty offences to imprisonment for a maximum of six years for cases of aggravated tax crime (grovtt skattebrott).
The fact that a tax surcharge has already been imposed on the same grounds as those forming the basis of the criminal charge is no bar to criminal proceedings. Moreover, a decision to impose a tax surcharge has no binding force or any other effect that might prejudice the determination of the criminal charge. When considering the penal sanction, however, the general courts are supposed to pay attention to the fact that a surcharge has been imposed (cf. Government Bill 1971:10, pp 351 and 364). A criminal charge should be brought against a taxpayer only if the evaded tax is of some significance. According to an agreement between the Prosecutor General (Riksåklagaren) and the National Tax Board (Riksskatteverket) the tax authorities shall not normally inform the prosecutor unless the evaded tax amounts to at least 75 per cent of the basic amount for national security purposes (which in 1992 amounted to SEK 33,700). In addition, section 13 provides that an indictment shall not be brought for a petty tax offence, unless there are special reasons therefore.
3. Tax surcharges and the Convention in Swedish case law
In a judgment delivered on 29 November 2000 the Swedish Supreme Court considered whether a person could be convicted of a tax offence in criminal proceedings following the imposition of a tax surcharge in tax proceedings (case no. B 868-99, published in Nytt juridiskt arkiv (NJA) 2000, p. 622). Having noted that, under Swedish law, a surcharge is not considered a criminal penalty and thus does not prevent trial and conviction for a tax offence relating to the same act, the Supreme Court went on to examine the matter under the Convention. It first considered, in the light of the European Court’s case-law, that there were weighty arguments for regarding Article 6 as being applicable under its criminal head to proceedings involving a tax surcharge. Even assuming this to be the case, it held, however, that the principle of ne bis in idem, as set forth in Article 4 of Protocol no. 7 to the Convention, did not prevent criminal proceedings from being brought against someone for an act in respect of which a surcharge had already been levied as it was a matter of two different offences. It underlined in this connection that the imposition of tax surcharges requires neither intent nor negligence, while in order to be convicted of tax fraud it must be established that the accused had a criminal intent.
In a judgment delivered on 13 September 2002 the Supreme Administrative Court considered whether the imposition of a tax surcharge in tax proceedings could be upheld following a person’s conviction of a tax offence in criminal proceedings (case no. 624-1999, published in Regeringsrättens Årsbok (RÅ) 2002, ref 79). The Supreme Administrative Court recalled inter alia:
“that taxation in Sweden is largely based on information given by the individual and certification by him or her of information received from other sources. The purpose of the tax surcharge is to emphasise, inter alia, that the individual is required to be meticulous in fulfilling the duty of filing a tax return and the related obligation to submit information. In principle, carelessness is not acceptable. Furthermore, the taxpayer must normally have an understanding of what information is of relevance to the examination of a claim in order to avoid the risk of incorrect information being considered to have been given and a surcharge imposed. In other words, the taxpayer is required to have a certain knowledge of the tax rules”.
The Supreme Administrative Court concluded that the applicant had not been punished twice for the same offence as prohibited by Article 4 of Protocol no. 7 to the Convention, notably in that:
“a tax surcharge is a general and standardised sanction the purpose of which is, inter alia, to prevent inaccuracy when complying with the legal obligation to complete a tax return. Provided there is no ground for remission it is always set at one of two fixed percentages. It is imposed regardless of intent or negligence. If a person intentionally submits incorrect information or fails to file a tax return, an additional sanction may be imposed for tax fraud. The intent, which the prosecutor must prove, is one of the essential elements of this offence. The offence leads either to imprisonment or, having regard to the personal circumstances of the accused, some of the other possible punishments. Thus, in comparison with the grounds required for imposing a tax surcharge, in order to convict an accused of tax fraud, another essential requirement must be fulfilled. Accordingly, in the sense of the European Convention, it is a question of two different offences.”
Recently, the Council on Legislation (Lagrådet), which is composed of three judges from the two highest courts in Sweden, scrutinised a Government Bill proposing amendments to the Taxation Act and commented in this connection on the principle of ne bis in idem. The Council considered, inter alia, in the light of the decision Ponsetti and Chesnel v. France (dec.), nos. 36855/97 and 41731/98, decision of 14 September 1999, ECHR 1999-VI, that is was reasonable to assume that the fundamental conditions for tax surcharges and intentional tax offences differed in such a way that no conflict with Article 4 of Protocol no. 7 to the Convention would arise (opinion of 23 January 2003 of the Council of Legislation).
COMPLAINT
The applicant complains that he was being tried and punished twice for the same offence as prohibited by Article 4 § 1 of Protocol no. 7 to the Convention
THE LAW
The applicant alleges a violation of Article 4 of Protocol no. 7 to the Convention, which in so far as relevant, provides as follows:
“1. No one shall be liable to be tried or punished again in criminal proceedings under the jurisdiction of the same State for an offence for which he has already been finally acquitted or convicted in accordance with the law and penal procedure of that State. »
The applicant contends that the proceedings leading to the tax surcharge being imposed on him were criminal in nature and contained the same essential elements as the tax offence for which he was convicted and sentenced to two years’ imprisonment.
The Government question whether the proceedings leading to the imposition of a tax surcharge can be regarded as criminal proceedings and note in this respect among other things that the procedural rules applicable in taxation cases belong entirely to administrative law and are not part of penal procedure, and that tax authorities and the administrative courts have no jurisdiction to deal with issues classified as belonging to criminal law.
