Croatia / Constitutional Court of the Republic of Croatia / U-III-2425/2021
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Croatia / Constitutional Court of the Republic of Croatia / U-III-2425/2021
Key facts of the case:
The applicant was liable to pay income tax and was entitled to an increase in the basic deduction (the non-taxable part of annual income) for a dependent child who was a full-time graduate student at the time. The applicant lost the right to an increase in the basic deduction for a dependent child because of receiving support for student mobility from the Erasmus+ program for a period of one year in 2014. The applicant filed an appeal in the administrative proceedings against the tax decision of the Ministry of Finance of the Republic of Croatia, alleging a violation of the principle of non-discrimination guaranteed by EU law, which was based on the child's status as a beneficiary of the Erasmus+ student mobility measure. The appeal was rejected as unfounded. The applicant filed a lawsuit with the Administrative Court in Osijek, to annul the decision of the Ministry of Finance of the Republic of Croatia, and the lawsuit was rejected as unfounded by the first-instance judgment. The applicant then filed a detailed appeal with the High Administrative Court, raising the same objections as in the earlier proceedings, and the High Administrative Court rejected the appeal by essentially repeating the allegations of the contested first-instance judgment.
The applicant then filed a constitutional complaint and filed a request for reimbursement of the costs of the appeal proceedings. The Constitutional Court held that the constitutional complaint must be examined in respect to Article 48 (right to property), in conjunction with Article 51 (the principles of equality and fairness of the tax system) of the Constitution, and Article 141c and d (EU law and right of EU citizens) of the Constitution.
Key legal question of the case:
Has there been interference with the rights guaranteed by Articles 48(1) and 141d(1) of the Constitution? Is the interference with the rights guaranteed by Article 48(1), and Article 141d(1) of the Constitution justified? Whether the administrative courts have carried out effective judicial review of the legality and proportionality of the interference with the rights protected by Article 48(1) of the Constitution in the context of the obligation to directly apply EU law and to provide effective judicial protection for subjective rights guaranteed by EU law in accordance with Article 141c of the Constitution?
Outcome of the case:
The Constitutional Court concluded that the contested tax measure was not legal and did not pursue a specific legitimate objective in the public interest, but imposed an excessive individual burden on the applicant, because it was applied in explicit contradiction with the legitimate objectives - the purpose and nature of Erasmus+ grants, which represent an expression of the objective set out in Article 165(2) of the TFEU, and without any consideration of the applicant's personal situation.
The Constitutional Court held that administrative courts failed to address the substantial, but completely clear, specific and thoroughly reasoned complaint related to of violation of Articles 20 and 21 TFEU, or Article 141d(1) of the Constitution. Therefore, the specific administrative dispute did not meet the requirements of effective judicial protection for the consideration of complaints about violations of constitutional and convention rights and subjective rights granted by EU law.
The Constitutional Court held that the contested judgments of the administrative courts had violated Articles 48(1) of the Constitution and 141d(1) of the Constitution.
The Constitutional Court referred the case back to the Osijek Administrative Court .
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Paragraphs referring to EU Charter
33.1. This obligation has also been confirmed in the case-law of the Court of Justice of the EU, which, starting from the fact that the Charter of Fundamental Rights contains rights corresponding to those of the [European Convention on Human Rights and Fundamental Freedoms], recalls that Article 52(3) of the Charter of Fundamental Rights of the European Union (OJ C 202/2, 7.6.2016; hereinafter: the Charter), seeks to ensure the necessary consistency between the rights contained therein and the corresponding rights guaranteed by the Convention, without undermining the autonomy of EU law. Therefore, any interpretation of EU law must ensure a level of protection that does not infringe that guaranteed by the Convention as interpreted by the [European Court of Human Rights, ECtHR] (judgment of 6 October 2021, W.Ż., Supreme Court Chamber of Extraordinary Control and Public Affairs – Appointment, C-487/19, EU:C:2021:798, paragraph 123).
