FIFTH SECTION
DECISION
Application no. 7362/10
Shibendra DEV
against Sweden
The European Court of Human Rights (Fifth Section), sitting on 21 October 2014 as a Chamber composed of:
Mark Villiger, President,
Angelika Nußberger,
Boštjan M. Zupančič,
Ganna Yudkivska,
Vincent A. De Gaetano,
Helena Jäderblom,
Aleš Pejchal, judges,
and Claudia Westerdiek, Section Registrar,
Having regard to the above application lodged on 21 January 2010,
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
1. The applicant, Mr Shibendra Dev, is a Swedish national, who was born in 1950 and lives in Hässelby. He was represented before the Court by Mr B. Leidhammar and Mr C. Crafoord, lawyers practising in Stockholm.
2. The Swedish Government (“the Government”) were represented by their Agents, Ms I. Kalmerborn, Ms H. Kristiansson and Mr. A. Rönquist, Ministry for Foreign Affairs.
A. The circumstances of the case
1. Tax proceedings
3. By a decision of 2 June 2004 the Tax Agency (Skatteverket), noting that the applicant ran two restaurants together with his wife, Mrs Lucky Dev (who also lodged an application before the Court; no. 7356/10), found that they should each declare half of the proceeds and the costs of that business. As the applicant, in his tax return, had not declared all his income and had, moreover, not declared it in the correct manner, the Agency revised upwards his income for 2002 (i.e. the taxation year 2003), finding him liable to pay tax on underdeclared business income (inkomst av näringsverksamhet) amounting to 765,009 Swedish kronor (SEK; approximately 83,000 euros (EUR)). It also increased his liability to pay value-added tax (mervärdesskatt; VAT) for 2002 by SEK 260,033 (approximately EUR 28,000). Finally, as the information supplied by the applicant in his tax return was found to be incorrect and the revision had had to be made under a discretionary assessment procedure, given the business’s deficient accounting, the Agency ordered him to pay tax surcharges (skattetillägg), amounting to 40% and 20%, respectively, of the increased income tax and VAT.
4. Following the applicant’s appeal, the Tax Agency, on 18 March 2005, made an obligatory review of its decision but did not change it.
5. On 10 January 2007 and 29 October 2008, respectively, the County Administrative Court (länsrätten) in Stockholm and the Administrative Court of Appeal (kammarrätten) in Stockholm upheld the Tax Agency’s decision.
6. By a decision of 20 October 2009 the Supreme Administrative Court (Regeringsrätten) refused leave to appeal.
2. Criminal proceedings
7. Criminal proceedings were initiated against the applicant on 5 August 2005 in regard to the above conduct.
8. By a judgment of 16 December 2008 the Stockholm District Court (tingsrätt) convicted the applicant of an aggravated bookkeeping offence (grovt bokföringsbrott) and an aggravated tax offence (grovt skattebrott) and sentenced him to eight months’ imprisonment. The offences concerned the same period as the above-mentioned tax decisions, that is, the year 2002. The District Court found that the bookkeeping of the restaurant business had been seriously deficient and that the applicant and his wife had been responsible for failing to account for considerable proceeds and VAT, which had involved large profits for them. In regard to the tax offence, the court considered that the applicant had intentionally given false information in his tax return and had thus failed to declare proceeds of almost one million SEK and a further amount relating to VAT. The court considered that the penal value of the applicant’s offences was one year’s imprisonment, but imposed a lower sentence based on the fact that a long period of time had passed since the commission of the offences.
9. On 12 October 2010 the Svea Court of Appeal (Svea hovrätt) upheld the District Court’s judgment in so far as it concerned the bookkeeping offence. In regard to the tax offence, however, it found that it should be classified as a regular offence, stating that, in particular, the amounts involved did not give reason to consider it as being of an aggravated nature. It also, like the District Court, took into account the time that had passed since the offences were committed. As a consequence, the Court of Appeal lowered the penalty, giving the applicant a suspended sentence and ordering him to pay 100 day fines.
10. On 25 November 2010 the Supreme Court (Högsta domstolen) refused leave to appeal.
B. Relevant domestic law and practice
1. Provisions on taxes and tax surcharges
11. The rules on taxes and tax surcharges relevant to the present case were primarily laid down in, as far as income tax was concerned, the Tax Assessment Act (Taxeringslagen, 1990:324) and, with respect to VAT, the Tax Payment Act (Skattebetalningslagen, 1997:483). Both laws have since been replaced by the Tax Procedure Act (Skatteförfarandelagen; 2011:1244).
12. A tax surcharge could – and still can – be 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 Tax Assessment Act, and Chapter 15, section 1 of the Tax Payment Act) or if, following a discretionary assessment, the Tax Agency decides not to rely on the tax return (Chapter 5, section 2, and Chapter 15, section 2, respectively). It is not only express statements 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. A discretionary tax assessment is made if the taxpayer has submitted information which is so inadequate that the Tax Agency cannot base its tax assessment on it or if he or she has not filed a tax return despite the obligation to do so. In certain circumstances, the tax surcharges may be exempted.
