Pursuant to the principle ne bis in idem, set out in Article 4 of Additional Protocol n° 7 of the European Convention on Human Rights, no one can be criminally judged, prosecuted, or charged twice for the same facts. European Court of Human Rights1 and Court of Justice of the European Union2 applied this principle to exclude the cumulation of tax and criminal penalties.
In recent years, this cumulation of criminal and fiscal sanctions has been a subject of significant litigation before the French courts.
Since 2016, the French Constitutional Council (Conseil constitutionnel) has approved the principle of cumulation of criminal and fiscal sanctions for the most serious cases of tax fraud. It sets out however some reservations regarding the cumulation. For the first time, the French Supreme Court (Cour de Cassation), in six rulings dated on September 11, 20193 and October 23, 2019 4, has had the occasion to clarify these reservations.
The Court has, nonetheless, reasserted that the principle ne bis in idem does not apply systematically to the cumulation of criminal and fiscal sanctions and decided that these reservations were not applicable to the cases in hand. France stays thus on the sidelines of the European stance.
I. The French Supreme Court states that the criminal judge can order a stay of proceedings only when the proceedings pending before the tax judge constitutes a serious risk of conflict between tax and criminal decisions
One of the reservations expressed by the French Constitutional Council is that the principle of necessity of offences prohibits a taxpayer who has been relieved from taxation by a final court decision on substantive grounds from being convicted of tax fraud 5. This reservation led to the question of the obligation from the criminal judge to stay the proceedings until a final decision of the tax judge.
In one of the September 11th’s decisions 6, the company and its director were found liable by the administrative Court of tax evasion (related to declaratory deductions for VAT and abusive refunds of research tax credits), and were sentenced to pay the said eluded taxes and the penalties resulting from this breach. The defendant appealed the decision and requested the criminal judge to order a stay of the criminal proceedings based on this ground.
The Criminal Chamber of the Supreme Court ruled that the criminal judge should only order a stay of proceedings in the event of proceedings pending before the tax judge if there is a “serious risk” of conflict between the decision of the tax judge and the decision of the criminal judge. In other words, a criminal sentence can be imposed even though the accused could ultimately be discharged from the disputed taxes. In the present case, there was, however, no indication of possible contradiction between the rulings of criminal and tax judges, as the lower tax court decision (subject of appeal) did not discharge the defendant from taxation on substantive grounds in the first place.
II. The French Supreme Court limits the application of the principle of proportionality to sanctions of the same nature and specifies the nature of the solidarity penalty
According to the French Constitutional Council, when two proceedings lead to a cumulation of penalties, the total amount of penalties imposed should not exceed the higher amount of one of the penalties incurred 7.
This rule, known as the principle of proportionality, only applies to sanctions “of the same nature”. Hence, a question arises with respect to the application of the principle in case of cumulation of penalties of different nature, such as fines, tax increases, confiscation measures, ineligibility or imprisonment. Since only monetary sanctions can be compared, the judge making the last decision must carry out a comparison of the criminal and fiscal monetary penalties incurred in order to determine the ceiling’s highest amount. 8
Regarding the monetary sanctions, the Court had to clarify the legal nature of solidarity in the October 23rd 2019 decision 9. In this case, the company’s director was jointly and severally sentenced with the company for the payment of the fraudulent taxes, increases and related penalties. The Court considered that “the fiscal solidarity stated in Article 1745 of the General Tax Code, which constitutes a guarantee for the recovery of the debt of the Public Treasury, does not constitute a penalty in the meaning of Article 8 of the Declaration of 1789”, so that the principle of proportionality is not applicable” 10. This position confirms that solidarity is not punitive in nature as “anyone who has paid the amount of evaded taxes and related penalties in place of the debtor, has a recourse action against the principal debtor, and, where applicable, against co-debtors jointly and severally liable” 11.
III. The French Supreme Court clarifies what are the “most serious cases of fraudulent concealment of sums subject to tax” 12 where cumulation of penalties can apply
The seriousness of the fraud may result from the amount of duties defrauded or the conduct of the person prosecuted 13. The various rulings of the French Supreme Court have shown that elements such as the use of intermediaries established abroad, the existence of concealment maneuvers or the amount of duties can be taken into account in assessing the seriousness 14. For instance, the Court held in one of the September 11th’s decisions 15, that the seriousness of the fraud arose from the use by the defendant of accounts opened in Switzerland for fictional companies registered in tax heavens, and the amount of duties evaded which amounted to 235,580 euros.
