ECHR: company tax litigation is a criminal and property case

Moldovan company Agurdino SRL producing chemical products was ordered to pay Value-Added Tax of € 126 000, and a fine of € 101 000. The Moldovan Supreme Court of Justice found in favour of the company, since it was operating in the Expo-Business- Chişinău Free Economic Zone, and therefore hadn’t been obliged to pay VAT (§§ 6-7). However then the Moldovan Parliament adopted an Act on Interpretation of the Act on the Free Economic Zone (§ 8). On the basis of this Act, the Supreme Court of Justice re-opened the case and ordered the Agurdino SRL to pay the money (§ 11).

Since the fine of € 101 000 has the purpose to deter re-offending rather than merely imposing a pecuniary compensation, the tax litigation must be qualified as “criminal” (§ 23). The money that could be kept after the first Supreme Court of Justice judgment is covered with the category of “possession” (§ 40).

The ECHR qualified re-opening the file after issuing a legislative interpretation as “appeal in disguise” violating the principle of legal certainty and property rights.