Sweden / Supreme Court / B 5428-19

KG vs. The Prosecutor General
Policy area
Justice, freedom and security
Deciding body type
National Court/Tribunal
Deciding body
Supreme Court
Typ
Decision
Decision date
18/03/2021
  • Sweden / Supreme Court / B 5428-19

    Key facts of the case:

    This case concerns the sale of an illegal drug containing the substance melanotan, this drug is not allowed to be sold in any of the EU member states. During the years 2014 and 2015, KG sold a drug that contained melanotan. Net sales in 2014 amounted to approximately SEK 154,000 and in 2015 to approximately SEK 210,000.  No accounting and no tax returns were submitted regarding VAT in relation with these sales. KG also did not raise any income from these operations in his income tax returns. KG was prosecuted for accounting offenses, tax offenses and complicating tax control. The district court dismissed the indictment in its entirety with reference to KGs business as it had not been either accountable or taxable.

    The Court of Appeal, on the other hand, considered that both accounting and tax liability existed and has therefore sentenced KG for accounting offenses, tax offenses and aggravation of tax control to a suspended sentence and daily fine and imposed tax surcharge.

    The Supreme Court examined whether a person who had sold melanotan was liable for VAT and income tax and whether there was an obligation to maintain accounting records. These questions were preliminary to determine whether the person in question had committed accounting offenses, tax offenses and complicating tax control, as well as whether he should pay tax surcharges. The court also examined the relationship between the obligation to provide information and the right not to incriminate oneself in accordance with Article 6 of the European Convention of Human Rights and Article 47 and 48 of the EU Charter of Fundamental Freedoms.

     

    Key legal question raised by the Court:

    Does the right not to incriminate oneself constitute an obstacle to a scheme that obliges the individual to file tax returns and account for also income and other business transactions relating to an illegal activity?

     

    Outcome of the case: 

    The court concluded that there was a tax liability for both VAT and income tax and that the person had an obligation to maintain accounting records.Dealing with the right not to incriminate oneself the court concluded that this right does not constitute an obstacle to a system that obliges the individual to pay and declare VAT and income tax and maintain accounting records for illegal activities. On the other hand, liability for tax offences and bookkeeping offices cannot always be imposed if, at the time whenthe obligation would have been fulfilled, there was an accusation of crime or a criminal proceeding was imminent.

    The Supreme Court upheld the judgement of the Court of Appeal. 

  • Paragraphs referring to EU Charter

    22. The right not to incriminate oneself follows from the right to a fair trial under Article 6 of the European Convention (cf. Articles 47 and 48 of the Charter of Rights of the European Union and Article 7 and Paragraph 27 of the so-called Presumption of Innocence Directive). The right ensures that no one is forced to provide information to the detriment of oneself in the context of an examination of a criminal charge. Such an accusation exists when a competent authority has informed the individual of the accusation or when the authority has taken action which means that the person’s situation has a significantly effected based the existence of a suspicion against him or her (see the judgment of the European Court in Serves v. France, 20 October 1997, § 42, Reports on judgments and decisions 1997-VI; see also the case "Bouppteckningseden" NJA 2005 p. 407).

    23. A violation of the right not to incriminate oneself may exist if the individual is forced to provide information after an accusation of crime has been made. A violation may also exist if information, which has been provided under duress before the accusation, is subsequently used in a criminal proceeding. The right not to incriminate oneself, on the other hand, does not constitute a general obstacle to individuals being forced to - outside the framework of a criminal procedure - provide information about their financial activities, e.g. as a basis for calculating tax. If there is an obligation to provide such information, the individual may not refuse to provide the information or provide false information even if the purpose is to conceal crime. The right not to incriminate oneself cannot be given the meaning that it justifies acting in order to avoid official scrutiny. (Cf. judgments of the European Court of Justice in the cases of Allen v. The United Kingdom [Dec.], no. 76574/01, § 1, ECHR 2002-VIII, and Weh v. Austria, no. 38544/97, § 42-44, 8 April 2004, as well as "Bouppteckningseden" NJA 2005 p. 407 and "Smitningen" NJA 2018 p. 394 p. 12.)

    24. The right not to incriminate oneself does not constitute an obstacle to a system which obliges the individual to declare and record income and other business transactions relating to an illegal activity. Another thing is that liability for tax offenses and accounting offenses cannot always be imposed if, at the time when the obligation would have been fulfilled, there was an accusation of crime or a criminal proceeding was imminent.
     

  • Paragraphs referring to EU Charter (original language)

    22. Rätten att inte belasta sig själv följer av rätten till en rättvis rättegång enligt artikel 6 i Europakonventionen (jfr artiklarna 47 och 48 i Europeiska unionens rättighetsstadga samt artikel 7 och beaktandesats 27 i det s.k. oskuldspresumtionsdirektivet). Den innebär att ingen ska tvingas lämna upplysningar till nackdel för sig själv inom ramen för en prövning av en anklagelse om brott. En sådan anklagelse föreligger när en behörig myndighet har underrättat den enskilde om anklagelsen eller när myndigheten har vidtagit en åtgärd som gör att dennes situation väsentligen har påverkats av att det finns en misstanke mot henne eller honom (se Europadomstolens dom i målet Serves v. France, 20 October 1997, § 42, Reports of Judgments and Decisions 1997-VI; se även rättsfallet ”Bouppteckningseden” NJA 2005 s. 407). 

    23. En kränkning av rätten att inte belasta sig själv kan föreligga om den enskilde tvingas lämna upplysningar sedan en anklagelse om brott har framförts. En kränkning kan också föreligga om upplysningar, som har lämnats under tvång före anklagelsen, sedermera används i ett brottmålsförfarande. Rätten att inte belasta sig själv utgör däremot inget generellt hinder mot att enskilda tvingas att – utom ramen för ett straffrättsligt förfarande – lämna information om sin ekonomiska verksamhet, t.ex. som underlag för beräkning av skatt. Om det finns en skyldighet att lämna sådan information, får den enskilde inte vägra att lämna upplysningarna eller lämna falska uppgifter även om syftet är att dölja brottslighet. Rätten att inte belasta sig själv kan nämligen inte ges den innebörden att den rättfärdigar ett agerande i syfte att undvika myndighetsgranskning. (Jfr Europadomstolens avgöranden i målen Allen v. the United Kingdom [dec.], no. 76574/01, § 1, ECHR 2002-VIII, och Weh v. Austria, no. 38544/97, § 42-44, 8 April 2004, liksom ”Bouppteckningseden” NJA 2005 s. 407 och "Smitningen" NJA 2018 s. 394 p. 12.) 

    24. Rätten att inte belasta sig själv utgör således inte något hinder mot en ordning som ålägger den enskilde att deklarera och bokföra också intäkter och andra affärshändelser som avser en olaglig verksamhet. En annan sak är att ansvar för skattebrott och bokföringsbrott inte alltid kan ådömas om det vid den tidpunkt då skyldigheten skulle ha fullgjorts förelåg en anklagelse om brott eller ett straffrättsligt förfarande var nära förestående.