IV. The French Supreme Court confirms the application of the reservation issued by France to the Article 4 of the Additional Protocol n° 7 of the European Convention on Human Rights to reject the application of ne bis in idem principle
France accompanied the ratification of the Article 4 of Additional Protocol n°7 of the European Convention on Human Rights with a reservation which restricts the application of ne bis in idem to criminal courts’ decisions and criminal offences 16.
The French Supreme Court affirms in these decisions that the criminal judges have to apply this reservation confirming the specificity of France in the application of ne bis in idem principle. The ECtHR has invalidated the reservations made by several other EU countries, but France reservation is indeed still valid 17. Until otherwise decided, French courts shall thus apply the reservation made to ne bis in idem principle and give it full effect 18.
It is however interesting to note that the commentators expect the ECtHR to decide on the validity of the reservation issued by France in the foreseeable future 19 and to potentially undermine the current position of the French Supreme Court.
- CEDH November 15, 2016, A. et B. c/ Norway.
- CJUE March 20, 2018, Di Puma
- Cass. Crim., September 11, 2019, n° 18-81.980; n° 18-81.067; n° 18-82.430; n° 18-81.040; n° 18-83.484; n° 18-84.144.
- Cass. Crim. October 23, 2019, n° 18-85.088.
- Cons. Const. June 24, 2016, n° 2016-545 QPC, §13.
- Cass. Crim., September 11, 2019, n° 18-81.980.
- Cons. Const. June 24, 2016, n° 2016-545 QPC, § 24.
- Cass. Crim., September 11, 2019, n° 18-82.430 et 18-81.067.
- Article 1745 of the French General Tax Code (“All those who have been subject of a final conviction, pronounced in application of Articles 1741, 1742 or 1743 may be jointly and severally liable, together with the person legally liable for the tax defrauded, for the payment of this tax as well as for the payment of the related tax penalties”).
- Cass. Crim. October 23, 2019, n° 18-85.088, (“The fiscal solidarity stipulated in Article 1745 of the General Tax Code, which constitutes a guarantee for the recovery of the Treasury’s claim, does not constitute a penalty in the meaning of Article 8 of the Declaration of 1789, so that the above-mentioned principle is not applicable”).
- Cass. Crim. June 25, 2014, n° 13-87.692, (“A person who has paid the evaded taxes and related penalties has a recourse action against the principal debtor and, where appropriate, against the joint and several co-debtors”); “Non bis in idem et droit pénal fiscal : rappels salutaires”, C. Litaudon, in AJ Pénal 2020, p.25.
- Cons. Const. June 24, 2016, n° 2016-545 QPC, §21.
- Cass. Crim., September 11, 2019, n° 18-81.040.
- “Principe ne bis in idem : la Cour de cassation applique les réserves d’interprétation du Conseil Constitutionnel”, M. Lassalle, in AJ Pénal 2019, p.564.
- Cass. Crim., September 11, 2019, n° 18-81.040.
- Cass. Crim. September 11, 2019, n° 18-81.067 et 18-82.430, (“The [French] Supreme Court has consistently held that the prohibition of double jeopardy for the same acts, stipulated in Article 4 of Protocol No. 7, according to the reservation entered by France, applies only to offences falling under French law within the jurisdiction of the criminal judge, and does not prohibit the imposition of fiscal penalties in addition to the penalties imposed by the criminal courts”).
- “Fraude fiscale – Cumul des répressions pénale et fiscale : la Cour de cassation précise la portée des jurisprudences constitutionnelle et européenne en la matière Regards croisés”, S. Detraz, E. Dezeuze, in La Semaine Juridique Edition Générale n° 43, October 21, 2019, 1086, (“<em<It should be noted that the reservations made by Austria and Italy have been held to be invalid as they failed to provide a brief statement of the law concerned, as required by Article 57 § 2 of the Convention (see respectively Gradinger v. Austria, 23 October 1995, § 51, Series A no. 328-C; and Grande Stevens, cited above, §§ 204-211), unlike the reservation made by France (see Göktan v. France, no. 33402/96, § 51, ECHR 2002-V)”).
- Cass. Crim. September 11, 2019, n° 18-81.067 et 18-82.430, (“the criminal court shall apply article 4 […] by giving full effect to the reservation made by France”).
- “Fraude fiscale – Cumul des répressions pénale et fiscale : la Cour de cassation précise la portée des jurisprudences constitutionnelle et européenne en la matière Regards croisés”, S. Detraz, E. Dezeuze, in La Semaine Juridique Edition Générale n° 43, October 21, 2019.