The tax penalties for not issuing invoices are legal and proportionate. The right to property was not violated

The Court notes at the outset that the impugned interference falls within the scope of the second paragraph of Article 1 of Protocol No. 1, concerning measures for “the control of the use of property”, and more particularly, in respect of the fine, measures “to secure the payment of taxes or other contributions or penalties”.

In this connection, the Court reiterates that it is in the first place for the national authorities to decide what kind of taxes or contributions are to be collected. Decisions in this area will commonly involve an appreciation of political, economic and social questions which the Convention leaves within the competence of the Contracting States. The margin of appreciation of the Contracting States is therefore a wide one (see Gasus Dosier- und Fördertechnik GmbH v. the Netherlands, 23 February 1995, § 60, Series A no. 306‑B, and Baláž v. Slovakia (dec.), no. 60243/00, 16 September 2003) and the Court will respect the legislature’s assessment in such matters unless it is devoid of reasonable foundation (see National & Provincial Building Society, Leeds Permanent Building Society and Yorkshire Building Society v. the United Kingdom, 23 October 1997, § 80, Reports of Judgments and Decisions 1997-VII).

This does not, however, mean that the Court’s supervisory role on this issue is entirely excluded, as it must verify whether Article 1 of Protocol No. 1 has been correctly applied.

According to the Court’s well-established case-law, an interference, including one resulting from a measure to secure the payment of taxes, must strike a “fair balance” between the demands of the general interest of the community and the requirements of the protection of the individual’s fundamental rights. The concern to achieve this balance is reflected in the structure of Article 1 as a whole, including the second paragraph: there must therefore be a reasonable relationship of proportionality between the means employed and the aims pursued. Consequently, any financial liability arising out of a fine may undermine the guarantee afforded by that provision if it places an excessive burden on the person or entity concerned or fundamentally interferes with the latter’s financial position.

The fair balance also requires procedural guarantees to establish an applicant’s liability, whereby he or she is afforded an adequate opportunity to put his or her case to the responsible authorities in order to plead, as the case may be, illegality or arbitrary and unreasonable conduct.

(b)  Compliance with Article 1 of Protocol No. 1

(i)     Whether the interference was prescribed by law

The Court notes that in the instant case cumulative sanctions were imposed on the applicant company as a consequence of a tax inspection which concluded that it had failed to comply with the legal provisions rendering mandatory the issuing of receipts for merchandise sold. The sanctions applied were all provided for by Article 10 (b), Article 11 §§ 1 (b) and 3 and Article 14 § 1 of GEO no. 28/1999. The interference was therefore prescribed by law.

(ii)   Pursuit of a legitimate aim

Furthermore, the Court accepts the Government’s statement that the interference pursued the legitimate aim of combating tax evasion and improving financial responsibility among traders.

(iii)  Proportionality of the interference

It remains to be determined whether a fair balance was struck between the demands of the general interest and the requirements of the protection of the applicant company’s fundamental rights.

In the present case, the offence committed by the applicant company represented part of a recurring problem at national level, which, as established by the national courts, prevented the economy from functioning properly and efficiently. In this connection, the Court acknowledges that the aims pursued by the relevant legislation also concern issues going beyond the mere pecuniary damage incurred by the State as a consequence of traders’ not issuing receipts for every product sold, such issues falling within the more general context of combating tax evasion.

The issue of whether such conduct should be punished by one or several financial sanctions with a deterrent effect comes within the margin of appreciation of the State. That margin is a wide one and the Court will respect the legislature’s assessment in such matters unless it is devoid of reasonable foundation.

Turning to the facts of the present case, the Court is of the opinion that the applicant company’s argument that the actual damage incurred by the State amounted to approximately RON 3 must be considered while having regard to the more general context and to the State’s fiscal policy at the relevant time, which was, as mentioned above, one of attempting to encourage more discipline and responsibility in the field of business and accounting.

Furthermore, and equally importantly, the applicant company had at its disposal a procedural guarantee by which to challenge the sanctions, specifically the possibility of bringing judicial review proceedings in respect of the fine and the other sanctions imposed. It made use of that remedy and there is nothing to show that the decision-making process confirming the imposition of the sanctions complained of was unfair or arbitrary.

Indeed, the national courts upheld the sanctions imposed by the tax authority, as they were fully in accordance with the law; moreover, even if in accordance with the law, the domestic courts had the discretion to apply more lenient sanctions by, for instance, replacing the fine with a warning , they considered, having regard to the circumstances of the applicant company’s case, that the sanctions, including the fine applied in its minimum amount, were proportionate to the aim pursued, which at the relevant time was of particular importance at national level. Such an assessment must be regarded as being within the domestic courts’ margin of appreciation to interpret and apply the relevant law, notwithstanding the fact that one other court in another similar case concluded differently as regards the measure of suspending that company’s activity.

Lastly, the Court accepts that even though the fine imposed on the applicant company was the minimum amount possible under the relevant legal provision, that sanction, coupled with the suspension of the applicant company’s business activities for three months, must have had a certain impact on its financial situation; however, that impact was of a temporary nature. Thus, the parties’ submissions show that the applicant company never had to file for bankruptcy and managed to stay operational, even if, admittedly, in more difficult circumstances.

Therefore, in view of the overall context, the restrictive measures imposed on the applicant company were neither prohibitive nor oppressive or otherwise disproportionate.

In these circumstances, the Court finds that the national authorities struck a fair balance between, on the one hand, the general interest and, on the other, respect for the applicant company’s right of property. The interference did not, therefore, impose an excessive burden on the applicant company such as to make the measure complained of disproportionate to the legitimate aim pursued.

Accordingly, it finds that there has been no violation of Article 1 of Protocol No. 1 to the Convention.