FIRST SECTION
DECISION
Application no. 55630/14
Marijan TURKALJ
against Croatia
The European Court of Human Rights (First Section), sitting on 16 March 2021 as a Committee composed of:
Erik Wennerström, President,
Lorraine Schembri Orland,
Ioannis Ktistakis, judges,
and Attila Teplán, Acting Deputy Section Registrar,
Having regard to the above application lodged on 1 August 2014,
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 Marijan Turkalj, is a Croatian national, who was born in 1969 and lives in Zagreb. He was represented before the Court by Mr A. Jureško, a lawyer practising in Zagreb.
2. The Croatian Government (“the Government”) were represented by their Agent, Ms Š. Stažnik.
3. The facts of the case, as submitted by the parties, may be summarised as follows.
4. By a decision of the Tax Administration department of the Ministry of Finance (hereinafter “the Tax Administration”) of 10 October 2009 the applicant was ordered to pay real-estate-transfer tax (porez na promet nekretnina) in the amount of 45,569.62 Croatian kunas (HRK).
5. On 26 November 2009 the applicant, represented by an advocate, appealed against that decision arguing that his request for tax exemption had not been decided upon.
6. By a new decision of 2 April 2010 the Tax Administration: (a) replaced its earlier decision of 10 October 2009; (b) dismissed the applicant’s request for tax exemption; (c) ordered him to pay the real‑estate‑transfer tax of HRK 45,569.62; and (d) wrote off the tax debt of HRK 45,569.62. In particular, this last part (point IV) of the operative provisions read as follows:
“The following tax debt is hereby written off as regards the taxpayer Turkalj, Marijan:
- real-estate-transfer tax in the amount of HRK 45,569.62
The tax accounting service shall record the said amount as a write-off in the taxpayer’s tax account.”
7. In the reasons given for its decision the Tax Administration did not refer in any way to this part of the operative provisions.
8. The applicant, thinking that his tax debt had been written off, did not appeal against that decision.
9. On 14 May 2011 the Tax Administration issued an enforcement order against the applicant. In so doing it relied on its decision of 2 April 2010 (see paragraph 6 above) as the enforcement title.
10. On 10 June 2011 the applicant appealed arguing that the tax debt the Tax Administration sought to collect by issuing the enforcement order had been written off by the same decision that served as the enforcement title.
11. By a decision of 11 January 2012 the Ministry of Finance, as the second-instance administrative authority, dismissed the applicant’s appeal. The relevant part of that decision reads as follows:
“Point IV [of the operative provisions] is addressed to the tax accounting service with a view to making the relevant entry in the [applicant’s] tax account and is therefore of no influence on a different decision in this case.”
12. The applicant then brought an action for judicial review against the Ministry’s decision.
13. By a judgment of 21 November 2012 the Zagreb Administrative Court (Upravni sud u Zagrebu) dismissed the applicant’s action. The relevant part of that judgment reads as follows:
“... the fact that a [tax] debt is written off during tax assessment [proceedings] does not call into question the lawfulness of the enforcement order because, from the statutory provision stipulating the procedure for writing off outstanding tax debt (section 137 of the General Tax Act), it does not follow that writing off the debt negates the existence of the outstanding tax debt. In accordance with statutory requirements, the writing off of the debt occurs only in a case where it is impossible to collect the established outstanding tax debt, that is to say only in the enforcement proceedings and not in the tax assessment proceedings. Therefore, the fact that in the tax assessment proceedings it was established by a final decision that the debt was written off does not at the same time mean that the debt does not exist.”
14. The applicant then lodged a constitutional complaint against that judgment. He relied on his rights to equality before the law, equality before judicial and other relevant authorities, the right to fair proceedings and the right of ownership, all guaranteed by the Croatian Constitution.
15. By a decision of 9 January 2014 the Constitutional Court (Ustavni sud Republike Hrvatske) dismissed the applicant’s constitutional complaint and served its decision on his representative on 4 February 2014. The relevant part of that decision reads as follows:
“In the instant proceedings for assessment of real-estate-transfer tax two first‑instance decisions were adopted. The earlier one (that of 10 October 2009) established a tax obligation of a certain amount and the complainant’s/taxpayer’s tax account was debited, for accounting purposes, by that amount. After the first-instance tax authority established its own omission following the complainant’s appeal (it had failed to decide on the requested tax exemption ...) the said decision was replaced by a new one (that of 2 April 2010). In this way the decision of 10 October 2009 was set aside.
Consequently, the first-instance tax authority, when issuing the new decision, ordered that that the complainant’s tax account, which had been previously debited by the amount of tax debt established by the earlier decision (which has since been set aside), be cleared of that debt for accounting purposes. Given that by the new decision it was again established that the complainant’s tax obligation remained extant, the complainant’s tax account was again debited by the amount established by the new decision.
The above means that, without the order to write off [the previous tax debt] made by the first-instance tax authority in the disputed part IV of the operative provisions of the decision of 2 April 2010, the complainant’s account would have been debited twice, that is to say on the basis of both decisions. Therefore, naturally, when issuing the decision of 2 April 2010 the relevant authority had to remove such double debiting and thereby prevent that the complainant as a party to the proceedings from sustaining damage.
