Hans Åkerberg Fransson was a Swedish fisherman living in the north of Sweden. In 2007 it was decided that he would have to pay a tax surcharge, due to the fact that he had provided false information concerning his income tax and value added tax (VAT). Two years later, in 2009, criminal proceedings were initiated against him for the same facts. Åkerberg Fransson objected to these criminal proceedings and argued that the criminal charges should be dismissed on the ground that he had already been punished for those acts through the tax surcharges two years earlier. According to him, this was a violation of the ne bis in idem principle laid down in article 50 of the EU Charter of Fundamental Rights (the Charter) – the right not to be tried or punished again in criminal proceedings for an offense for which someone has already been finally acquitted or convicted within the Union.
The two most important issues brought up by the EU Court of Justice (CJEU) were (1) the question of jurisdiction and (2) if the proceedings imposed by the Swedish court constituted a violation of the ne bis in idem principle set out in the Charter.
The CJEU first discussed the issue of jurisdiction and whether the Charter could apply in the present case. According to article 51(1) in the Charter, its provisions are only addressed to the Member States when they are implementing EU law. Only in those situations, the CJEU has the jurisdiction to answer a question referred for a preliminary ruling. According to the Court, its “settled case-law indeed states, in essence, that the fundamental rights guaranteed in the legal order of the European Union are applicable in all situations governed by European Union law, but not outside such situations” (para. 19). In the present case, the CJEU stated that the proceedings initiated against Åkerberg Fransson were connected in part to breaches of his obligations to declare VAT. According to Directive 2006/112/EC of 28 November 2006 on the common system of value added tax every Member State is under an obligation to take all legislative and administrative measures appropriate for ensuring collection of the VAT. Moreover, the Member States are obliged to counter all wrongdoing affecting the financial interests of the EU (article 325 TFEU). The Court came to the conclusion that “tax penalties and criminal proceedings for tax evasion (…) constitute implementation of Articles 2, 250(1) and 273 of Directive 2006/112 (…) and of Article 325 TFEU and, therefore, of European Union law, for the purposes of Article 51(1) of the Charter” (para. 27). Thus, the CJEU found itself to have jurisdiction to answer the questions referred by the Swedish court. This is a noteworthy conclusion, since the Advocate General, five governments and the European Commission argued for the opposite.
Thereafter, the CJEU continued by discussing the substantive matter submitted by the national court. The Swedish referring court had asked if the principle of ne bis in idem could be an obstacle of a charge of tax offences, when there had already been a previous financial penalty (tax surcharge) imposed on the defendant for the same act. According to the CJEU, the ne bis in idem principle is only an obstacle for a criminal penalty if the previously imposed financial penalty was criminal in nature. When determining if a penalty is criminal in nature, three criteria should be observed: “The first criterion is the legal classification of the offence under national law, the second is the very nature of the offence, and the third is the nature and degree of severity of the penalty that the person concerned is liable to incur” (para. 35). Although it was not explicitly expressed by the CJEU, these criteria were first introduced by the European Court of Human Rights (ECtHR) in the case Engel and others v. Netherlands, judgment of 8 June 1976, No 5100/71, 5101/71, 5102/71, 5354/72 and 5370/72. Since then, they have also been applied by the CJEU (see case C-489/10 Bonda  ECR I-0000, para. 37). Whether the tax surcharge was criminal in the nature was, however, left for the national court to determine.
One very important aspect of the case is the fact that it offers a new view on the concept of implementation. As stated above, according to article 51(1) in the Charter, its provisions are addressed to the Member States only when they are implementing EU law. However, the Charter is rather new and according to the case-law set out by the CJEU prior to the Charter; the EU fundamental rights should apply when the Member States acted within the scope of EU law. Thus, there is a contradiction between the case-law of the CJEU and the wording of the Charter. One issue that has been widely discussed in literature is whether the Charter has led to an alteration of the scope of the EU fundamental rights standard, since the wording “when they are implementing Union law” appears to limit the scope of the Charter compared to the prior case-law. In this case, however, the Court basically confirmed that the former scope should still apply.
Another aspect that has led to debate on how to apply the Charter is the issue of translation. When translating a document into other languages difficulties are bound to occur. For example, the Swedish translation of article 51(1) in the Charter is best described as a requirement for the Member States to observe its provisions when they are applying EU law (“tillämpar”, see the Swedish translation of the Charter here). This is a much wider concept than implementing, which has led to further issues regarding the scope of the Charter. This was not discussed by the Court in its reasoning but it appears as if the judgment reflects the Swedish version of the article. Also, the judgment indicates that applying might have been a more correct choice of words than implementing.
For Sweden, the most interesting part of the case is that about article 50 in the Charter and whether the Swedish system is compatible with the ne bis in idem principle. According to the CJEU, it is now up to the Swedish court to decide if the tax surcharge is criminal in nature. However, this has already been determined by the ECtHR. In the two cases Janosevic v. Sweden, judgment of 23 July 2002, No 34619/97 and Västberga Taxi Aktiebolag and Vulic v. Sweden, judgment of 23 July 2002, No 36985/97 the ECtHR stated that, based on the Engel criteria, the Swedish tax surcharge was criminal in nature. Both cases regarded article 6 of the European Convention on the Human Rights (ECHR) but, according to the ECtHR, the same criteria should apply also to the ne bis in idem principle laid out in article 4 of Protocol No 7 to the ECHR (Zolotukhin v. Russia, judgment of 10 February 2009, No 14939/03). Since article 52(3) in the Charter states that the meaning and scope of its rights shall be the same as those laid down in the ECHR, reading between the lines gives the impression that the CJEU concluded that the Swedish system is, in fact, incompatible with the Charter. This has also recently been determined by a Swedish Court of Appeal (HovR över Skåne och Blekinge, B 985-12, available only in Swedish).
Moreover, the AG also offers a different point of view on the more substantive question of the Swedish tax system and its compatibility with article 50 in the Charter. The conclusion provided by the AG states that the Charter does not preclude the system with parallel penalties as long as the criminal court is able to take the existence of a prior administrative penalty into account when deciding the proper punishment. This approach is not part of the Engel criteria and also, there is a risk of it being used to circumvent the ne bis in idem principle since it does not per se prohibit multiple criminal sanctions. Again, however, no reference is made by the Court to the arguments made by the AG.
In this case, the CJEU was presented a perfectly good opportunity to make two things clear. First, to propose a general test for the application of article 51(1) of the Charter, as suggested by the AG. Second, to end the debate of the Swedish tax surcharge once and for all and determine its compatibility with the ne bis in idem principle set out in article 50 in the Charter. The CJEU did neither. Why? Out of self-restraint? Was it too controversial? Whatever the reason was, the Court offers a judgment that only provides answers to some of the questions that needed to be clarified. That, however, is not enough.
by Ida Karlsson, Petra Enmalm and Amandine Douma