1. APPLICATION OF THE CONVENTION ON HUMAN RIGHTS IN TAX MATTERS ECHR cases Jussila v. Finland and Ruotsalainen v. Finland 32E29000 European and International Tax Law Johanna Männistö

2. Jussila v. Finland (23 November 2006) Tax office found deficiencies in Jussila’s book-keeping and made a reassessment of the VAT payable and ordered him to pay tax surcharges amounting to 10 % (EUR 308,80) on reassessed VAT liability Appealed to Administrative court requesting an oral hearing, which was refused by the Court as being “manifestly unnecessary in the matter” Requested leave to appeal to Supreme administrative court renewing also request to oral hearing but the Court refused him the leave Jussila brought the case before the ECHR alleging that he had not received a fair hearing

3. Applicability of Art. 6 Applicability of Art. 6 of the Convention for the Protection of Human Right and Fundamental Freedoms Art. 6(1) ”In the determination of… any criminal charge against him, everyone is entitled to a fair and public hearing… by an independent and impartial tribunal established by law…” Assessment of tax and the imposition of surcharges fall outside the scope Applying Engel-criteria 1) The classification of the offence as criminal according to the domestic legal system 2) The nature of the offence 3) The degree of severity of the penalty that the person concerned risks incurring => Applicable since tax surcharges intended as a punishment to deter re-offending and have thus deterrent and punitive purpose

4. Compliance with Art. 6 An oral and public hearing constitutes a fundamental principle However, the obligation to hold a hearing is not absolute No issue of credibility or contested facts that would necessitate a hearing etc. ECHR: No violation of Article 6 § 1 of the Convention since the applicant was not denied the possibility of requesting an oral hearing and was given a consideration with reasons by the national Court was given an opportunity to put forward his case in writing an comment of the submissions of the FTA The Court also noted the minor sum of money at stake

5. Ruotsalainen v. Finland (16 June 2009) Ruotsalainen used more leniently taxed fuel than diesel oil in the tank of a pickup van and was fined for petty tax fraud and subsequently issued with a fuel fee debit Requested a reduction of the fuel fee debit of EUR 15,137 but FTA and Administrative Court rejected the appeal and Supreme Administrative Court refused the leave of appeal Ruotsalainen brought the case before the ECHR alleging a breach of Art. 4 of Protocol No. 7

6. Ne bis in idem Alleged violation of Art. 4 of Protocol No. 7 to the Convention ”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.” Applying Engel-criteria to determine whether the sanctions were criminal in nature (“criminal charge”) Fine for petty tax fraud criminal proceedings, the summary penal order had become res judicata Fuel fee debit in administrative proceedings but had deterrent and punitive purpose => The nature of fuel fee debit was such as to bring the offence within the ambit of “penal procedure”

7. Ne bis in idem Furthermore, ECHR had to decide whether the latter sanctions arose from the same facts as the former, and whether there was a duplication of proceedings Zolotukhin: The same offence when it arises from identical facts or facts which are substantially the same (idem element) “The facts of the two sets of proceedings hardly differ albeit there was a requirement of intent in the first set of proceedings” and must be regarded as “substantially the same” for the purposes of the Article The Court focused on the facts that constitute a set of concrete factual circumstances involving the same defendant and inextricably linked in time and space  Violation of Article 4 of Protocol No. 7

8. Implications in Finland Supreme Court gave two precedents in 2010 on the relevance of ne bis in idem in tax matters (KKO 2010:45 and 2010:46) The Court held that only a surcharge that has become final would prevent prosecuting the person on the same matter in criminal proceedings However, the Supreme Court changed its interpretation in 2013 by the ruling KKO 2013:59 Charge on tax fraud charge cannot be investigated if a decision has already been made regarding tax surcharge in the tax procedure and the tax fraud charge would be based on the same proceedings and facts As of 1.12.2013 Act on Tax Surcharges and Customs Duty Surcharges Imposed by a Separate Decision (Laki erillisellä päätöksellä määrättävästä veron- tai tullinkorotuksesta 781/2013), so- called “Ne bis in idem” law Nowadays, when making a taxation decision FTA has to decide whether to impose tax penalty as an administrative matter or to take the matter to criminal proceedings (prosecution matter)