2. Criminal law provisions
(a) Tax offences
13. A person who intentionally furnishes incorrect information to an authority or fails to file a tax return or other required information, thereby causing a risk that taxes will be withheld from the public treasury or wrongly credited or repaid to him or her, is criminally liable under sections 2-4 of the Tax Offences Act (Skattebrottslagen, 1971:69). The possible sentence ranges from a fine for a tax misdemeanour (skatteförseelse) to imprisonment for a maximum of six years for an aggravated tax offence. Section 5 provides that a person who is not considered to have furnished incorrect information with intent but to have been grossly negligent in doing so (vårdslös skatteuppgift) may be sentenced to a fine or a maximum of one year in prison. The term “incorrect information” in the Tax Offences Act is considered to have the same meaning as in the above provisions on tax surcharges (Government Bill 2010/11:165, p. 1110).
(b) Bookkeeping offences
14. A person who intentionally or by negligence disregards bookkeeping obligations under the Accountancy Act (Bokföringslagen, 1999:1078) by, inter alia, failing to enter business events in the books or save relevant documentation or by giving incorrect information in the books is convicted for a bookkeeping offence under Chapter 11, section 5 of the Penal Code (Brottsbalken) if, as a consequence thereof, the running of the business or its financial result or status cannot be assessed mainly on the basis of the books. A bookkeeping offence carries a prison sentence of no more than two years or, if the offence is of a minor character, a fine or imprisonment of up to six months. If the offence is deemed aggravated, the offender is sentenced to imprisonment between six months and four years.
3. Tax surcharges and tax offences and the Convention in Swedish case-law
15. In a judgment of 29 November 2000 the 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 (published in Nytt juridiskt arkiv (NJA) 2000, p. 622). Having noted that, under internal Swedish law, a surcharge is not considered a criminal penalty and 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 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 presupposed that the initial conviction or acquittal had been delivered in accordance with the penal procedure of the State. Therefore the principle did not prevent criminal proceedings from being brought against someone for an act in respect of which a surcharge had already been levied. This view was confirmed in later judgments delivered by the Supreme Court.
16. On 17 September 2009 the Supreme Administrative Court examined the reverse situation, that is, where the question of imposition of tax surcharges arose after a criminal conviction for a tax offence (judgment published in Regeringsrättens årsbok (RÅ) 2009, ref. 94). In assessing whether there was a violation of the prohibition on double punishment under Article 4 of Protocol No. 7 to the Convention, the court referred to the fact that the relevant Swedish provisions aimed at ensuring that the combined sanctions – criminal conviction and imposition of tax surcharges – were in reasonable proportion to the conduct for which the individual had been found liable. It further noted that the Swedish legal system contained the special feature of separate general courts and administrative courts. In the court’s opinion, Article 4 of Protocol No. 7 had to be interpreted in the light of such special features in the national legal systems. While acknowledging that the European Court’s recent judgments in Sergey Zolotukhin v. Russia ([GC], no. 14939/03, judgment of 10 February 2009, ECHR 2009) and Ruotsalainen v. Finland (no. 13079/03, judgment of 16 June 2009) suggested a change in the Strasbourg case-law, the Supreme Administrative Court noted that they did not relate to the Swedish legal system and concluded that this system, allowing for both a conviction for a tax offence and an imposition of tax surcharges, was in conformity with the Convention.
17. By a decision of 31 March 2010 the Supreme Court examined the issue anew (NJA 2010, p. 168). It found again, by a majority of 3 votes to 2, that there was no reason generally to invalidate the Swedish system with double proceedings by virtue of Article 4 of Protocol No. 7. The court considered that, following Sergey Zolotukhin v. Russia (cited above) and later judgments concerning the issue, it could be excluded that the European Court would find that proceedings concerning sanctions for the submission of identical statements would involve different “offences” because of the differing subjective prerequisites for the imposition of tax surcharges and the conviction for tax offences; instead, it was now clear that the question of whether two proceedings concerned the same offence had to be examined on the basis of the circumstances of the case. If the later proceedings concerned identical or essentially the same facts as the earlier proceedings, it was a matter of proceedings concerning the same offence. However, the Supreme Court noted that the Strasbourg case-law left some room for several punishments for the same offence that could be decided by separate organs at different times and mentioned by way of example, inter alia, the conviction for a traffic offence and the resultant withdrawal of the offender’s driving licence. The Supreme Court further found that the invalidation of a Swedish system regulated by domestic law with reference to the Convention required that either the Convention itself or the European Court’s jurisprudence provided clear support for that conclusion and considered that neither Article 4 of Protocol No. 7 nor the jurisprudence provided such support in the matter at hand.
