HEINANEN v. FINLAND
Inadmissible
George Nicolaou;Guido Raimondi;Krzysztof Wojtyczek;Nona Tsotsoria;Päivi Hirvelä;Zdravka Kalaydjieva
1. The applicant, Mr Jukka Tapani Heinänen, is a Finnish national, who was born in 1962 and lives in Espoo. He was represented before the Court by Mr Jyrki Kuusivaara, a lawyer practising in Helsinki. 2. The Finnish Government (“the Government”) were represented by their Agent, Mr Arto Kosonen of the Ministry for Foreign Affairs. 3. The facts of the case, as submitted by the parties, may be summarised as follows. 4. The applicant owns all the shares in two limited liability companies. Apparently, in spite of their being limited liability companies, he was the only person running them. 5. In 2004 the tax authorities carried out a tax inspection in the first company and concluded that it had failed to declare and pay a considerable amount of tax and that it had, inter alia, paid salaries off the books and undertaken other fraudulent activities. It appeared that the company had been operating entirely on the black market. 6. The tax authorities carried out a tax inspection in the second company after the police investigation concerning the applicant’s activities had been concluded in 2007. 7. On 2 November 2007 the tax authorities imposed additional tax and tax surcharges (veronkorotus, skatteförhöjning) on the applicant for the tax years 2004 and 2005 as they found that the applicant had withdrawn cash from the second company which the tax authorities considered as disguised dividends. 8. On 27 January 2010 the tax authorities imposed additional taxes and tax surcharges on the applicant for the tax year 2004 as they found that the applicant had also withdrawn cash from the first company which was considered as disguised dividends. 9. The applicant apparently did not appeal against those decisions. The period set for appeal in tax matters is five years counted from the beginning of the calendar year following the year when the initial taxation decision was made. Therefore, the taxation concerning the tax years 2004 and 2005 became final on 31 December 2010 and 31 December 2011 respectively. 10. On 18 May 2005 the local tax office requested the police to investigate the applicant’s activities in relation to the first company. On 14 November 2006 the applicant was arrested. On 20 November 2006 a police investigation into the applicant’s actions in the second company was initiated. 11. On 29 June 2007 the prosecutor brought charges against the applicant for, inter alia, aggravated accounting offence (törkeä kirjanpitorikos, grovt bokföringsbrott) and aggravated tax fraud (törkeä veropetos, grovt skattebedrägeri) concerning his activities as the owner of the two companies. 12. On 11 April 2008 the District Court (käräjäoikeus, tingsrätten) delivered its judgment. The applicant appealed against this judgment to the Court of Appeal (hovioikeus, hovrätten), alleging that one of the lay judges sitting in the case had been partial. On 27 June 2008 the Court of Appeal rejected the applicant’s appeal. However, on 6 February 2009 the Supreme Court (korkein oikeus, högsta domstolen) accepted the applicant’s appeal and quashed the lower courts’ judgments. The case was referred back to the District Court for a new examination. 13. On 19 February 2009 the prosecutor repeated the charges. Four counts concerned the applicant’s activity in the first company from 2003 to 2005 and four counts concerned the applicant’s activity in the second company from 2004 to 2005. According to the charges, the applicant was accused of aggravated tax fraud as he had failed to submit a tax declaration for both companies and, consequently, no income tax had been paid or imposed on the companies. On another count of aggravated tax fraud the applicant was accused of not declaring the salaries paid and, consequently, the taxes and social security payments had been too low. The tax authorities joined the charges and presented a compensation claim totalling approximately the amount of avoided taxes. 14. On 13 November 2009 the District Court convicted the applicant, inter alia, of two counts of aggravated tax fraud for having failed to submit a tax declaration for the two companies in question for the tax years 2004 and 2005. He was sentenced to imprisonment for 2 years and 8 months and ordered, together with another convicted person, to pay the tax authorities 435,742.99 euros (EUR) plus interest in compensation. The court also ordered an extended forfeiture of the proceeds of crime. In addition, the applicant was banned from undertaking business activities for five years. 