Luca Menci

On 20 March 2018, the Court of Justice (Grand Chamber) delivered its judgment in case C-524/15 on the interpretation of Article 50 of the Charter on the ne bis in idem principle in the context of a national legislation which provides for an administrative penalty and a criminal penalty for the same acts, relating to non-payment of VAT.

Mr Menci, in his capacity as proprietor of the sole trading business of the same name, was subject to an investigation by the Italian tax authorities as a result of non-payment of VAT for the tax year 2011. The investigation concluded with the relevant notice of assessment and the imposition on Mr Menci of a financial penalty. On conclusion of such administrative proceedings, the Public Prosecutor’s Office commenced criminal proceedings against Mr Menci, on the ground that non-payment of VAT was a criminal offence.
In this context, the Bergamo District Court asked the Court whether Article 50 of the Charter, interpreted in the light of Article 4 of Protocol No 7 to the ECHR and the related case law of the ECtHR, precludes the possibility of conducting criminal proceedings concerning an act for which a definitive administrative penalty has been imposed on the defendant.

Building on its judgment in the M.A.S. and M.B. case, the Court first recalled that, since they seek to ensure the proper collection of VAT and to combat fraud, administrative penalties imposed by the national tax authorities and criminal proceedings initiated in respect of VAT offences, such as those at issue in the main proceedings, constitute implementation of Articles 2 and 273 of Directive 2006/112 and of Article 325 TFEU and, therefore, of EU law for the purposes of Article 51(1) of the Charter.

As regards assessing whether proceedings and penalties, such as those at issue in the main proceedings, are criminal in nature, it then recalled that, according to the Court’s case-law, three criteria are relevant. The first criterion is the legal classification of the offence under national law, the second is the intrinsic nature of the offence, and the third is the degree of severity of the penalty that the person concerned is liable to incur.

With respect to the administrative procedure involving Mr Menci and the final administrative penalty imposed on him following that procedure, the Court noted that national law classifies the procedure giving rise to the imposition of that penalty as an administrative procedure. It nevertheless appeared to the Court that that penalty had a punitive purpose and that it had a high degree of severity which is liable to support the view that that penalty is of a criminal nature for the purposes of Article 50 of the Charter, which it is however for the referring court to determine.

It then noted that Article 50 of the Charter prohibits the imposition, with respect to identical facts, of several criminal penalties as a result of different proceedings brought for those purposes.

In those circumstances, in the Court’s view, it appeared that the national legislation at issue in the main proceedings allows criminal proceedings to be brought against a person, such as Mr Menci, in respect of an offence consisting in the failure to pay VAT due on the basis of the tax return for a tax year, after the imposition on that person, in respect of the same acts, of a final administrative penalty of a criminal nature for the purposes of Article 50 of the Charter. Such a duplication of proceedings and penalties constitutes a limitation of the fundamental right guaranteed by that article.

It nevertheless noted that, in its judgment in the Spasic case, the Court ruled that a limitation to the ne bis in idem principle guaranteed by Article 50 of the Charter may be justified on the basis of Article 52(1) thereof.

The court ruled that Article 50 of the Charter must be interpreted as not precluding national legislation in accordance with which criminal proceedings may be brought against a person for failing to pay VAT due within the time limits stipulated by law, although that person has already been made subject, in relation to the same acts, to a final administrative penalty of a criminal nature for the purposes of Article 50 of the Charter, on condition that that legislation
– pursues an objective of general interest which is such as to justify such a duplication of proceedings and penalties, namely combating VAT offences, it being necessary for those proceedings and penalties to pursue additional objectives,
– contains rules ensuring coordination which limits to what is strictly necessary the additional disadvantage which results, for the persons concerned, from a duplication of proceedings, and
– provides for rules making it possible to ensure that the severity of all of the penalties imposed is limited to what is strictly necessary in relation to the seriousness of the offence concerned.

It stressed that it is for the national court to ensure, taking into account all of the circumstances in the main proceedings, that the actual disadvantage resulting for the person concerned from the application of the national legislation at issue in the main proceedings and from the duplication of the proceedings and penalties that that legislation authorises is not excessive in relation to the seriousness of the offence committed.