Published on 15 September 2025
FIFTH SECTION
Application no. 29930/19
YAZM FIRM, TOV
against Ukraine
lodged on 29 May 2019
communicated on 29 August 2025
SUBJECT MATTER OF THE CASE
The application concerns a fine imposed on the applicant company for an alleged underpayment of rent for municipal land.
Since 2008 the applicant company has leased municipal land in Lviv under an agreement with the city council (“the council”). Between 2015 and 2017, as part of an initiative to support local businesses, the council adopted a series of resolutions granting selected entities, including the applicant company, preferential land rent rates in the form of a 0.6 coefficient applied to their actual contractual rates. The lease agreement was amended accordingly, and for 2015 and 2016 the applicant company paid rent at the reduced rate.
During a 2017 audit of the applicant company, the tax authorities considered that the reduced rent fell below the statutory minimum for land rent payments prescribed by Article 288.5.1 of the Tax Code (which, at the material time, constituted 3% of the land’s normative value) and ordered repayment of the outstanding amount. In addition, relying on Article 123.1 of the Tax Code, which mandates a surcharge of 25% on any tax liability determined by the tax authority, it imposed on the applicant company a fine of Ukrainian hryvnias (UAH) 343,164.01 (an equivalent of over 10,900 euros (EUR).
Arguing, inter alia, that it had acted in good faith and in accordance with the council’s resolutions, the applicant company challenged the tax authority’s findings before domestic courts. By a final ruling of the Supreme Court of 20 November 2018, its claim was rejected. In doing so, the courts apparently did not address the applicant company’s objections to the fine.
The applicant company complains that the imposed fine was in breach of Article 1 of Protocol No. 1 to the Convention as it was entirely caused by the authorities’ own decision to reduce the applicable rent rate. The applicant company further complains under Article 6 of the Convention that the domestic proceedings related to the imposed fine were unfair as the courts failed to address its arguments.
QUESTIONS TO THE PARTIES
1. Did 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 DELTA PEKÁRNY a.s. v. the Czech Republic, no. 97/11, §§ 125-26, 2 October 2014; Krayeva v. Ukraine, no. 72858/13, §§ 24 and 28-33, 13 January 2022; S.C. Zorina International S.R.L. v. Romania, no. 15553/15, §§ 40-44, 27 June 2023)?
3. In so far as the proceedings in the present case related to the imposed fine, was there a breach of the applicant’s right to a fair hearing, as guaranteed by Article 6 § 1 of the Convention?