In any event, the Government submit that the offences in question differed in nature, in that for the administrative sanction i.e. the tax surcharge to be imposed it was sufficient that the applicant had failed to furnish the tax authorities with correct information as regards his income and property, while the criminal sanction required the establishment of criminal intent on his part. Further, the sanctions did not have identical purposes. The purpose of the system of tax surcharges is primarily to ensure that the tax authorities receive timely, sufficient and correct information so that they can make correct assessment, while criminal sanctions are mainly intended to be deterrent and punitive. Finally, the sanctions were imposed in proceedings of a different character and they had different legal basis.
The Court notes that the aim of Article 4 of Protocol no. 7 is to prohibit the repetition of criminal proceedings which have been concluded by a final decision (see Gradinger v. Austria, judgment of 23 October 1995, Series A no. 328-C, p. 65, § 53). In order to determine whether there has been such repetition, the character of the offences at issue in the various proceedings has to be established; more precisely, the Court has to examine whether or not the offences have the same essential elements (see Franz Fischer v. Austria, no. 37950/97, 29 May 2001, § 25).
Thus, it has to be determined whether the proceedings concerning aggravating tax fraud and those involving the tax surcharges were criminal proceedings conducted in regard to offences with the same essential elements.
The first issue that arises is whether the proceedings relating to the 40 per cent tax surcharge could be viewed as “criminal” for the purposes of Article 4 of Protocol no. 7. In this connection, the Court reiterates its findings in Janosevic v. Sweden ( no. 34619/97, 23 July 2002, §§ 68-71, ECHR 2002- VII ) and Västberga Taxi Aktiebolag and Vulic v. Sweden ( no. 36985/97, 23 July 2002, §§ 79-82 ) that the proceedings in question were “criminal” although the surcharges cannot be said to belong to criminal law under the Swedish legal system, and in Manasson v. Sweden ((dec.) no. 41265/98, 8 April 2003) that proceedings involving tax surcharges were “criminal” not only for the purpose of Article 6 of the Convention, but also for the purpose of Article 4 of Protocol no. 7 to the Convention. Moreover, in its judgment in the case Göktan v. France ( no. 33402/96, § 48, ECHR 2002-V) concerning Article 7 of the Convention and Article 4 of Protocol no. 7, the Court held that the notion of penalty should not have different meanings under different provisions of the Convention.
Accordingly, the Court considers that both proceedings were criminal in nature for the purpose of the invoked provision.
With respect to the conduct attributed to the applicant in the two proceedings, the Court notes that he was finally convicted by the Court of Appeal on 24 April 2003 pursuant to sections 2 and 4 of the Tax Offences Act for having failed to file his tax return for the income year 1991 with the intent of evading part of the tax due, amounting in total to SEK 2,336,723. The tax surcharges, however, were imposed on him by the tax authorities and the administrative courts pursuant to chapter 5, section 2 of the Taxation Act because he had failed to file his tax return for the fiscal year 1991, resulting in the tax authorities having to make a discretionary assessment of the applicant’s income for the said year.
The Court observes that the fulfilment of the conditions for the 40 per cent tax surcharge was not sufficient for criminal liability for (aggravated) tax fraud under sections 2 and 4 of the Tax Offences Act. Pursuant to the latter it was a condition that it could be established that the failure to submit correct information or to file a tax return was the result of criminal intent or gross negligence on the applicant’s part.
In other words, culpable intent or gross neglect, which was not a condition for a tax surcharge, was an essential condition for criminal conviction for (aggravated) tax fraud under section 2 and 4 of the Tax Offences Act. It served not only a deterrent but also a penal purpose.
The Court is further mindful of the Swedish Supreme Court’s judgment of 29 November 2000, and the Supreme Administrative Court’s judgment of 13 September 2002. It notes in particular that “taxation in Sweden is largely based on information given by the individual and certification by him or her of information received from other sources. The purpose of the tax surcharge is to emphasise, inter alia, that the individual is required to be meticulous in fulfilling the duty of filing a tax return and the related obligation to submit information. In principle, carelessness is not acceptable. Furthermore, the taxpayer must normally have an understanding of what information is of relevance to the examination of a claim in order to avoid the risk of incorrect information being considered to have been given and a surcharge imposed. In other words, the taxpayer is required to have a certain knowledge of the tax rules”. Moreover, “a tax surcharge is a general and standardised sanction the purpose of which is, inter alia, to prevent inaccuracy when complying with the legal obligation to complete a tax return. Provided there is no ground for remission it is always set at one of two fixed percentages. It is imposed regardless of intent or negligence.”
The Court thus notes that the purpose of the criminal offence within sections 2 and 4 of the Tax Offences Act differed from the purpose of the imposition of a tax surcharge. The purpose of the latter was to secure the fundament of the national tax system; control and sanctions being necessary devises for ensuring efficient compliance by millions of tax subjects with their fundamental duty to provide extensive and accurate factual information and material for their tax assessment.
In the light of the above considerations, the Court finds that the two offences in question were entirely separate and differed in their essential elements (see Ponsetti and Chesnel v. France (dec.), nos. 36855/97 and 41731/98, ECHR 1999-VI). Against this background, the Court does not find that the proceedings at issue disclosed any failure to comply with the requirements of Article 4 of Protocol no. 7 to the Convention.
It follows that the application must be rejected as being manifestly ill-founded pursuant to Article 35 §§ 3 and 4 of the Convention.
For these reasons, the Court by a majority
Declares the application inadmissible.
Michael O’BoyleNicolas Bratza
RegistrarPresident
Full & Egal Universal Law Academy