18. By a plenary decision of 11 June 2013 (NJA 2013, p. 502) the Supreme Court overturned its previous conclusions. In line with its 2010 decision, the court held that the imposition of tax surcharges and the conviction for a tax offence based on the same information supplied in a tax return are founded on identical factual circumstances and the relevant proceedings thus concern the same offence within the meaning of Article 4 of Protocol No. 7. However, where the court in 2010 had found that the invalidation of the Swedish system required clear support in the Convention itself or in Strasbourg case-law, the court now noted that the judgment of the European Court of Justice in the case of Åkerberg Fransson (26 February 2013, case no. C-617/10) already prohibited double proceedings and punishments with respect to VAT. As the Swedish system had thereby been partially invalidated, the legal and practical consequences of further changes were not so radical as to require the intervention of the legislature. The court also took into account that no legislative amendments had been made despite the developments in Strasbourg case-law since 2009 and that it would be inexpedient and difficult to apply different rules on similar contraventions within a system meant to be coherent. Consequently, the court held that there was sufficient support for concluding that the Swedish system of tax surcharges and tax offences was incompatible with Article 4 of Protocol No. 7. This conclusion applied not only to VAT, but also to income tax, employer’s contributions and similar payments.
The Supreme Court further found that the protection under Swedish law against double proceedings and punishments was valid also in cases where the state exacted personal liability on an individual for tax surcharges imposed on a legal person. Having regard to the strong and systematic connection in Swedish law between the principles of res judicata and lis pendens, the court also held, although the Court’s jurisprudence was unclear on this point, that ongoing, not finalised proceedings on tax surcharges precluded a criminal indictment concerning the same factual circumstances. The procedural hindrance against an indictment materialised when the Tax Agency took its decision to impose surcharges.
However, whereas the imposition of tax surcharges and the conviction for a tax offence based on the same factual circumstances concerned the same offence and were thus prohibited, the situation was different when the criminal conviction concerned a bookkeeping offence. According to the Supreme Court, which had regard to the case-law of the Court, the concrete factual circumstances forming the basis of a bookkeeping offence could normally not be considered inextricably linked to the factual circumstances leading to the imposition of tax surcharges. In addition to the breach of bookkeeping obligations under the Accountancy Act, the imposition of a tax surcharge involved a further factual element, namely the submission of incorrect information in a tax return.
In the case at hand, which involved the imposition of tax surcharges against an individual in November 2009 and the criminal indictment of him in June 2010 for, inter alia, aggravated tax offences and an aggravated bookkeeping offence, the Supreme Court quashed the appealed judgment of the Court of Appeal in so far as it concerned the tax offence relating to his personal income tax and dismissed the indictment in that respect. However, nothing prevented the examination of the bookkeeping offence or the tax offences concerning VAT and employer’s contributions. In the latter respect, the conclusion was due to the tax surcharges relating to VAT and employer’s contributions having been imposed on the appellant’s limited liability company and not on him personally.
19. In a further decision, taken on 16 July 2013 (NJA 2013, p. 746), the Supreme Court examined the question whether a former defendant could be granted a re-opening of criminal proceedings (resning) under Chapter 58, section 2 of the Code of Judicial Procedure (Rättegångsbalken) if he or she had been convicted of an offence under the Tax Offences Act in a manner incompatible with Article 4 of Protocol No. 7, as interpreted by the decision of 11 June 2013. The court concluded that, on the basis of the Convention, in particular Article 13, a Swedish court may decide, in certain situations, that a case is to be re-opened notwithstanding the special conditions specified in Chapter 58, section 2. The court also took the position that the incompatibility of Swedish legislation regarding sanctions for tax-related offences with Article 4 of Protocol No. 7 had arisen by virtue of the Sergey Zolotukhin judgment (cited above), thus on 10 February 2009. The Supreme Court’s decision led to criminal proceedings being re-opened in respect of an individual’s conviction for an offence under the Tax Offences Act. As a result, the possibility of being granted a re-opening of criminal proceedings applies retroactively to judgments having been delivered in criminal proceedings as from 10 February 2009.
20. On 25 July 2013 the Supreme Court took another decision of relevance (NJA 2013, p. 780). It stated therein that, if criminal proceedings have commenced before the Tax Agency has decided to impose tax surcharges, the prohibition against ne bis in idem cannot result in a criminal judgment that has become final being re-opened and quashed. Instead, it is the second set of proceedings to be commenced – the tax proceedings involving surcharges – that are contrary to the law. The violation of the right not to be tried or punished twice for the same offence is therefore in this situation a matter for the administrative courts.
21. By a plenary judgment of 29 October 2013 (HFD 2013 ref. 71), the Supreme Administrative Court (now Högsta förvaltningsdomstolen) reversed the position taken in its judgment of 17 September 2009 and confirmed in a judgment of 21 December 2010 (RÅ 2010 ref. 117). Agreeing with the conclusions drawn by the Supreme Court, the Supreme Administrative Court found that the same principles should apply when the order of the tax and criminal proceedings is different, that is, when the tax proceedings are commenced later. Accordingly, a criminal indictment constitutes a procedural hindrance against imposing tax surcharges based on the same submission of incorrect information.
