The European Court of Justice (ECJ) has ruled that a criminal proceeding can be brought against the legal representative of a company even if the company has already paid a tax penalty with respect to the same act or omission.
In the ECJ decision, Orsi, Baldetti (joined cases C-217/15 and C-350/15), individuals were brought before Italy’s Tribunal of Santa Maria Capua Vetere on the grounds that they failed, in their capacity as company legal representatives, to pay VAT within the time limit stipulated by law. The two companies had paid the VAT due plus a fine for the same offense prior to the Tribunal proceedings.
Based on these facts, the Tribunal asked the ECJ for a preliminary ruling on whether it was compliant with EU law to initiate a criminal action against the legal representative of a company for non-payment of VAT after the imposition (and payment) of a definitive tax penalty against the company with respect to the same act or omission.
The Tribunal questioned whether Article 50 of the Charter of Fundamental Rights of the European Union or article 4 of Protocol n. 7 to the European Convention for the Protection of Human Rights and Fundamental Freedoms (‘the ECHR’) would prohibit such action.
The ECJ concluded in the joined cases that the principle of ne bis in idem, guaranteed in article 50 of the Charter, is not violated as the tax penalties were imposed on companies with legal personality, whereas the criminal proceedings relate to legal representatives, who are natural persons.
In fact, the ne bis in idem principle, to be applied, presupposes that the same person is subject to the penalties or criminal proceedings at issue, the ECJ said. As pointed out by the ECJ, in the case at stake, the tax penalty and the criminal charges concern distinct persons.
With respect to article 4 of the protocol n. 7 to the ECHR, the ECJ stated that the provision was not infringed because the penalties at issue concern natural or legal persons who are legally distinct, according to the case-law of the European Court of Human Right.
Hence, the ECJ concluded that a criminal proceedings can be brought for non-payment of VAT, after the imposition of a definitive tax penalty with respect to the same act or omission, where that penalty was imposed on a company with legal personality, while those criminal proceedings were brought against a natural person.