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33.3. The ECtHR may also consider legitimate objectives of EU law in its assessment even when it is not superior to national law in a specific case or does not have direct effect (for example, by establishing a margin of appreciation on the basis of a rule of secondary EU law that is not superior to the national law of a non-EU Member State, as in Kurban v. Turkey, no. 75414/10, § 81, judgment of 24 November 2020). Thus, in the tax cases of N.K.M. v. Hungary (cited, § 59) and R.Sz. v. Hungary (no. 41838/11, §§ 59 and 61, judgment of 2 July 2013), the ECtHR accepted the general objectives of EU law and the provisions of the Charter as relevant for determining a legitimate objective in the public interest, even if the national authorities have not formally established its applicability in the specific circumstances under EU law.
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34.3. On the other hand, in the aforementioned case of R.Sz. v. Hungary, in which it was not disputed whether the applicant had a "claim" against the tax authorities under Article 1 of Protocol No. 1 to the Convention, that was sufficiently well-founded in domestic law, it was found, without any specific consideration of the existence of primacy or direct effect of EU law, that the applicant had been imposed an excessive individual burden by taxing a social benefit which had only in principle its legitimate aim also in the implementation of the rights guaranteed by the Charter, but the applied tax rate, without specific and convincing reasons capable of justifying it, deprived the applicant of a major part of the benefit paid (§§ 59 and 61; see also the case of N.K.M. v. Hungary, cited above).
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36.4. As regards the obligation of courts under Article 141c(3) of the Constitution to provide protection to subjective rights derived from EU law, it shall be interpreted in accordance with the principle of effective judicial protection derived from Article 2 TEU, which establishes the rule of law as a fundamental value of the EU, and from Article 19(1)(2) TEU, which specifies the obligation of national courts to guarantee the full application of EU law in all Member States, as well as effective judicial protection of the rights that persons exercise on the basis of that law and in all "areas covered by Union law", regardless of the situation in which the Member States implement it. In addition to the above, this principle is further confirmed by Article 47 of the Charter of Fundamental Rights (judgment of 2 March 2021, A. B. and Others, Appointment of Supreme Court judges – Remedy, C‐824/18, EU:C:2021:153, paragraphs 108 - 111).
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54. Finally, the Constitutional Court must point out, following the approach of the ECtHR in the aforementioned cases of R.Sz. v. Hungary and N.K.M. v. Hungary, in which there was no express determination of the direct effect of the Charter, the objectives of which were referred to there, or Kurban v. Turkey, which referred to provisions of secondary EU law that were not superior (binding) to the signatory to the Convention that was not a member of the EU, that the administrative courts' reasoning that recital 40 of the Erasmus+ Regulation was not legally binding did not relieve the administrative courts of the obligation to conduct a test of proportionality of the interference with the rights protected by Article 48(1) of the Constitution by directly applying the Constitution and the Convention, as interpreted by the Constitutional Court and the ECtHR (Article 115(3) of the Constitution, see the case law of the Constitutional Court in points 35 - 35.2 of the reasoning of this decision), and thus consider whether the contested tax measure was in accordance with the legitimate objective of EU law expressed in recital 40 of the Erasmus+ Regulation, which in the specific circumstances overlapped with the legitimate objectives of national legislation that remained improperly examined (ZIDZPD/18).
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54.2. Thus, administrative courts, among others, in an administrative dispute about the legality of individual acts of administrative authorities that are covered by the scope of application of EU law, and at the same time represent measures of state interference in constitutional and convention rights, called into question the fulfilment of the obligation of harmonized interpretation of national law, EU law and the Convention (see the aforementioned judgments of the ECtHR Jeunesse v. Netherlands and Bosphorus Hava Yolları Turizm ve Ticaret Anonim Şirketi v. Ireland; and in the context of direct taxes and limitations of the principle of procedural autonomy in interpretation of national laws, the subject of Franked Investment Income Group Litigation and the cited practice of the Court of the EU), and thus left the execution of this obligation to the Constitutional Court again, as in cases Nos. U-III-424/2019 and U-III-1411/2019 (see, for example, regarding the harmonized interpretation of ZUS/10, the Constitution, the Charter and the Convention, items 120 - 146 of the decision of December 17 2019, www.usud.hr).
