Application no. 39771/12 Hanna Riikka ALASIPPOLA
The European Court of Human Rights (Fourth Section), sitting on 27 January 2015 as a Chamber composed of:
Guido Raimondi, President, Päivi Hirvelä,
Ledi Bianku, Nona Tsotsoria, Zdravka Kalaydjieva, Paul Mahoney,
Faris Vehabović, judges,
and Françoise Elens-Passos, Section Registrar,
Having regard to the above application lodged on 20 June 2012, Having regard to the decision of 18 November 2013,
Having regard to the observations submitted by the respondent Government and the observations in reply submitted by the applicant, Having deliberated, decides as follows:
1. The applicant, Mrs Hanna Riikka Alasippola, is a Finnish national, who was born in 1972 and lives in Leppävesi. She was represented before the Court by Mr Markku Fredman, a lawyer practising in Helsinki.
2. The Finnish Government (“the Government”) were represented by their Agent, Mr Arto Kosonen of the Ministry for Foreign Affairs.
A. The circumstances of the case
3. The facts of the case, as submitted by the parties, may be summarised as follows.
4. The applicant was subject to a tax inspection during the years 2003 and 2004 due to an unexplained increase in her income. The tax inspection report was completed on 4 June 2004. At the same time the applicant’s husband was also subject to a tax inspection. He has lodged a separate application with the Court (no. 49509/12 Robert Alasippola v. Finland).
5. On 9 September 2004 the tax authorities imposed additional taxes and tax surcharges (veronkorotus, skatteförhöjning) on the applicant for the tax years 1999, 2000, 2001 and 2002. The amount of evaded taxes between 1999 and 2001 totalled approximately 55,290 euros. The amount of tax surcharges varied between 700 and 1,850 euros.
6. On an unspecified date the applicant sought rectification from the local Tax Rectification Committee (verotuksen oikaisulautakunta,
prövningsnämnden i beskattningsärenden), requesting it to quash the
decisions of 9 September 2004. Also the Tax Ombudsman (veroasiamies,
skatteombudet) sought rectification in respect of the tax year 2001,
requesting that the taxable income be increased.
7. On 17 September 2004 the Tax Rectification Committee reduced the amount of additional taxes as well as tax surcharges in respect of the tax year 2000.
8. On an unspecified date the Tax Rectification Committee accepted the Tax Ombudsman’s application and increased the taxable income for the tax year 2001. However, on 26 June 2006 the Hämeenlinna Administrative Court (hallinto-oikeus, förvaltningsdomstolen) quashed that decision.
9. On 11 December 2006 the Tax Rectification Committee rejected the applicant’s applications in respect of the tax years 1999, 2000, 2001 and 2002.
10. By letter dated 23 February 2007 the applicant appealed to the Hämeenlinna Administrative Court, requesting that the additional taxes and tax surcharges be quashed or at least reduced.
11. On 2 May 2008 the Hämeenlinna Administrative Court accepted the applicant’s appeal in respect of the tax year 2002 and quashed the additional tax and the tax surcharges in that respect. The remainder of the applicant’s appeal was rejected. This decision became final on 2 July 2008 as the applicant did not appeal against it.
12. On 27 March 2009 the public prosecutor brought charges against the applicant on one count of aiding and abetting aggravated dishonesty by a debtor (törkeä velallisen epärehellisyys, grovt oredlighet som gäldenär) and on two counts of aggravated tax fraud (törkeä veropetos, grovt
skattebedrägeri), all concerning the tax years 1999 to 2002. According to
dishonesty by a debtor as she had received unexplained income from her husband between 1999 and 2002. She was accused of aggravated tax fraud,
inter alia, as she had given false information to the tax authorities and tax
had therefore been incompletely levied between 1999 and 2001. The amount of evaded taxes had been 57,252 euros. The taxation authorities joined the charges and presented a compensation claim totalling exactly the amount of avoided taxes.