15. By letter dated 12 December 2009 the applicant appealed to the Court of Appeal, requesting that the District Court’s judgment be partly quashed and that a part of the charges be dismissed. He admitted some of the charges. The applicant relied also on the principle of ne bis in idem and the Court’s case-law in that respect with regard to the aggravated tax fraud and the tax surcharges imposed on him in the meantime. 16. On 23 December 2010, after having held an oral hearing, the Court of Appeal upheld the District Court’s judgment. It considered that, as the prosecutor had pressed charges for the first time on 29 June 2007 and the tax surcharges were imposed only after that date, the ne bis in idem principle could not prevent the examination of charges. 17. By letter dated 21 February 2011 the applicant appealed to the Supreme Court, reiterating the grounds of appeal already presented before the Court of Appeal. 18. On 20 June 2012 the Supreme Court, after having examined the question of extended forfeiture of the proceeds of crime and quashed a part of it, upheld the Court of Appeal’s judgment otherwise. 19. Section 57, subsection 1, of the Tax Assessment Procedure Act (laki verotusmenettelystä, lagen om beskattningsförfarande, Act no. 1558/1995, as amended by Act no. 1079/2005) provides that if a person has failed to make the required tax returns or has given incomplete, misleading or false information to the tax authorities and tax has therefore been incompletely or partially levied, the taxpayer shall be ordered to pay unpaid taxes together with additional tax and a tax surcharge. 20. According to Chapter 29, sections 1 and 2, of the Penal Code (rikoslaki, strafflagen, as amended by Acts no. 1228/1997 and no. 769/1990), a person who (1) gives a tax authority false information on a fact that influences the assessment of tax, (2) files a tax return concealing a fact that influences the assessment of tax, (3) for the purpose of avoiding tax, fails to observe a duty pertaining to taxation, influencing the assessment of tax, or (4) acts otherwise fraudulently and thereby causes or attempts to cause a tax not to be assessed, or too low a tax to be assessed or a tax to be unduly refunded, shall be sentenced for tax fraud to a fine or to imprisonment for a period of up to two years. If by the tax fraud (1) considerable financial benefit is sought or (2) the offence is committed in a particularly methodical manner and the tax fraud is aggravated when assessed as a whole, the offender shall be sentenced for aggravated tax fraud to imprisonment for a period between four months and four years. 21. The Supreme Court has taken a stand on the ne bis in idem principle in its precedent case KKO 2010:46 which concerned tax surcharges and aggravated tax fraud. In that case it found, inter alia, that even though a final judgment in a taxation case, in which tax surcharges had been imposed, prevented criminal charges being brought about the same matter, such preventive effect could not be applied to pending cases (lis pendens) crossing from administrative proceedings to criminal proceedings or vice versa. However, in July 2013 the Supreme Court reversed its line of interpretation, finding that charges for tax fraud could no longer be brought if there was already a decision to order or not to order tax surcharges in the same matter (KKO 2013:59). 22. The Act on Tax Surcharges and Customs Duty Surcharges Imposed by a Separate Decision (laki erillisellä päätöksellä määrättävästä veron- tai tullinkorotuksesta, lagen om skatteförhöjning och tullhöjning som påförs genom ett särskilt beslut, Act no. 781/2013) entered into force on 1 December 2013. According to the Act, the tax authorities can, when making a tax decision, assess whether to impose a tax surcharge or to report the matter to the police. The tax authorities can decide not to impose a tax surcharge. If they have not reported the matter to the police, a tax surcharge can be imposed by a separate decision by the end of the calendar year following the actual tax decision. If the tax authorities have imposed tax surcharges, they can no longer report the same matter to the police unless, after imposing the tax surcharges, they have received evidence of new or recently revealed facts. If the tax authorities have reported the matter to the police, tax surcharges can, as a rule, no longer be imposed. The purpose of the Act is thus to ensure that a tax or a customs duty matter is processed and possibly punished in only one set of proceedings. The Act does not, however, contain any transitional provisions extending its scope retroactively.