It follows that that the disputed write-off order (point IV of the decision of 2 April 2010) concerns the debt established by the earlier tax decision of 10 October 2009, which was extinguished. By this order the relevant service within the Tax Administration was ordered for accounting purposes to proceed in a certain way with the complainant’s tax account being debited, after the legal basis for that particular debiting had been set aside.”
16. By a judgment of 10 July 2014 the High Administrative Court (Visoki upravni sud Republike Hrvatske) decided on the applicant’s action for judicial review (see paragraph 12 above) and quashed the Ministry’s decision of 11 January 2012. The relevant part of that judgment reads as follows:
“... it is undisputed that the plaintiff has to pay the real-estate-transfer tax ... because his request for tax exemption was dismissed, which decision became final given that the plaintiff ... did not appeal against it.
It is undisputed that that the plaintiff did not pay the tax [debt] established in point III of the operative provisions of the decision of 2 April 2010 because ... he thought that the tax [debt in question] had been written off.
Specifically, point IV of the operative provisions of the said decision states that the [tax debt consisting of the real-estate-transfer tax of HRK 45,569.62 is written off].
...
... the operative provisions of the decision of 2 April 2010 are not drafted in accordance with [the relevant legislation governing administrative procedure] because [they] are unclear in that point IV ... is in contradiction with point III. It was therefore necessary to rectify that error before adopting the enforcement order.
Since the [first-instance] tax authority did not do so, [the Ministry of Finance] should have rectified the said error i.e. contradiction upon the plaintiff’s appeal ...
Having regard to the foregoing ... the contested [Ministry’s] decision [of 11 January 2012] is unlawful and thus must be quashed.
[The Ministry] shall on the basis of this judgment issue a new decision on the plaintiff’s appeal ...”
17. In the fresh proceedings, by a decision of 12 February 2015 the Ministry of Finance allowed the applicant’s appeal of 10 June 2011 (see paragraph 10 above) in part. The Ministry treated it as an appeal against the decision of 2 April 2010 (see paragraph 6 above) and quashed that decision in point IV of its operative provisions, namely in the part whereby the applicant’s tax debt had been written off. At the same time, the Ministry dismissed that appeal as regards the remaining part of the decision of 2 April 2010.
COMPLAINT
18. The applicant complained under Article 1 of Protocol No. 1 to the Convention about having to pay a tax debt that had been written off.
THE LAW
19. The applicant complained that he had been ordered to pay a tax debt that had been written off. He relied on Article 1 of Protocol No. 1 to the Convention which reads as follows:
“Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.
The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”
20. Being master of the characterisation to be given in law to the facts of the case (see Guerra and Others v. Italy, 19 February 1998, § 44, Reports of Judgments and Decisions 1998‑I, and Radomilja and Others v. Croatia [GC], nos. 37685/10 and 22768/12, § 124, 20 March 2018), and considering that in the given circumstances the applicant might have been deprived of the right to an effective remedy against the decision of 2 April 2010 (see paragraph 6 above), the Court, when giving notice of the application to the Government, also invited the parties to submit observations under Article 13 of the Convention. That Article reads as follows:
“Everyone whose rights and freedoms as set forth in [the] Convention are violated shall have an effective remedy before a national authority notwithstanding that the violation has been committed by persons acting in an official capacity.”The parties’ submissions
(a) The Government
21. The Government argued that the application was incompatible ratione materiae with the provisions of the Convention, that the applicant had not exhausted domestic remedies, that he had not suffered a significant disadvantage and that, in any event, the application was manifestly ill‑founded.
22. In particular, the Government submitted that the applicant had failed to exhaust domestic remedies in respect of his complaint under Article 1 of Protocol No. 1 to the Convention (see paragraphs 18-19 above) because he had failed to lodge an appeal against the Tax Administration’s decision of 2 April 2010 (see paragraph 6 above). For the same reason his complaint under Article 13 was manifestly ill-founded. In their view there was nothing which could justify such omission given that the applicant had been represented by an advocate and that the decision clearly stated that his request for tax exemption had been dismissed (see paragraphs 5-6 above). If he had considered that the operative part of the decision was self‑contradictory, he could have either asked for clarification from the tax authorities or appealed against it on the grounds that it was unintelligible. However, he had not done so.
23. As stated above (see paragraph 21), the Government also argued that the applicant’s complaint under Article 1 of Protocol No. 1 was manifestly ill-founded. They admitted that there had indeed been an interference with his right to the peaceful enjoyment of his possessions. However, that interference had been based in the relevant tax legislation, aimed to secure the payment of taxes and could not be seen as imposing an excessive individual burden on the applicant.
(b) The applicant
24. The applicant maintained his view that he had been forced to pay a tax debt which had been written off by a final decision. In his view that had been contrary to the principle of legal certainty.