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61.1. The Constitutional Court further notes that in joined cases C-224/19 and C-254/19 (judgment of 16 July 2020, Caixabank and Banco Bilbao Vizcaya Argentaria, EU:C:2020:578, paragraphs 93-99), and in case C-215/21 (judgment of 22 September 2022, Servicios prescriptor y medios de pagos E.F.C. S.A.U., EU:C:2022:723, paragraphs 33-34, 41-43), the Court of Justice of the EU established that in areas falling within the scope of EU law, in the absence of specific EU rules regulating the right of parties to judicial proceedings to reimbursement of costs, the principle of procedural autonomy is limited by the principles of effectiveness and equivalence as general principles of EU law confirmed by Article 19 TEU and Article 47 of the Charter.
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Paragraphs referring to EU Charter (original language)
33.1. Ta je obveza potvrđena i u praksi Suda EU-a koji, polazeći od toga da Povelja o temeljnim pravima sadržava prava koja odgovaraju pravima iz Konvencije, podsjeća na to da se člankom 52. stavkom 3. Povelje Europske unije o temeljnim pravima (SL C 202/2, 7.6.2016.; u daljnjem tekstu: Povelja), nastoji osigurati nužna usklađenost između prava sadržanih u njoj i odgovarajućih prava zajamčenih Konvencijom, a da to ne ugrožava autonomiju prava EU-a. Stoga svako tumačenje prava EU-a mora osigurati razinu zaštite koja ne krši onu zajamčenu Konvencijom kako je tumači ESLJP (presuda od 6. listopada 2021., W.Ż., Vijeće za izvanrednu kontrolu i javne poslove pri Vrhovnom sudu – Imenovanje, C-487/19, EU:C:2021:798, t. 123.).
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33.3. ESLJP u svojoj ocjeni može uzeti u obzir i legitimne ciljeve prava EU-a i kad ono u konkretnom slučaju nije nadređeno nacionalnom pravu ili nema izravni učinak (primjerice, utvrđivanjem područja slobodne procjene na temelju pravila sekundarnog prava EU-a koje nije nadređeno nacionalnom pravu države koja nije članica EU-a, kao u Kurban protiv Turske, br. 75414/10, § 81., presuda od 24. studenoga 2020.). Tako je u poreznim predmetima N.K.M. protiv Mađarske (navedeno, § 59.) i R.Sz. protiv Mađarske (br. 41838/11, §§ 59. i 61., presuda od 2. srpnja 2013.) za utvrđivanje legitimnog cilja u javnom interesu ESLJP prihvatio kao relevantne opće ciljeve prava EU-a i odredbe Povelje, makar nacionalna tijela nisu prema pravu EU-a formalno utvrdila njezinu primjenjivost u konkretnim okolnostima.
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34.3. S druge strane, u navedenom predmetu R.Sz. protiv Mađarske, u kojem nije bilo sporno ima li podnositelj na temelju članka 1. Protokola br. 1 uz Konvenciju "zahtjev" prema poreznim tijelima koji je dostatno utemeljen u domaćem pravu, utvrđeno je, bez posebnog razmatranja postojanja nadređenosti ili izravnog učinka prava EU-a, da je podnositelju nametnut prekomjeran pojedinačni teret oporezivanjem socijalne naknade koja je tek načelmno imala svoj legitimni cilj i u provedbi prava zajamčenih Poveljom, ali je pritom primijenjena porezna stopa bez određenih i uvjerljivih razloga koji bi to mogli opravdati lišila podnositelja većeg dijela isplaćene naknade (§§ 59. i 61.; v. također i predmet N.K.M. protiv Mađarske, navedeno).