In the case at hand, where the individual had been indicted in February 2005 and surcharges had been imposed by the Tax Agency in April 2005, the Supreme Administrative Court concluded that the latter decision violated Article 4 of Protocol No. 7. The appeal made against the appellate court’s judgment on tax surcharges was accordingly granted and the surcharges set aside.
22. The Supreme Administrative Court has since examined several petitions for the re-opening of tax proceedings in which tax surcharges had been imposed. In a decision of 2 December 2013 (cases nos. 5850-13 and 5851-13) it rejected the petition, stating that the earlier criminal proceedings had not led to an indictment of the individual but to a decision by the prosecutor to discontinue the preliminary investigation and that, accordingly, no violation of the prohibition against double proceedings had occurred. In a judgment of 5 June 2014 (cases nos. 1112-14 and 1113-14) it granted a re-opening, noting that, pursuant to the Supreme Court’s decision of 16 July 2013, the applicant would have had a right of re-opening of the criminal proceedings if the tax surcharge decision had preceded the indictment and finding that the situation at hand, which was the reverse, should not be treated differently. The Supreme Administrative Court accordingly re-opened the tax proceedings and quashed the tax surcharges in question. The latter case had already been examined by the Supreme Administrative Court as part of the original tax proceedings in December 2010 – prior to the recent developments in Swedish case-law – and had then been considered not to involve a breach of Article 4 of Protocol No. 7.
23. In a judgment of 19 June 2014 (cases nos. 7110-13 and 7111-13) the Supreme Administrative Court examined a different situation where tax surcharges had been imposed on a person by a decision of the Tax Agency in May 2011, upheld by the County Administrative Court in February 2012. During the subsequent examination before the Administrative Court of Appeal, the person in question was, in separate criminal proceedings, indicted for a tax offence but acquitted thereof by a judgment of the District Court in April 2013 which soon afterwards acquired legal force. As a consequence, the Administrative Court of Appeal, in September 2013, quashed the surcharges that had been imposed. The Supreme Administrative Court agreed with this course of action, noting that the Court had established in several judgments (including Nykänen v. Finland, no. 11828/11, 20 May 2014) that, in the event that one of two concurrent sets of proceedings becomes final, Article 4 of Protocol No. 7 required that the other set of proceedings be discontinued. The Supreme Administrative Court’s judgment was delivered in ordinary proceedings which had not involved any re-opening. Furthermore, all the decisions and judgments in the case were delivered after the Sergey Zolotukhin judgment.
24. Following the above judicial changes, the Prosecutor-General (Riksåklagaren) and the Economic Crime Authority (Ekobrotts-myndigheten) decided to examine all tax cases where there may have been double punishments in accordance with the conclusions by the two supreme courts. Whenever the conditions were met, the prosecutor would file a petition for the criminal proceedings to be re-opened, provided that the individual agreed to this course of action and had not already sought a re-opening him- or herself. The undertaking, expected to be finalised by mid-March 2014, was to cover all cases ending with a judgment, an order of summary punishment (strafföreläggande) or a decision not to prosecute (åtalsunderlåtelse) since 10 February 2009.
On 25 April 2014 the Swedish newspaper Dagens Nyheter, basing itself on information provided by the Economic Crime Authority, reported that close to 3,000 cases concerning tax offences had been examined. Out of more than 110 individuals who were serving prison sentences, 42 had been released. Those who had not been released had been convicted also for other crimes than tax offences. A further number of persons who were about to start serving prison sentences did not have to do so. 800 individuals who had already served their sentences had been asked whether they wished assistance in filing petitions for re-opening of proceedings and, so far, 541 of them had accepted and 128 cases had been re-opened. In some re-opened cases the convictions had been quashed in their entirety; in others, involving several offences, the proceedings had to be repeated.
4. Provisions on monetary compensation
25. Section 4 of the Act on Compensation for Deprivation of Liberty and Other Coercive Measures (Lagen om ersättning vid frihetsberövande och andra tvångsåtgärder; 1998:714) stipulates that a person who has served a prison sentence is entitled to compensation if, following an appeal or a re-opening of proceedings, he or she is acquitted or given a less severe sentence or the judgment containing the conviction is quashed. Under section 7 of that Act, compensation is awarded for costs, loss of income, interference in business activities and suffering. Normally, in accordance with the practice of the Chancellor of Justice (Justitiekanslern), compensation for suffering is set at a rate of SEK 30,000 (approximately EUR 3,300) for the first month, SEK 20,000 (EUR 2,200) for each additional month up to and including the sixth month and SEK 15,000 (EUR 1,600) per month after that. Certain circumstances can lead to a higher rate of compensation. This is primarily the case if the suspicions have concerned a particularly serious crime or if the matter has attracted extensive media attention.