13. On 26 February 2010 the Keski-Suomi District Court (käräjäoikeus,
tingsrätten) convicted the applicant of aiding and abetting aggravated
dishonesty by a debtor and imposed a 9-month suspended sentence. The charges of aggravated tax fraud were dismissed, as well as the tax authorities’ compensation claim.
14. By letter dated 6 April 2010 the applicant appealed to the Vaasa Appeal Court (hovioikeus, hovrätten), requesting that the District Court’s judgment be quashed and the charge on aiding and abetting aggravated dishonesty by a debtor be rejected or dismissed without examining the merits. She referred to the ne bis in idem principle and to the Court’s case-law in that respect.
15. On 31 October 2011 the Vaasa Appeal Court, after having held an oral hearing, upheld the District Court’s judgment. The court found that the mere fact that the same issues had been assessed in the administrative proceedings did not necessary prevent the examination of the charges pressed. In the administrative proceedings, the unexplained increase in the applicant’s wealth had been considered to be income, thus that case concerned only taxes. The criminal proceedings, however, concerned the fact that the applicant had received income from her husband to the detriment of his creditors. As the proceedings did not concern the same matter, there was no impediment to the examination of the charges.
16. By letter dated 22 December 2011 the applicant appealed to the Supreme Court (korkein oikeus, högsta domstolen), reiterating the grounds of appeal already presented before the Appeal Court. She emphasised that the income received from her husband was exactly the same income for which additional taxes and tax surcharges had been imposed. All the imposed additional taxes and tax surcharges had been paid.
17. On 31 January 2012 the Supreme Court refused the applicant leave to appeal but granted the applicant’s husband leave to appeal.
B. Relevant domestic law and practice
18. Section 57, subsection 1, of the Tax Assessment Procedure Act (laki
verotusmenettelystä, lagen om beskattningsförfarande, Act no. 1558/1995,
as amended by Act no. 1079/2005) provides that if a person has failed to make the required tax returns or has given incomplete, misleading or false information to the tax authorities and tax has therefore been incompletely or
partially levied, the taxpayer shall be ordered to pay unpaid taxes together with additional tax and a tax surcharge.
19. According to Chapter 29, sections 1 and 2, of the Penal Code (rikoslaki, strafflagen, as amended by Acts no. 1228/1997 and no. 769/1990), a person who (1) gives a tax authority false information on a fact that influences the assessment of tax, (2) files a tax return concealing a fact that influences the assessment of tax, (3) for the purpose of avoiding tax, fails to observe a duty pertaining to taxation, influencing the assessment of tax, or (4) acts otherwise fraudulently and thereby causes or attempts to cause a tax not to be assessed, or too low a tax to be assessed or a tax to be unduly refunded, shall be sentenced for tax fraud to a fine or to imprisonment for a period of up to two years. If by the tax fraud (1) considerable financial benefit is sought or (2) the offence is committed in a particularly methodical manner and the tax fraud is aggravated when assessed as a whole, the offender shall be sentenced for aggravated tax
fraud to imprisonment for a period between four months and four years.
20. According to Chapter 39, sections 1 and 1a, of the Penal Code (as amended by Acts no. 61/2003 and no. 317/1994), a debtor who (1) destroys his or her property, (2) gives away or otherwise surrenders his or her property without acceptable reason, (3) transfers his or her property abroad in order to place it beyond the reach of his or her creditors or (4) increases his or her liabilities without basis and thus causes his or her insolvency or essentially worsens his or her state of insolvency, shall be sentenced for
dishonesty by a debtor to a fine or to imprisonment for at most two years. If
by the dishonesty by a debtor (1) considerable benefit is sought, (2) considerable or particularly substantial damage is caused to the creditors, or (3) the offence is committed in a particularly methodical manner and the dishonesty by a debtor is aggravated also when assessed as a whole, the offender shall be sentenced for aggravated dishonesty by a
debtor to imprisonment for at least four months and at most four years.
