Case: Ferrazzini v. Italy
Judgement date: 12 July 2001 (Grand Chamber)
Topic: Taxation and the European Convention on Human Rights
Aspect: Right to a fair trial (Article 6 of the Convention)

Summary of the facts:
The company of which the applicant was the representative applied to the tax authorities for a reduction in the applicable rate of certain taxes for which it was liable. The tax authorities served supplementary tax assessments on the company. The applicant complained of the length of the subsequent tax proceedings.

Summary of the Court's findings:
In this case it was incumbent on the Court to review whether, in the light of changed attitudes in society as to the legal protection that fell to be accorded to individuals in their relations with the State, the scope of Article 6 § 1 (right to a fair trial) of the Convention should not be extended to cover disputes between citizens and public authorities as to the lawfulness under domestic law of the tax authorities’ decisions. In this respect, the Court noted that relations between the individual and the State had clearly developed in many spheres during the fifty years which had elapsed since the Convention was adopted, with State regulation increasingly intervening in private-law relations. In the tax field, developments which might have occurred in democratic societies did not, however, affect the fundamental nature of the obligation on individuals or companies to pay tax. In comparison with the position when the Convention was adopted, those developments had not entailed a further intervention by the State into the “civil” sphere of the individual’s life. The Court therefore considered that tax matters still formed part of the hard core of public-authority prerogatives, with the public nature of the relationship between the taxpayer and the tax authority remaining predominant. Accordingly, it found that tax disputes fell outside the scope of civil rights and obligations, despite the pecuniary effects which they necessarily produced for the taxpayer, and held that Article 6 § 1 did not apply in the instant case.

The facts:
THE CIRCUMSTANCES OF THE CASE
9. The applicant is an Italian citizen, born in 1947 and living in Oristano (Italy).
10. The applicant and another person transferred land, property and a sum of money to a limited liability company, A., which the applicant had just formed and of which he owned – directly and indirectly – almost the entire share capital and was the representative. The company, whose object was organising farm holidays for tourists ( agriturismo ), applied to the tax authorities for a reduction in the applicable rate of certain taxes payable on the above-mentioned transfer of property, in accordance with a statute which it deemed applicable, and paid the sum it considered due.
11. The present case concerns three sets of proceedings. The first concerned in particular the payment of capital-gains tax ( INVIM, imposta sull’incremento di valore immobiliare ) and the two others the applicable rate of stamp duty, mortgage-registry tax and capital-transfer tax ( imposta di registro, ipotecaria e voltura ), and the application of a reduction in the rate.
12. In the first set of proceedings, the tax authorities served a supplementary tax assessment on the applicant on 31 August 1987 on the ground that the property transferred to the company had been incorrectly valued. They requested payment of an aggregate sum of 43,624,700 Italian lire comprising the tax due and penalties. On 14 January 1988 the applicant applied to the Oristano District Tax Commission for the supplementary tax assessment to be set aside.
In a letter of 7 February 1998 the District Tax Commission informed the applicant that a hearing had been listed for 21 March 1998. In the meantime, on 23 February 1998, the tax authorities informed the commission that they accepted the applicant’s comments and requested the case to be struck out of the list.
In a decision of 21 March 1998, the text of which was deposited on 4 April 1998, the District Tax Commission struck the case out of the list.
13. In the other two sets of proceedings, the tax authorities served two supplementary tax assessments on A. on 16 November 1987 on the ground that the company was ineligible for the reduced rate of tax to which it had referred. The tax authorities’ note stated that the company would be liable to an administrative penalty of 20% of the amounts requested if payment was not made within sixty days.
On 15 January 1988 the applicant, acting in his own right, although the matter concerned the company A., lodged two applications with the Oristano District Tax Commission for the above-mentioned supplementary tax assessments to be set aside.
In two letters of 20 March 1998 the District Tax Commission informed the applicant, in his capacity as representative of A., that a hearing had been listed for 9 May 1998 in the two other cases. In two orders of that date the District Tax Commission adjourned the cases sine die and gave the applicant thirty days in which to appoint a lawyer. Subsequently, a hearing was listed for 24 April 1999.
In two decisions of 22 May 1999, the text of which was deposited at the registry on 16 July 1999, the District Tax Commission dismissed A.’s applications on the ground that the transferred property, which included, among other things, a swimming pool and a tennis court, could not be regarded as the normal assets of an agricultural company.
On 27 October 2000 A. lodged an appeal with the Regional Tax Commission.

Relevant law and the Court's assessment:
THE LAW
I. THE COMPLAINT UNDER ARTICLE 6 § 1 OF THE CONVENTION
14. The applicant alleged that the length of the proceedings had exceeded a “reasonable time” contrary to Article 6 § 1 of the Convention, the relevant part of which provides:
“In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a ... hearing within a reasonable time by [a] ... tribunal ...”
15. In respect of the first set of proceedings, the period to be considered began on 14 January 1988 and ended on 4 April 1998. It therefore lasted more than ten years and two months for a single level of jurisdiction.
In respect of the other sets of proceedings, the period to be considered began on 15 January 1988 and, since the proceedings were still pending as at 27 October 2000, has therefore lasted more than twelve years and nine months for two levels of jurisdiction.