26. An action for damages can also be based on the Tort Liability Act (Skadeståndslagen, 1972:207). Under Chapter 3, section 2 of that Act, compensation is awarded for damage caused by fault or negligence on the part of a public authority. Requests can be lodged with the Chancellor of Justice. If dissatisfied with the Chancellor’s decision, the individual has the option of bringing an action for damages against the State in the general courts. He or she may also institute such proceedings directly without having made a request to the Chancellor.
27. In addition, the Supreme Court has developed case-law which provides that, in order to provide redress for victims of Convention violations, compensation may be awarded without direct support in Swedish law. Based on this case-law, the Chancellor of Justice has awarded compensation in many cases following requests from individuals. The Court has had regard to this development and has concluded that, following a Supreme Court judgment of 3 December 2009 (NJA 2009 N 70), there is an accessible and effective remedy of general applicability, capable of affording redress in respect of alleged violations of the Convention (see, for example, Eriksson v. Sweden, no. 60437/08, §§ 48-52, 12 April 2012, and Marinkovic v. Sweden (dec.), no. 43570/10, § 43, 10 December 2013, and – in regard to the domestic case-law developments – the latter decision, §§ 21-31).
COMPLAINTS
28. The applicant complained, under Article 4 of Protocol No. 7 to the Convention, that, through the imposition of tax surcharges and the conviction of a tax offence and an aggravated bookkeeping offence, he had been tried and punished twice for the same offence.
29. He further claimed, under Article 6 §§ 1 and 2 of the Convention, that he had not had a fair hearing in the tax proceedings and that he had not been presumed innocent.
THE LAW
A. Article 4 of Protocol No. 7 to the Convention
30. The applicant claimed that he had been tried and punished twice. He invoked Article 4 of Protocol No. 7 to the Convention, the relevant parts of which read 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.
2. The provisions of the preceding paragraph shall not prevent the reopening of the case in accordance with the law and penal procedure of the State concerned, if there is evidence of new or newly discovered facts, or if there has been a fundamental defect in the previous proceedings, which could affect the outcome of the case.
...”
1. The parties’ submissions
(a) The Government
31. In so far as the applicant’s criminal conviction concerned a tax offence, the Government raised the issue of exhaustion of domestic remedies and left it to the Court to decide whether this part of the complaint under Article 4 of Protocol No. 7 should be declared inadmissible for non-exhaustion. They referred to the recent case-law from the two supreme courts regarding the application of the principle of ne bis in idem in tax matters and the possibilities of re-opening the set of proceedings that occurred later in time, whether it be the criminal proceedings or the tax proceedings. The Government pointed out that, whereas extraordinary remedies were generally not recognised as rendering effective redress, there was case-law from the Court indicating that, in certain circumstances, an individual may be required to exhaust such remedies. While conceding that, at the time of introduction of the present application, there had been no effective domestic remedies available to the applicant, the Government further submitted that there were exceptions also to the rule that the relevant time for assessing whether domestic remedies had been exhausted was the date on which the application to the Court had been lodged. In addition, the Government referred to the practice during the past several years of the Supreme Court and the Chancellor of Justice, which had established a general principle of right to compensation for violations of the Convention. This had been accepted by the Court as an effective remedy which potential applicants could be expected to exhaust. Compensation could also be claimed under the Act on Compensation for Deprivation of Liberty and Other Coercive Measures.
32. Furthermore, the Government contended that, in so far as the bookkeeping offence was concerned, the two sets of proceedings were neither identical nor substantially the same. The tax surcharges imposed and the conviction for a bookkeeping offence did not refer to the same offence. This part of the complaint under Article 4 of Protocol No. 7 should thus be declared inadmissible as being manifestly ill-founded.
33. Should the Court declare the application admissible, the Government left it to the Court to decide whether the case revealed a violation of the Convention. They referred to the recent developments at national level, notably the Supreme Court’s conclusion that Article 4 of Protocol No. 7 constituted an impediment against an indictment for a tax offence as soon as tax surcharges had been imposed.
(b) The applicant
34. The applicant asserted that several uncertainties remained following the changes in Swedish case-law. To begin with, the Supreme Court had in its decision of 11 June 2013 (see paragraph 18 above) stated that the fact that tax surcharges had been imposed on an individual “normally” did not hinder prosecution and conviction of him or her for a bookkeeping offence. It was thus unclear under what circumstances there could be such a hindrance in a case concerning a bookkeeping offence. Furthermore, the new case-law did not determine what right an individual had to compensation for a violation of the principle of ne bis in idem. As of 18 October 2013, there had been no decision by the courts or the Chancellor of Justice awarding monetary compensation in cases concerning ne bis in idem in tax matters.