25. As regards the Government’s non-exhaustion argument (see paragraph 22 above), the applicant replied that he had not had any reason to appeal against the decision of 2 April 2010 as it clearly stated that his tax debt had been written off. In any event, any mistake by the State authorities must not be at the expense of the individuals concerned.The Court’s assessment
26. The Government conceded that the domestic authorities’ decisions ordering the applicant to pay the tax debt consisting of the real‑estate‑transfer tax in the amount of HRK 45,569.62, constituted an interference with his right to the peaceful enjoyment of his possessions (see paragraph 23 above). Having regard to its case-law in the matter (see, for example, Arnaud and Others v. France, nos. 36918/11 and 5 others, §§ 23-25, 15 January 2015; Di Belmonte v. Italy, no. 72638/01, § 38, 16 March 2010, and Imbert de Trémiolles v. France (dec.), nos. 25834/05 and 27815/05, 4 January 2008), the Court sees no reason to hold otherwise. It further finds it evident that the said interference aimed to secure the payment of taxes, within the meaning of the second paragraph of Article 1 of Protocol No. 1.
27. The applicant’s argument that he was ordered to pay a tax debt that had been written off (see paragraphs 18-19 and 24 above) is to be seen as an argument challenging the lawfulness of the interference, it being understood that any interference by a public authority with the peaceful enjoyment of possessions should be lawful.
28. In that connection the Court first reiterates that its power to review compliance with domestic law is limited. It is in the first place for the national authorities, notably the courts, to interpret and apply domestic law, even in those fields where the Convention “incorporates” the rules of that law, since the national authorities are, in the nature of things, particularly qualified to settle the issues arising in this connection. Unless the interpretation is arbitrary or manifestly unreasonable, the Court’s role is confined to ascertaining whether the effects of that interpretation are compatible with the Convention (see, for example, Radomilja and Others v. Croatia [GC], nos. 37685/10 and 22768/12, § 149, 20 March 2018).
29. In the present case the domestic tax and judicial authorities held that the applicant’s tax debt had not been written off, clarified the matter and rectified the error in the operative provisions of the decision of 2 April 2010 which had led him to believe that the debt had been extinguished (see paragraphs 6, 11, 13 and 15-17 above). In the given circumstances that finding cannot, in the Court’s view, be considered arbitrary or manifestly unreasonable. The Court is therefore satisfied that the interference with the applicant’s property rights was provided for by law, as required by Article 1 of Protocol No. 1 to the Convention.
30. The applicant did not argue that the interference in question was disproportionate. The Court, having regard to the wide margin of appreciation enjoyed by the States in tax matters (see, for example, Arnaud and Others, cited above, §§ 25-27), does not find anything to suggest that the domestic authorities’ decisions in the present case imposed an excessive individual burden on the applicant and thus were at odds with the principle of proportionality, inherent in Article 1 of Protocol No. 1 to the Convention.
31. It follows that the applicant’s complaint under Article 1 of Protocol No. 1 to the Convention is inadmissible under Article 35 § 3 (a) of the Convention as manifestly ill-founded and must be rejected, pursuant to Article 35 § 4 thereof.
32. The only remaining issue to be examined is the one in the context of Article 13 of the Convention (see paragraph 20 above). In particular, if the applicant could reasonably deduce from the Tax Administration’s decision of 2 April 2010 that his tax debt had been written off and he did not appeal against it for that reason (see paragraphs 6 and 25 above), then it can be argued that the domestic authorities in that way deprived him of the right to an effective remedy.
33. In that regard the Court notes that the domestic authorities eventually re-examined the said decision just as if the applicant had appealed against it. Specifically, they examined his appeal of 10 June 2011 lodged against the enforcement order (see paragraphs 9-10 above) as if it had been lodged against the decision of 2 April 2010 (see paragraphs 6 and 17 above). Therefore, it cannot be said that the applicant was prevented from challenging the Tax Administration’s decision of 2 April 2010 (see paragraphs 6, 20, 25 and 32 above).
34. In any event, the Court reiterates that Article 13 requires a remedy in domestic law only where an individual has an “arguable claim” that one of his or her rights or freedoms set forth in the Convention has been violated (see, for example, Boyle and Rice v. the United Kingdom, 27 April 1988, § 52, Series A no. 131). In view of its above finding that the applicant’s complaint under Article 1 of Protocol No. 1 is inadmissible as manifestly ill-founded (see paragraphs 26-31 above), the Court considers that the complaint under Article 13 cannot be considered “arguable” for the purposes of Article 13 of the Convention.
35. It follows that the complaint under Article 13 of the Convention is also inadmissible under Article 35 § 3 (a) of the Convention as manifestly ill-founded and must be rejected pursuant to Article 35 § 4 thereof.
36. For these reasons, the Court does not find it necessary to examine the Government’s remaining inadmissibility objections (see paragraph 21 above).
For these reasons, the Court, unanimously,
Declares the application inadmissible.
Done in English and notified in writing on 15 April 2021.
Attila TeplánErik Wennerström
Acting Deputy RegistrarPresident
Full & Egal Universal Law Academy