Key facts of the case:
THE CIRCUMSTANCES OF THE CASE
- The first applicant, Mr A, was born in 1960 and lives in Norway. The second applicant, Mr B, was born in 1965 and lives in Florida, United States of America.
- The applicants and Mr E.K. owned a Gibraltar-registered company Estora Investment Ltd. (“Estora”). Mr T.F. and Mr G.A. owned the Samoa/Luxembourg-registered company Strategic Investment AS (“Strategic”). In June 2001 Estora acquired 24% of the shares in Wnet AS. Strategic acquired 46% of the shares in Wnet AS. In August 2001 all the shares in Wnet AS were sold to Software Innovation AS, at a substantially higher price. The first applicant’s share of the sale price was 3,259,341 Norwegian kroner (NOK) (approximately 360,000 euros (EUR)). He transferred this amount to the Gibraltar-registered company Banista Holding Ltd., in which he was the sole shareholder.
The second applicant’s share of the sale price was NOK 4,651,881 (approximately EUR 500,000). He transferred this amount to Fardan Investment Ltd., in which he was the sole shareholder.
Mr E.K., Mr G.A. and Mr T.F. made gains on similar transactions, while Mr B.L., Mr K.B. and Mr G.N. were involved in other undeclared taxable transactions with Software Innovation AS.
The revenue from these transactions, amounting to approximately NOK 114.5 million (approximately EUR 12.6 million), was not declared to the Norwegian tax authorities, resulting in unpaid taxes totalling some NOK 32.5 million (approximately EUR 3.6 million).
- In 2005 the tax authorities started a tax audit on Software Innovation AS and looked into the owners behind Wnet AS. On 25 October 2007 they filed a criminal complaint against T.F. with Økokrim (the Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime) with regard to matters that later led to the indictment of the first applicant, along with the other persons mentioned above and the second applicant, for aggravated tax fraud.
The persons referred to in paragraph 12 above were subsequently prosecuted, convicted and sentenced to terms of imprisonment for tax fraud in criminal proceedings. It may also be noted that:
- the prison term to which Mr E.K. was sentenced at first instance was upheld at second instance, even though the second-instance court found it somewhat mild; in the meantime he had had a 30% tax penalty imposed on him;
- the length of Mr B.L.’s term of imprisonment was fixed in the light of his having previously had a 30% tax penalty imposed on him;
- Mr G.A. was neither sentenced to a fine nor had a tax penalty imposed on him;
- Mr T.F. was in addition sentenced to a fine corresponding to the level of a 30% tax penalty;
- Mr K.B. and Mr G.N. were each sentenced to a fine in accordance with the approach set out in the Supreme Court’s ruling in Rt. 2011 p. 1509, with reference to Rt. 2005 p. 129, summarised at paragraph 50 below.
Results (sanctions) and key consequences of the case:
FOR THESE REASONS, THE COURT
- Declares, unanimously, the applications admissible;
- Holds, by sixteen votes to one, that there has been no violation of Article 4 of Protocol No. 7 to the Convention in respect of either of the applicants.