35. The applicant conceded that, based on the practice developed by the Supreme Court, he might possibly be able to obtain a re-opening of his conviction for a tax offence. However, it was unclear whether the Supreme Court would grant a re-opening in regard to the bookkeeping offence. Moreover, given the lack of case-law regarding the right to compensation, such a right for the applicant could not be excluded but also not presumed. He welcomed the Court’s guidance in both respects.
36. On the merits, the applicant referred, inter alia, to the judgments in Sergey Zolotukhin v. Russia and Ruotsalainen v. Finland (both cited above) and submitted that the two proceedings conducted against him and the punishments imposed (the tax surcharges and the criminal convictions) were criminal in nature and based on identical or substantially the same facts and were thus in breach of the principle of ne bis in idem. The administrative and general courts had not been bound by each other’s judgments but had made separate and complete examinations of the offences in question. Thus, in order not to violate Article 4 of Protocol No. 7 in his case, the criminal proceedings would have had to be terminated or annulled as soon as the tax proceedings had been finalised and the matter had become res judicata.
37. Finally, in the applicant’s view, his conviction for a bookkeeping offence was based on substantially the same facts as the decision to impose tax surcharges on him. Consequently, also this part of his criminal conviction was in breach of Article 4 of Protocol No. 7. He maintained that the same incomplete information that had been accounted for in the bookkeeping had later been presented in the tax return. Allegedly, the grounds for liability for the bookkeeping offence had been nothing else than the omission to account for the exact income accrued; the same income had been withheld in the tax return, leading to the imposition of tax surcharges.
2. The Court’s assessment
38. The Court reiterates that the purpose of the requirement of exhaustion of domestic remedies under Article 35 § 1 of the Convention is to afford the Contracting States the opportunity to prevent or put right the violations alleged against them before those allegations are submitted to the Court. Consequently, States are dispensed from answering for their acts before an international body before they have had an opportunity to put matters right through their own legal system. That rule is based on the assumption, reflected in Article 13 of the Convention – with which it has close affinity –, that there is an effective remedy available in the domestic system in respect of the alleged breach. In this way, it is an important aspect of the principle that the machinery of protection established by the Convention is subsidiary to the national systems safeguarding human rights (see Selmouni v. France [GC], no. 25803/94, § 74, ECHR 1999-V, with further references).
39. The only remedies which should be exhausted are those that relate to the breach alleged and are available and sufficient. The existence of such remedies must be sufficiently certain not only in theory but also in practice, failing which they will lack the requisite accessibility and effectiveness: it falls to the respondent State to establish that these conditions are satisfied (see, among many other authorities, McFarlane v. Ireland [GC], no. 31333/06, § 107, 10 September 2010).
40. Turning to the circumstances of the present case, it should first be pointed out that the domestic case-law developments concerning the possibility to claim compensation for violations of the Convention (see paragraph 27 above) did not in themselves create a remedy that could be used to put right any alleged violation in situations such as that of the applicant. The reason for this is that, until the Supreme Court’s decision of 11 June 2013, domestic case-law did not acknowledge that the Swedish system of double proceedings and punishments in tax matters could involve a breach of Article 4 of Protocol No. 7. Notably, in its decision of 31 March 2010, the Supreme Court itself concluded that there was no clear support for invalidating that system.
41. Accordingly, the issue whether there is an effective domestic remedy must be assessed with reference to the new legal position brought about by the Supreme Court’s decision of 11 June 2013 and the later decisions taken by the two supreme courts (see paragraphs 18-22 above).
42. The Court notes that the decisions in question established that the imposition of tax surcharges and the conviction for a tax offence based on the same information supplied in a tax return are founded on identical factual circumstances and therefore, having regard to the findings in the Sergey Zolotukhin judgment (cited above), are incompatible with Article 4 of Protocol No. 7. Although Strasbourg case-law did not lend clear guidance on this point, the incompatibility with the principle of ne bis in idem was considered to extend also to situations where no final decision had yet been taken in either the tax proceedings or the criminal proceedings. Thus, taking into account Swedish legal tradition, the duplication of proceedings was ruled out not only where there is a final decision creating a res judicata but also where there is lis pendens, that is, when the first set of proceedings are ongoing but not finalised. The procedural hindrance against a second course of action against an individual materialises when the Tax Agency has taken a decision to impose tax surcharges or when the prosecutor has brought a criminal indictment. However, the situation was deemed to be different when the criminal conviction concerns a bookkeeping offence, as the factual circumstances of that offence could normally not be considered inextricably linked to the factual circumstances leading to the imposition of tax surcharges.
43. Moreover, the Supreme Court’s decision of 16 July 2013 introduced the possibility of having the criminal proceedings re-opened if a person has been convicted in contravention of Article 4 of Protocol No. 7, as interpreted by the decision of 11 June 2013. Concluding that the incompatibility of Swedish legislation with this provision coincided with the judgment of 10 February 2009 in Sergey Zolotukhin (cited above), the court decided on a retroactive application of the re-opening option, covering criminal judgments delivered as from that date. The Supreme Administrative Court has agreed with this rule, confirming that it applies also when the tax proceedings have been commenced later than the criminal proceedings. In this context, regard should be had to the considerable efforts made, of their own motion, by the Prosecutor-General and the Economic Crime Authority to identify the cases which were not in conformity with the Supreme Court’s decision of 11 June 2013 and to assist the individuals concerned in filing petitions for the re-opening of proceedings (see paragraph 24 above).