A. Admissibility of the complaint based on Article 6 § 1
16. The Government submitted that this complaint should be declared inadmissible within the meaning of Article 35 § 3 of the Convention because Article 6 § 1 did not apply to disputes relating to tax proceedings. In their submission, the proceedings in question did not relate to “a criminal charge”. They pointed out that in Italy enforcement of the tax courts’ judgments was effected according to the procedure used to enforce civil obligations. The amount payable by the applicant could not be converted into a custodial sentence. Only enforcement measures, such as the seizure and possible sale of the debtor’s assets, were available. In respect of the “civil” aspect, the Government pointed out that, in accordance with the established case-law of the Convention institutions, taxation matters concerned only public law.
17. The applicant, for his part, agreed with the Government that the proceedings in question were not criminal. He emphasised, however, the financial aspect of the proceedings, which accordingly concerned a “civil right”.
18. The Court notes that both parties acknowledged that Article 6 did not apply under its criminal head. In respect of the civil head, and despite the existence of the established case-law referred to by the Government, the Court considers that the complaint raises questions of law which are sufficiently complex not to be susceptible of being resolved at the admissibility stage. Accordingly, the determination of this complaint, including the question, raised by the Government, of the applicability of Article 6 § 1 of the Convention, depends on an examination of the merits.
19. That being so, this complaint cannot be declared inadmissible on the ground that it is incompatible ratione materiae with the provisions of the Convention. The Court notes further that no other ground for declaring it inadmissible has been established and that it must therefore be declared admissible.
B. Applicability of Article 6 § 1
20. The parties having agreed that a “criminal charge” was not in issue, and the Court, for its part, not perceiving any “criminal connotation” in the instant case (see, a contrario, Bendenoun v. France, judgment of 24 February 1994, Series A no. 284, p. 20, § 47), it remains to be examined whether the proceedings in question did or did not concern the “determination of civil rights and obligations”.
21. The Government argued that Article 6 was inapplicable to the proceedings in question, considering that they did not concern a “civil right”. The existence of an individual’s tax obligation vis-à-vis the State belonged, in their submission, exclusively to the realm of public law. That obligation was part of the civic duties imposed in a democratic society and the purpose of the specific provisions of public law was to support national economic policy.
22. The applicant, for his part, stressed the pecuniary aspect of his claims and contended that the proceedings accordingly concerned “civil rights and obligations”.
23. As it is common ground that there was a “dispute” ( contestation ), the Court’s task is confined to determining whether it was over “civil rights and obligations”.
24. According to the Court’s case-law, the concept of “civil rights and obligations” cannot be interpreted solely by reference to the domestic law of the respondent State. The Court has on several occasions affirmed the principle that this concept is “autonomous”, within the meaning of Article 6 § 1 of the Convention (see, among other authorities, König v. Germany, judgment of 28 June 1978, Series A no. 27, pp. 29-30, §§ 88-89, and Baraona v. Portugal, judgment of 8 July 1987, Series A no. 122, pp. 17-18, § 42). The Court confirms this case-law in the instant case. It considers that any other solution is liable to lead to results that are incompatible with the object and purpose of the Convention (see, mutatis mutandis, König, cited above, pp. 29-30, § 88, and Maaouia v. France [GC], no. 39652/98, § 34, ECHR 2000-X).
25. Pecuniary interests are clearly at stake in tax proceedings, but merely showing that a dispute is “pecuniary” in nature is not in itself sufficient to attract the applicability of Article 6 § 1 under its “civil” head (see Pierre-Bloch v. France, judgment of 21 October 1997, Reports of Judgments and Decisions 1997-VI, p. 2223, § 51, and Pellegrin v. France [GC], no. 28541/95, § 60, ECHR 1999-VIII; cf. Editions Périscope v. France, judgment of 26 March 1992, Series A no. 234-B, p. 66, § 40). In particular, according to the traditional case-law of the Convention institutions,
“There may exist ‘pecuniary’ obligations vis-à-vis the State or its subordinate authorities which, for the purpose of Article 6 § 1, are to be considered as belonging exclusively to the realm of public law and are accordingly not covered by the notion of ‘civil rights and obligations’. Apart from fines imposed by way of ‘criminal sanction’, this will be the case, in particular, where an obligation which is pecuniary in nature derives from tax legislation or is otherwise part of normal civic duties in a democratic society”. (See, among other authorities, Schouten and Meldrum v. the Netherlands, judgment of 9 December 1994, Series A no. 304, p. 21, § 50; Company S. and T. v. Sweden, no. 11189/84, Commission decision of 11 December 1986, Decisions and Reports (DR) 50, p. 121, at p. 140; and Kustannus oy Vapaa Ajattelija AB, Vapaa-Ajattelijain Liitto – Fritänkarnas Förbund r.y. and Kimmo Sundström v. Finland, no. 20471/92, Commission decision of 15 April 1996, DR 85-A, p. 29, at p. 46)
26. The Convention is, however, a living instrument to be interpreted in the light of present-day conditions (see, among other authorities, Johnston and Others v. Ireland, judgment of 18 December 1986, Series A no. 112, pp. 24-25, § 53), and it is incumbent on the Court to review whether, in the light of changed attitudes in society as to the legal protection that falls to be accorded to individuals in their relations with the State, the scope of Article 6 § 1 should not be extended to cover disputes between citizens and public authorities as to the lawfulness under domestic law of the tax authorities’ decisions.