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36.4. Kad je riječ o obvezi sudova iz članka 141.c stavka 3. Ustava da pruže zaštitu subjektivnim pravima izvedenima iz prava EU-a, ona se tumači u skladu s načelom učinkovite sudske zaštite izvedenim iz članka 2. UEU-a koji određuje vladavinu prava kao temeljnu vrijednost EU-a, te iz članka 19. stavka 1. podstavka 2. UEU‐a koji konkretizira obvezu nacionalnih sudova da zajamče punu primjenu prava EU-a u svim državama članicama, kao i učinkovitu sudsku zaštitu prava koju osobe ostvaruju na temelju tog prava te u svim "područjima obuhvaćenima pravom Unije", neovisno o situaciji u kojoj ga države članice provode. Pored navedenog, to je načelo dodatno potvrđeno člankom 47. Povelje o temeljnim pravima (presuda od 2. ožujka 2021., A. B. i dr., Imenovanje sudaca Vrhovnog suda – pravno sredstvo, C‐824/18, EU:C:2021:153, t. 108. - 111.).
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54. U konačnici, Ustavni sud mora istaknuti, slijedeći pristup ESLJP-a u navedenim predmetima R.Sz. protiv Mađarske i N.K.M. protiv Mađarske u kojima je izostalo izričito utvrđenje izravnog učinka Povelje na čije se ciljeve tamo pozvalo, ili Kurban protiv Turske koji se poziva na odredbe sekundarnog prava EU-a koje nije nadređeno (obvezujuće) potpisnici Konvencije koja nije članica EU-a, da obrazloženje upravnih sudova kako uvodna izjava 40. Erasmus+ Uredbe nije pravno obvezujuća nije oslobodilo upravne sudove obveze da izravnom primjenom Ustava i Konvencije, kako ih tumače Ustavni sud i ESLJP (članak 115. stavak 3. Ustava, v. praksu Ustavnog suda u t. 35. - 35.2. obrazloženja ove odluke), provedu test proporcionalnosti miješanja u prava zaštićena člankom 48. stavkom 1. Ustava i tako razmotre je li osporena porezna mjera u skladu s legitimnim ciljem prava EU-a izraženim u uvodnoj izjavi 40. Erasmus+ Uredbe, koji se u konkretnim okolnostima preklapao i s legitimnim ciljevima nacionalnog zakonodavstva koji se ostali nepropisno ispitani (ZIDZPD/18).
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54.2. Tako su upravni sudovi, među ostalim, u upravnom sporu o zakonitosti pojedinačnih akata upravnih vlasti koji su obuhvaćeni područjem primjene prava EU- a, a istodobno predstavljaju mjere miješanja države u ustavna i konvencijska prava, doveli u pitanje ispunjavanje obveze usklađenog tumačenja nacionalnog prava, prava EU-a i Konvencije (v. navedene presude ESLJP-a Jeunesse protiv Nizozemske i Bosphorus Hava Yolları Turizm ve Ticaret Anonim Şirketi protiv Irske; te u kontekstu izravnih poreza i ograničenja načela postupovne autonomije u tumačenju nacionalnih zakona predmet Franked Investment Income Group Litigation i tamo citiranu praksu Suda EU-a), i tako izvršavanje te obveze iznova prepustili Ustavnom sudu, kao u predmetima brojeva U-III-424/2019 i U-III-1411/2019 (v. primjerice, u pogledu usklađenog tumačenja ZUS-a/10, Ustava, Povelje i Konvencije, t. 120. - 146. odluke od 17. prosinca 2019., www.usud.hr).
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61.1. Ustavni sud dalje primjećuje da je u spojenim predmetima brojeva C-224/19 i C-254/19 (presuda od 16. srpnja 2020., Caixabank i Banco Bilbao Vizcaya Argentaria, EU:C:2020:578, t. 93. – 99.), te predmetu broj: C-215/21 (presuda od 22. rujna 2022., Servicios prescriptor y medios de pagos E.F.C. S.A.U., EU:C:2022:723, t. 33. – 34., 41. - 43.), Sud EU-a utvrdio da je u područjima obuhvaćenima područjem primjene prava EU-a, u izostanku određenih pravila EU-a koji bi regulirali pravo stranaka sudskog postupka na nadoknadu troškova, načelo postupovne autonomije ograničeno načelima djelotvornosti i ekvivalentnosti kao općim načelima prava EU-a potvrđenima člankom 19. UEU-a i člankom 47. Povelje.