44. An individual who has been a victim of a violation of Article 4 of Protocol No. 7 may request compensation therefor. The Act on Compensation for Deprivation of Liberty and Other Coercive Measures and the Tort Liability Act (see paragraphs 25 and 26 above) contain certain provisions of relevance in this respect. Perhaps more importantly, the Supreme Court has for several years developed case-law, according to which compensation for Convention violations may be awarded without direct support in Swedish law (paragraph 27). The latter developments did not, as has been noted above (paragraph 40), create a remedy that could be used to argue a violation of Article 4 of Protocol No. 7 prior to the Supreme Court’s decision of 11 June 2013. However, there is no reason to believe that the new compensation rules would not apply thereafter to cases where, for instance, an individual has been granted a re-opening of proceedings and has had surcharges or sentences quashed or reduced due to a breach of the principle of ne bis in idem, the more so since the alleged Convention violation would not be based on general considerations in Strasbourg case-law but on individual decisions taken by the Swedish courts. Accordingly, the individuals concerned would be able to lodge requests for compensation with the courts and the Chancellor of Justice.
45. Having regard to the new legal position following the Supreme Court’s decision of 11 June 2013, the Court concludes that there is now an accessible and effective remedy in Sweden that is capable of affording redress in respect of alleged violations of Article 4 of Protocol No. 7, provided that the conditions specified in that and later decisions are met. Thus, to the extent that the case involves tax surcharges and tax offences based on the same information supplied in a tax return and has been tried or adjudicated in the second set of proceedings on or after 10 February 2009, a potential applicant may be expected to take domestic action to secure a re-opening of proceedings, a quashing or reduction of sanctions or an award of compensation for alleged damage.
46. The question remains whether an applicant who has introduced an application with the Court before the Supreme Court’s decision of 11 June 2013 should be required to turn again to the domestic courts and authorities and avail him- or herself of this remedy, which did not exist at the time of introduction. In this connection, it is reiterated that the assessment of whether domestic remedies have been exhausted is normally carried out with reference to the date on which the application was lodged with the Court. However, this rule is subject to exceptions, which may be justified by the particular circumstances of each case (see for example, Brusco v. Italy (dec.), no. 69789/01, ECHR 2001-IX, and Andrei Georgiev v. Bulgaria, no. 61507/00, §§ 78-79, 26 July 2007).
47. Indeed, there are several factors in the present case, and in other cases concerning the same issues, that justify a departure from the general principle on the relevant date for the assessment of the exhaustion requirement. First, by examining the issues in question in plenary, the Supreme Court and the Supreme Administrative Court intended to address a general question of compatibility of the Swedish legal system with the Convention by delivering leading decisions for the guidance of the future handling of cases concerning double proceedings and punishments in tax matters. Second, as opposed to the development in Sweden in regard to compensation for Convention violations (see paragraph 27 above), the new legal position regarding ne bis in idem and Article 4 of Protocol No. 7 has not come about through gradual changes or been defined in general terms but has been laid down specifically for one type of case and situation. While future jurisprudence from the Swedish courts may regulate some further aspects, the Supreme Court’s decision of 11 June 2013 and the subsequent decisions taken by the two supreme courts are sufficiently detailed and precise to enable an applicant to assess whether or not his or her case may meet the conditions stipulated. Third, having regard to the principle of subsidiarity of the Convention system, it is of importance that the remedy provided affords litigants a genuine opportunity to obtain redress for their grievances at national level. In this context, the Court notes that the Supreme Court did not stop at a literal reading of Article 4 of Protocol No. 7 but, basing itself on Swedish legal tradition, decided to extend the prohibition against double proceedings and punishments to situations of lis pendens. The protection afforded by the new domestic remedy thus goes beyond the protection provided by Article 4 of Protocol No. 7 (see further Lucky Dev v. Sweden, no. 7356/10, § 60, judgment of 27 November 2014, adopted on 21 October 2014). Fourth, as has been noted above, the domestic remedy provides that criminal punishments and tax surcharges may be quashed or reduced. For instance, the efforts undertaken in finding cases not complying with the new legal position have led to many individuals being released from prison and a number of others not starting to serve their sentences (see paragraph 24 above). In contrast, the compensation afforded by the Convention system is normally limited to an award of monetary damages.
48. In the light of the foregoing, the Court is of the view that, generally, applicants who claim that their rights under Article 4 of Protocol No. 7 have been violated in the circumstances described above (see paragraph 45) are required under Article 35 § 1 of the Convention to petition the domestic courts for a re-opening of the proceedings and take the further steps necessary to obtain redress for such a violation at national level, whether or not they have already lodged an application with the Court.
