Published on 15 September 2025
FIFTH SECTION
Application no. 61718/19
VITERRA UKRAINE, PII
against Ukraine
lodged on 15 November 2019
communicated on 29 August 2025
SUBJECT MATTER OF THE CASE
The application concerns a tax adjustment and a penalty imposed on the applicant company as a result of the allegedly unlawful conduct of its supplier.
In 2015 tax authorities carried out an audit of the applicant company (which at the material time operated under the name “Glencore Grain Ukraine, PII”). During the audit, the authorities refused to recognise as tax‑deductible the applicant company’s expenses related to the purchase of cereals from company A.T. considering those transactions sham. In reaching this conclusion the authorities relied on evidence obtained in unrelated criminal proceedings indicating that A.T.’s director had not, in fact, signed any of its documents and had merely permitted unknown persons to use his identity in company documentation.
Taking into account the above information and the absence of A.T. at its registered address, the authorities increased the applicant company’s corporate income tax liability for the relevant period and imposed a fine. In total, the applicant company was ordered to pay 19,333,913.75 Ukrainian hryvnias (more than 821,000 euros at the relevant time).
The applicant company challenged the tax authority’s decision in domestic courts, arguing that the impugned transactions were genuine, and that the subsequent resale of the cereals purchased from A.T. had generated taxable income duly reflected in its financial records. Although initially the first instance and the appeal courts found in the applicant company’s favour, on 4 June 2019 the Supreme Court dismissed its claim and upheld the findings of the tax authority.
Relying on Article 1 of Protocol No. 1 to the Convention, the applicant company complains that the authorities’ decision to adjust its tax liability and impose a fine was unlawful and disproportionate. It argues, inter alia, that it exercised due diligence and complied with its reporting obligations, yet the authorities based their decision solely on the allegedly unlawful conduct of the applicant company’s supplier, of which it was not and could not reasonably have been aware. The applicant company also argues under Article 6 § 1 of the Convention that the Supreme Court failed to properly assess its arguments in this regard.
QUESTIONS TO THE PARTIES
1. Did the tax adjustment and the fine imposed on the applicant company constitute an interference with the peaceful enjoyment of its possessions, within the meaning of Article 1 of Protocol No. 1 to the Convention?
2. Has that interference been in the public interest, and in accordance with the conditions provided for by law, and, if so, did it impose an excessive individual burden on the applicant company (see “Bulves” AD v. Bulgaria, no. 3991/03, §§ 67-70, 22 January 2009; Euromak Metal Doo v. the former Yugoslav Republic of Macedonia, no. 68039/14, §§ 43-50, 14 June 2018; and compare with Nazarev and others v. Bulgaria (dec.), nos. 26553/05, 25912/09, 40107/09 and 12509/10, 25 January 2011)?
3. Is Article 6 § 1 of the Convention applicable to the proceedings in the present case (see, for example, Vegotex International S.A. v. Belgium [GC], no. 49812/09, §§ 71-74, 3 November 2022)? If yes, was there a breach of the applicant company’s right to a fair hearing?