21. The Supreme Court has taken a stand on the ne bis in idem principle in its precedent case KKO 2010:46 which concerned tax surcharges and aggravated tax fraud. In that case it found, inter alia, that even though a final judgment in a taxation case, in which tax surcharges had been imposed, prevented criminal charges being brought about the same matter, such preventive effect could not be applied to pending cases (lis pendens) crossing from administrative proceedings to criminal proceedings or vice versa. However, in July 2013 the Supreme Court reversed its line of interpretation, finding that charges for tax fraud could no longer be brought if there was already a decision to order or not to order tax surcharges in the same matter (KKO 2013:59).
22. The Act on Tax Surcharges and Customs Duty Surcharges Imposed by a Separate Decision (laki erillisellä päätöksellä määrättävästä veron- tai
genom ett särskilt beslut, Act no. 781/2013) entered into force on
1 December 2013. According to the Act, the tax authorities can, when making a tax decision, assess whether to impose a tax surcharge or to report the matter to the police. The tax authorities can decide not to impose a tax surcharge. If they have not reported the matter to the police, a tax surcharge can be imposed by a separate decision by the end of the calendar year following the actual tax decision. If the tax authorities have imposed tax surcharges, they can no longer report the same matter to the police unless, after imposing the tax surcharges, they have received evidence of new or recently revealed facts. If the tax authorities have reported the matter to the police, tax surcharges can, as a rule, no longer be imposed. The purpose of the Act is thus to ensure that a tax or a customs duty matter is processed, and possibly punished, in only one set of proceedings. The Act does not, however, contain any transitional provisions extending its scope retroactively.
23. The applicant complained under Article 4 of Protocol No. 7 to the Convention of a violation of the ne bis in idem principle. The taxation proceedings, in which tax surcharges had been imposed, had ended with a final decision on 2 July 2008. The criminal proceedings had been initiated and concluded thereafter in the same matter.
24. The applicant complained under Article 4 of Protocol No. 7 to the Convention of a violation of the ne bis in idem principle.
25. Article 4 of Protocol No. 7 to the Convention reads 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.
3. No derogation from this Article shall be made under Article 15 of the Convention.”
26. The Government found it indisputable that both sets of proceedings, the criminal proceedings as well as those related to the tax surcharges, had
been criminal in nature for the purposes of the Article relied on. However, the proceedings had been based on separate facts. The applicant had been imposed tax surcharges because of the unexplained increase in her assets and for having provided the tax authorities false or incomplete information intentionally or through gross negligence. As to the criminal proceedings, the applicant had been charged and convicted for aiding and abetting aggravated dishonesty by a debtor as she had received assets from her husband while being aware of his financial difficulties. The charges against the applicant for aggravated tax fraud had been dismissed by the District Court. The decision on tax surcharges had concerned only a failure to provide information for taxation while the criminal proceedings had concerned the fact that the applicant had received income from her husband to the detriment of his creditors.
27. The Government further noted that, under well-established Finnish case-law, tax fraud and dishonesty by a debtor fell under different scopes of
res judicata. The offences injured different objects of legal protection, were
committed concretely by different acts and caused damage to different actors. The parties injured by a debtor were the creditors. In the Government’s view, the ne bis in idem effect could not be extended to offences which fell under different scopes of res judicata and were committed differently from the conduct for which the tax surcharge was imposed. The concrete transfer measures had fulfilled the constituent elements of dishonesty by a debtor, which had injured the interest of the creditors in general. The taxation proceedings had only concerned the compliance with the obligation to provide information under taxation legislation. Thus the concrete acts of committing the tax offence and the debtor’s offence had been distinct in method, time and space. Accordingly, the proceedings had been based on distinct matters, and the applicant had not been tried or punished twice in the same matter.
28. The applicant claimed that exactly the same facts and circumstances had been assessed both in the taxation proceedings and in the criminal proceedings. The applicant had been charged with aggravated tax fraud for failing to declare assets received from her husband. However, these charges had been dismissed as the District Court had not found her separately guilty of aggravated tax fraud to that extent. The court thus had found that she had failed to make a tax declaration but it had also found that, by doing so, she had not been guilty of a separate tax fraud. This was logical as, if the applicant had received illegal assets and by doing so committed an offence, she had no duty to report this offence and its profit to the tax authority. Therefore it was really a question of one act and the same circumstances.