49. In the present case, the tax surcharges imposed on the applicant on 2 June 2004 constituted, under the new domestic legal position, a procedural hindrance against a criminal indictment. The criminal proceedings, which commenced on 5 August 2005, were finalised on 25 November 2010, i.e. after 10 February 2009, the date of the Sergey Zolotukhin judgment. It is thus open to the applicant to petition the Supreme Court for a re-opening of the criminal proceedings in so far as they concern the tax offence and request a quashing or reduction of the sentence. Furthermore, he may claim compensation for alleged damage, relying on the Tort Liability Act and, in accordance with the case-law developed by the Supreme Court, without direct support in Swedish law.
50. It follows that, in so far as the tax offence is concerned, the complaint under Article 4 of Protocol No. 7 must be declared inadmissible for non‑exhaustion of domestic remedies within the meaning of Article 35 §§ 1 and 4 of the Convention.
51. Turning to the applicant’s conviction of an aggravated bookkeeping offence, it is unlikely that he would be able to obtain a re-opening of the criminal proceedings in this respect. Nevertheless, as has been observed by the Court on previous occasions (see Manasson v. Sweden (dec.), no. 41265/98, 8 April 2003, at pp. 22-23, and Carlberg v. Sweden, no. 9631/04, §§ 69-70, 27 January 2009) the obligation of a businessperson to enter correct figures in the books is an obligation per se, which is not dependent on the use of bookkeeping material for the determination of tax liability. In other words, the applicant, while not having fulfilled the legal bookkeeping requirements, could later have complied with the duty to supply the Tax Agency with sufficient and accurate information by, for instance, correcting the information contained in the books or by submitting other material which could adequately form the basis of a tax assessment. Accordingly, the applicant’s submission of the incorrect bookkeeping material to the agency in support of the claims and statements made in his tax return and his failure to provide the agency with other reliable documentation on which it could base its tax assessment constituted important additional facts in the tax proceedings which did not form part of his conviction for a bookkeeping offence. In these circumstances, the two offences in question were sufficiently separate to conclude that the applicant was not punished twice for the same offence. Thus, the applicant’s trial and conviction for an aggravated bookkeeping offence do not disclose any failure to comply with the requirements of Article 4 of Protocol No. 7.
52. It follows that, in so far as the bookkeeping offence is concerned, the complaint under Article 4 of Protocol No. 7 is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.
B. Article 6 of the Convention
53. The applicant complained that he had not had a fair hearing in the tax proceedings and that he had not been presumed innocent. He relied on Article 6 §§ 1 and 2 of the Convention, the relevant parts of which provide the following:
“1. In the determination of ... any criminal charge against him, everyone is entitled to a fair ... hearing ... by [a] tribunal established by law. ...
2. Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law.”
54. The applicant alleged that where, as in the present case, the tax liability had been determined through a discretionary assessment, the Tax Agency only had to make it probable (sannolikt) that the tax could not be adequately fixed based on the information supplied by the individual. In reality, therefore, the level of proof required for the Tax Agency’s imposition of tax surcharges was merely “probable”. Given that tax surcharges corresponded to a penal sanction, this level of proof was too low; to comply with the requirements of Article 6 it should rather be “beyond reasonable doubt”.
55. The Court has examined similar complaints in previous Swedish cases on tax-related matters (see, for instance, Janosevic v. Sweden, no. 34619/97, §§ 99-104, ECHR 2002-VII, and Carlberg, cited above, §§ 56‑57). It has concluded that the Swedish system operates with a presumption – which is acceptable in principle, if applied reasonably proportionate to the aim – that inaccuracies found during a tax assessment are due to an inexcusable act attributed to the taxpayer and that it is not manifestly unreasonable to impose tax surcharges as a penalty for that act. The individual is not left without means of defence. He or she may lodge a challenge against the Tax Agency’s tax assessment in court which, if successful, will have an automatic effect on the surcharges. He or she may also put forward grounds for a reduction or exemption of the surcharges themselves. Furthermore, regard must be had to the financial interests of the State in tax matters. A system of taxation principally based on information supplied by the taxpayer would not function properly without some form of sanction against the provision of incorrect or incomplete information, imposed according to standardised rules. In the Court’s view, provided that the courts make a nuanced assessment in the individual case as to the grounds for imposing as well as exempting the surcharges, the fact that the level of proof required for the imposition of surcharges is the same as the level required for the fixing of the tax itself does not involve a breach of Article 6.
56. Moreover, there is no indication on the facts of the present case that the applicant did not have a fair hearing in the tax proceedings.
57. It follows that this complaint is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.
For these reasons, the Court, unanimously,
Declares the application inadmissible.
Claudia WesterdiekMark Villiger
RegistrarPresident
Full & Egal Universal Law Academy