Article 16 - Freedom to conduct a business
Article 21 - Non-discrimination
Article 49 - Principles of legality and proportionality of criminal offences and penalties
Article 50 - Right not to be tried or punished twice in criminal proceedings for the same criminal offence
Article 52 - Scope and interpretation
Key facts of the case:
Reference for a preliminary ruling — Value added tax (VAT) — Directive 2006/112/EC — Inclusion in the register of taxable persons for VAT — National law requiring provision of a guarantee — Combating fraud — Charter of Fundamental Rights of the European Union — Freedom to conduct a business — Principle of non-discrimination — Principle ne bis in idem — Principle of non-retroactivity
Outcome of the case:
On those grounds, the Court (Ninth Chamber) hereby rules:
Article 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and Article 16 of the Charter of Fundamental Rights of the European Union must be interpreted as not precluding, at the time of the registration for the purposes of value added tax of a taxable person, of which the director was formerly the director or associate member of another legal person which had not complied with its tax obligations, the tax authority from requiring that taxable person to provide a guarantee, the amount of which could reach EUR 500000, provided that the guarantee required from that taxable person does not go further than is necessary in order to attain the objectives of Article 273, which it is for the referring court to determine.
The principle of equal treatment must be interpreted as not precluding a tax authority from requiring a new taxable person, at the time of his registration for the purposes of value added tax, to provide, owing to his links with another legal person that has tax debts, such a guarantee.
1) This request for a preliminary ruling concerns the interpretation of Article 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1, ‘the VAT Directive’) and the concept of ‘freedom to conduct a business’, the principle of equal treatment, the principle ne bis in idem and the principle of non-retroactivity of offences and penalties, enshrined in the Charter of Fundamental Rights of the European Union (‘the Charter’).
...
14) In those circumstances, the Najvyšší súd Slovenskej republiky (Supreme Court of the Slovak Republic) decided to stay the proceedings and refer the following questions to the Court of Justice for a preliminary ruling:
‘(1) Is it possible to interpret as in accordance with the objective of Article 273 of [the VAT Directive], that is, the prevention of VAT evasion, an approach on the part of a national body which considers the fact that the current director of a legal person was also the director of another legal person which has outstanding tax liabilities to be a ground under national law for requiring payment of a tax guarantee of up to the value of EUR 500000?
(2) May it be held that the abovementioned tax guarantee, given its amount, which may be up to the value of EUR 500000, as in the case in the main proceedings, is consistent with the freedom to conduct a business under Article 16 of [the Charter], does not directly force the taxable person to declare bankruptcy, does not constitute discrimination under Article 21(1) of [the Charter] and does not constitute a breach, in the area of the levying of VAT, of the principle ne bis in idem or of the prohibition on retroactivity under Article 49(1) and (3) of the Charter?’
19) By its two questions, which it is appropriate to examine together, the referring court asks, in essence, whether Article 273 of the VAT Directive, Article 16, Article 21(1) and Article 49(1) and (3) of the Charter, or the principle ne bis in idem enshrined in Article 50 of the Charter, must be interpreted as precluding a tax authority from requiring, at the time of registration for the purposes of VAT, a taxable person, the director of which was formerly the director or associate member of another legal person which had not complied with its tax obligations, to provide a guarantee, the amount of which could reach EUR 500000.
30) It must be noted, in the second place, that the referring court also asks the Court as to the interpretation to be given, in circumstances such as those in the main proceedings, to Article 49(1) and (3) of the Charter, the principle ne bis in idem enshrined in Article 50 of the Charter, the concept of ‘freedom to conduct a business’ protected by Article 16 of the Charter and the principle of equal treatment guaranteed by Article 21 of the Charter.
31) In that regard, it must be recalled that Article 49 of the Charter enshrines the principles of legality and proportionality of criminal offences and penalties, according to which, inter alia, no one shall be held guilty of any criminal offence on account of any act or omission which did not constitute a criminal offence under national law or international law at the time when it was committed; and that, in accordance with the principle ne bis in idem laid down in Article 50 of the Charter, no one shall be liable to be tried or punished again for an offence for which he has already been finally convicted or acquitted in the European Union in accordance with the law. The application of that principle presupposes that the measures which have already been adopted against a person by means of a decision that has become final are of a criminal nature (judgment of 26 February 2013, Åkerberg Fransson, C‑617/10, EU:C:2013:105, paragraph 33).
32) The aim of an obligation to provide a guarantee, such as that in the main proceedings, is not enforcement, given that it is common ground that the legal person applying to be registered has not committed any offence and that the aim of the provision at issue is to ensure the correct collection of VAT in the future. The fact, put forward by the referring court, that, due to its amount, the provision of such a guarantee could be a very heavy burden for the newly established legal person, does not in itself enable, in the present case, that guarantee to be regarded as a criminal penalty for the purposes of Articles 49 and 50 of the Charter.
33) In those circumstances, as submitted by the tax directorate, the Slovak Government and the European Commission, it must be held that Articles 49 and 50 of the Charter are not applicable in the present case.
34) As regards the freedom to conduct a business, it should be recalled that Article 16 of the Charter provides that that freedom is recognised in accordance with Union law and national laws and practices.
37) In accordance with Article 52(1) of the Charter, any limitation on the exercise of the freedom to conduct a business must be provided for by law and respect the essence of that right and, in compliance with the principle of proportionality, is permissible only if it is necessary and actually meets objectives of general interest recognised by the European Union or the need to protect the rights and freedoms of others.
47) Having regard to all of the foregoing considerations, the answer to the questions referred is that:
48) Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.