29. The applicant further argued that what was essential was what circumstances had de facto led to charges and been investigated in the successive proceedings. The most essential element was that the rise in value of the applicant’s property could not be explained otherwise than that
she had received assets from her husband which in turn had been profits from crime or tax evasion. In both sets of proceedings the most integral element was the source of the funding of the property. Moreover, the tax fraud element had also been included in the aiding and abetting of aggravated dishonesty by a debtor. The sameness of the facts had to be assessed concretely by examining which kinds of actions had led to punishment in both proceedings and which kinds of actions had led to conviction.
30. The Court notes first of all that, as to the criminal nature of the impugned proceedings, it is clear that the criminal proceedings for aiding and abetting aggravated dishonesty by a debtor and for aggravated tax fraud were criminal in nature.
31. As to the criminal nature of tax surcharges, the Court reiterates that the legal characterisation of the procedure under national law cannot be the sole criterion of relevance for the applicability of the principle of ne bis in
idem under Article 4 § 1 of Protocol No. 7. Otherwise, the application of
this provision would be left to the discretion of the Contracting States to a degree that might lead to results incompatible with the object and purpose of the Convention (see for example Storbråten v. Norway (dec.), no. 12277/04, ECHR 2007-... (extracts), with further references). The notion of “penal procedure” in the text of Article 4 of Protocol No. 7 must be interpreted in the light of the general principles concerning the corresponding words “criminal charge” and “penalty” in Articles 6 and 7 of the Convention respectively (see Haarvig v. Norway (dec.), no. 11187/05, 11 December 2007; Rosenquist v. Sweden (dec.), no. 60619/00, 14 September 2004; Manasson v. Sweden (dec.), no. 41265/98, 8 April 2003; Göktan v. France, no. 33402/96, § 48, ECHR 2002-V; Malige
v. France, 23 September 1998, § 35, Reports of Judgments and Decisions
1998-VII; and Nilsson v. Sweden (dec.), no. 73661/01, ECHR 2005-XIII). 32. The Court’s established case-law sets out three criteria, commonly known as the “Engel criteria” (see Engel and Others v. the Netherlands, 8 June 1976, Series A no. 22), to be considered in determining whether or not there was a “criminal charge”. The first criterion is the legal classification of the offence under national law, the second is the very nature of the offence and the third is the degree of severity of the penalty that the person concerned risks incurring. The second and third criteria are alternative and not necessarily cumulative. This, however, does not rule out a cumulative approach where separate analysis of each criterion does not make it possible to reach a clear conclusion as to the existence of a criminal charge (see Jussila v. Finland [GC], no. 73053/01, §§ 30-31, ECHR 2006-XIV; and Ezeh and Connors v. the United Kingdom [GC], nos. 39665/98 and 40086/98, §§ 82-86, ECHR 2003-X).
33. The Court has taken a stand on the criminal nature of tax surcharges, in the context of Article 6 of the Convention, in the case Jussila v. Finland
(cited above). In that case the Court found that, regarding the first criterion, it was apparent that the tax surcharges were not classified as criminal but as part of the fiscal regime. This was not decisive, but the second criterion, the nature of the offence, was more important. The Court observed that the tax surcharges were imposed by general legal provisions applying to taxpayers generally. Further, under Finnish law, the tax surcharges were not intended as pecuniary compensation for damage but as a punishment to deter re-offending. The surcharges were thus imposed by a rule, the purpose of which was deterrent and punitive. The Court considered that this established the criminal nature of the offence. Regarding the third Engel criterion, the minor nature of the penalty did not remove the matter from the scope of Article 6. Hence, Article 6 applied under its criminal head notwithstanding the minor nature of the tax surcharge (see Jussila v. Finland [GC], cited above, §§ 37-38). Consequently, proceedings involving tax surcharges are “criminal” also for the purpose of Article 4 of Protocol No. 7.