27. Relations between the individual and the State have clearly evolved in many spheres during the fifty years which have elapsed since the Convention was adopted, with State regulation increasingly intervening in private-law relations. This has led the Court to find that procedures classified under national law as being part of “public law” could come within the purview of Article 6 under its “civil” head if the outcome was decisive for private rights and obligations, in regard to such matters as, to give some examples, the sale of land, the running of a private clinic, property interests, the granting of administrative authorisations relating to the conditions of professional practice or of a licence to serve alcoholic beverages (see, among other authorities, Ringeisen v. Austria, judgment of 16 July 1971, Series A no. 13, p. 39, § 94; König, cited above, p. 32, §§ 94-95; Sporrong and Lönnroth v. Sweden, judgment of 23 September 1982, Series A no. 52, p. 29, § 79; Allan Jacobsson v. Sweden (no. 1), judgment of 25 October 1989, Series A no. 163, pp. 20-21, § 73; Benthem v. the Netherlands, judgment of 23 October 1985, Series A no. 97, p. 16, § 36; and Tre Traktörer AB v. Sweden, judgment of 7 July 1989, Series A no. 159, p. 19, § 43). Moreover, the State’s increasing intervention in the individual’s day-to-day life, in terms of welfare protection for example, has required the Court to evaluate features of public law and private law before concluding that the asserted right could be classified as “civil” (see, among other authorities, Feldbrugge v. the Netherlands, judgment of 29 May 1986, Series A no. 99, p. 16, § 40; Deumeland v. Germany, judgment of 29 May 1986, Series A no. 100, p. 25, § 74; Salesi v. Italy, judgment of 26 February 1993, Series A no. 257-E, pp. 59-60, § 19; and Schouten and Meldrum, cited above, p. 24, § 60).
28. However, rights and obligations existing for an individual are not necessarily civil in nature. Thus, political rights and obligations, such as the right to stand for election to the National Assembly (see Pierre-Bloch, cited above, p. 2223, § 50), even though in those proceedings the applicant’s pecuniary interests were at stake (ibid., § 51), are not civil in nature, with the consequence that Article 6 § 1 does not apply. Neither does that provision apply to disputes between administrative authorities and those of their employees who occupy posts involving participation in the exercise of powers conferred by public law (see Pellegrin, cited above, §§ 66-67). Similarly, the expulsion of aliens does not give rise to disputes ( contestations ) over civil rights for the purposes of Article 6 § 1 of the Convention, which accordingly does not apply (see Maaouia, cited above, §§ 37-38).
29. In the tax field, developments which might have occurred in democratic societies do not, however, affect the fundamental nature of the obligation on individuals or companies to pay tax. In comparison with the position when the Convention was adopted, those developments have not entailed a further intervention by the State into the “civil” sphere of the individual’s life. The Court considers that tax matters still form part of the hard core of public-authority prerogatives, with the public nature of the relationship between the taxpayer and the community remaining predominant. Bearing in mind that the Convention and its Protocols must be interpreted as a whole, the Court also observes that Article 1 of Protocol No. 1, which concerns the protection of property, reserves the right of States to enact such laws as they deem necessary for the purpose of securing the payment of taxes (see, mutatis mutandis, Gasus Dosier- und Fördertechnik GmbH v. the Netherlands, judgment of 23 February 1995, Series A no. 306-B, pp. 48-49, § 60). Although the Court does not attach decisive importance to that factor, it does take it into account. It considers that tax disputes fall outside the scope of civil rights and obligations, despite the pecuniary effects which they necessarily produce for the taxpayer.
30. The principle according to which the autonomous concepts contained in the Convention must be interpreted in the light of present-day conditions in democratic societies does not give the Court power to interpret Article 6 § 1 as though the adjective “civil” (with the restriction that that adjective necessarily places on the category of “rights and obligations” to which that Article applies) were not present in the text.
31. Accordingly, Article 6 § 1 of the Convention does not apply in the instant case.
II. THE COMPLAINT UNDER ARTICLE 14 OF THE CONVENTION
Admissibility
32. The applicant also complained that he had been “persecuted by the Italian courts” and relied on Article 14 of the Convention, which provides:
“The enjoyment of the rights and freedoms set forth in [the] Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.”
33. The Court reiterates that discrimination is not forbidden by the Convention unless different measures are taken in respect of persons in comparable situations (see Case “relating to certain aspects of the laws on the use of languages in education in Belgium”, judgment of 23 July 1968, Series A no. 6, pp. 33-34, §§ 9-10).
34. The applicant has not explained how there has been an infringement of that provision. Accordingly, since this complaint has not been substantiated, the Court considers that there is no appearance of a violation of that provision and that the complaint must therefore be dismissed as manifestly ill-founded under Article 35 §§ 3 and 4 of the Convention.