ECHR rejects complaints about Italian tax on compensation for property expropriation

JUDGMENT 

Cacciato v. Italy (no. 60633/16) and Guiso and Consiglio v. Italy 08.02.2018 (no. 50821/06)

see here  

SUMMARY 

Expropriation of land by municipal authorities for building purposes. Compensation to owners with a 20% withholding tax. The ECtHR recognized a margin of appreciation in the exercise of fiscal policy and the determination of the tax rate and therefore did not find any breach of the right to property protection.

PROVISION 

Article 1 of the First Additional Protocol

PRINCIPAL FACTS 

The applicants in application no. 60633/16 are Concetta Cacciato and Michele Cacciato, who live in Canicattì (Italy) and were born in 1945 and 1950 respectively. The applicants in application no. 50821/06 are Paolo and Alessandro Guiso. They were born in 1962 and 1960 and live in Nuoro. A third applicant, Vincenza Consiglio, died in February 2008. All the applicants are Italian nationals.

Both cases arose after municipal authorities expropriated the applicants’ land for building purposes.

In the first case, the authorities in Canicattì took possession of the Cacciatos’ land in 2000 and issued a formal expropriation order in 2005. The family went to court in 2008 to seek compensation for the expropriation. In June 2014 the Palermo Court of Appeal awarded them the land’s market value plus statutory interest as well as compensation for the period in which the land had been unlawfully occupied. Tax of 20% was deducted on payment.

In the second case, Nuoro City Council took possession of the applicants’ land in November 1991 and began building works. It issued an expropriation order in October 1996. The order was declared unlawful by a court in May 1999 and the applicants went to the Regional Administrative Court the following year for compensation for unlawful deprivation of property.

The court in January 2005 ordered compensation that was below the land’s market value, applying legislation that was later declared unconstitutional. It also ruled that the land had been taken by “constructive expropriation”, the occupation of land by local authorities without any formal expropriation procedure. On appeal, the Consiglio di Stato increased the compensation in July 2011 to reflect the market value, adjusted it for inflation and added statutory interest. It also ordered compensation in respect of non-pecuniary damage. All the awards were subject to 20% tax.

THE DECISION OF THE COURT

Article 1 of Protocol No. 1

The Court noted that States had room for manoeuvre (“margin of appreciation”) when it came to fiscal policy. The core issue when it came to the 20% tax was whether it had imposed an unreasonable or disproportionate burden on them.

The Court did not consider the 20% rate itself to be too high or that the tax had nullified or frustrated the compensation awards as it had not led to the State taking away in tax what it had awarded in compensation. There was no sign that having to pay the levy had fundamentally undermined the applicants’ financial situation.

The Court, responding to an argument made by the Guisos, agreed that it often exempted its own just satisfaction awards from tax. However, that practice could not be extended by mere analogy to domestic awards. Overall, it found that the charge had not upset the necessary balance between the protection of the applicants’ rights and the public interest in securing taxes.
Overall, the applicants’ complaints about the tax were inadmissible as manifestly ill-founded.

As regards the other complaints, the Court held that the Cacciatos had not exhausted all the domestic legal remedies with regard to their compensation. It found in addition that the Giusos’ complaint about being unlawfully deprived of their land had already been dealt with in substance by the domestic courts and they had been awarded a sum of money which was in line with one the Court had approved in the case of Armando Ianelli v. Italy in similar circumstances (echrcaselaw.com editing).


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