34. Therefore, in the present case, the Court considers that it is clear that both sets of proceedings are to be regarded as criminal for the purposes of Article 4 of Protocol No. 7 to the Convention.
35. Turning now to the question of whether the offences for which the applicant was prosecuted were the same (idem), the Court has acknowledged in the case of Sergey Zolotukhin v. Russia (see Sergey
Zolotukhin v. Russia [GC], no. 14939/03, §§ 81-84, ECHR 2009) the
existence of several approaches to this question. The Court presented an overview of the existing three different approaches to this question. It found that the existence of a variety of approaches engendered legal uncertainty incompatible with the fundamental right not to be prosecuted twice for the same offence. It was against this background that the Court provided in that case a harmonised interpretation of the notion of the “same offence” for the purposes of Article 4 of Protocol No. 7 to the Convention. In the Zolotukhin case the Court thus found that an approach which emphasised the legal characterisation of the two offences was too restrictive on the rights of the individual. If the Court limited itself to finding that a person was prosecuted for offences having a different legal classification, it risked undermining the guarantee enshrined in Article 4 of Protocol No. 7 rather than rendering it practical and effective as required by the Convention. Accordingly, the Court took the view that Article 4 of Protocol No. 7 had to be understood as prohibiting the prosecution or trial of a second “offence” in so far as it arose from identical facts or facts which were substantially the same. It was therefore important to focus on those facts which constituted a set of concrete factual circumstances involving the same defendant and inextricably linked together in time and space, the existence of which had to be demonstrated in order to secure a conviction or institute criminal proceedings.
36. In the present case the parties disagree on whether the tax surcharge proceedings, on the one hand, and the criminal proceedings, on the other hand, arose from the same facts. The Court notes, first of all, that the applicant was party in her personal capacity to both sets of proceedings. The tax surcharge proceedings arose from the fact that the applicant had given incomplete information to the tax authorities and tax had therefore been incompletely or partially levied between 1999 and 2002. On the other hand, in the criminal proceedings the applicant was accused of one count of aiding and abetting aggravated dishonesty by a debtor and two counts of aggravated tax fraud, but convicted only for the former. According to the charges, the applicant was accused of aiding and abetting aggravated dishonesty by a debtor as she had received unexplained income from her husband between 1999 and 2002, whereas she was accused of aggravated tax fraud as she had failed, inter alia, to declare income and, consequently, the tax imposed on her between 1999 and 2001 had been too low.
37. The Court therefore finds that the concrete factual circumstances are not the same as far as the conviction for aiding and abetting aggravated dishonesty by a debtor is concerned. The Court agrees with the Government that the concrete act of committing that offence, namely receiving assets from her husband while being aware of his financial difficulties, is distinct in method, time and space from the failure to provide complete information to the tax authorities. It follows that, in so far as aiding and abetting aggravated dishonesty by a debtor 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.
38. The Court notes that the applicant was also charged and tried for aggravated tax fraud between 1999 and 2001 but was not convicted. As far as these charges are concerned, the Court considers that the two impugned sets of proceedings arose from the same failure by the applicant to declare income. Both sets of proceedings also concerned the same period of time, namely the period from 1999 to 2001, and approximately the same amount of evaded taxes. The two impugned sets of proceedings thus constituted, as far as the aggravated tax fraud charges are concerned, a single set of concrete factual circumstances arising from identical facts or facts which were substantially the same.
39. The Court notes, however, that the applicant never relied on the ne
bis in idem principle in respect of the aggravated tax fraud charges either
before the District Court or in her letter of appeal to the Appeal Court. In her letter of appeal to the Appeal Court she only relied on the ne bis in idem principle in respect of her conviction for aiding and abetting aggravated dishonesty by a debtor. It follows thus that, in so far as aggravated tax fraud is concerned, the applicant’s application must be rejected under Article 35 §§ 1 and 4 of the Convention for non-exhaustion of domestic remedies.
For these reasons, the Court unanimously
Declares the application inadmissible.
Done in English and notified in writing on 19 February 2015.
Françoise Elens-Passos Guido Raimondi