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Utility of passenger cars? Application to ECtHR

The Helsinki Foundation for Human Rights has submitted an application to the European Court of Human Rights in a case concerning tax laws. The application alleges that by basing a tax authority’s decision on insufficiently precise provisions, Poland may have breached the provisions of the European Convention on Human Rights regarding respect for the right to property.

The Helsinki Foundation for Human Rights has submitted an application to the European Court of Human Rights in a case concerning tax laws. The application alleges that by basing a tax authority’s decision on insufficiently precise provisions, Poland may have breached the provisions of the European Convention on Human Rights regarding respect for the right to property.

Is this car utility of passenger vehicle?

M. imported SUVs and vans converted into utility vehicles from Germany and then sold them in Poland. The vehicles were structurally altered so that they could be classified as utility vehicles, which, contrary to passenger cars, are not subject to the excise duty tax.

In Poland, a roadworthiness test must be carried out at a vehicle inspection station before an imported car can be registered. All vehicles sold by M. passed this test and were classified as light utility vehicles, which are exempt from excise duty. M. completed all formalities and, relying on the collected Polish and German technical documentation, registered the vehicles without filing a certificate of payment of the excise duty tax.

Nearly five years after the vehicles were registered, i.e. just before the date of the expiration of tax obligation, a tax authority issued a decision, in which it determined M.’s was obliged to pay the excise duty tax in connection with the purchase of passenger cars. The tax body based its decision on the manufacturer’s information about the car model, but neither did it take into account the detailed Polish and German vehicle documentation, nor did it carry out a physical examination of the vehicles concerned. In addition, the tax authority rejected a statement issued by a vehicle inspection station that carried out technical inspections, indicating that it operated under provisions other than those relating to excise duty.

M. challenged all decisions issued against him, but ultimately his obligation to pay PLN 93,904 of the outstanding excise tax, with interest, was affirmed by judgments of the Supreme Administrative Court.

Application

In the application prepared on M.’s behalf, the HFHR noted that since the tax authority’s decision was based on insufficiently precise provisions of law, Poland may have violated Article 1 of Protocol to the European Convention on Human Rights, which ensures respect for the right to property.

State’s obligations

“According to the ECtHR’s case law, any interference with the right to property should be ‘lawful’, which requires the existence of sufficiently accessible, precise and predictably applied provisions of law”, says Dr Piotr Kładoczny, M.’s legal representative. “The lawfulness requirement has not been satisfied in this case. The national legislation imposed on the applicant (a taxpayer under Polish law) an obligation to declare whether the vehicles that he purchased were either excise duty-exempt utility vehicles or passenger cars subject to the excise duty tax. However, the wording of those provisions was so vague that they prevented the trader from unequivocally determining whether or not he was obliged to pay the tax. This is a consequence of the fact that Polish law defines a passenger vehicle in different ways, depending on the branch of law to which a given situation refers”, Mr Kładoczny adds.

The ECtHR accepts that states have a wide margin of appreciation in determining tax laws in connection with their exercise of the fiscal function. This does not mean, however, that individuals should suffer the effects of imprecise provisions.

The application to the European Court of Human Rights in Strasbourg was prepared by the Strategic Litigation Programme.

 


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