Criminal proceedings against Mauro Scialdone.
Date: 2018-05-02
25


In that regard, it should be recalled that the VAT Directive does not harmonise the penalties to be applied in relation to VAT. That sphere falls, in principle, within the competence of the Member States.
26


Nevertheless, it follows, first, from Articles 2 and 273 of the VAT Directive, read in conjunction with Article 4(3) TEU, that Member States are required to take all legislative and administrative measures appropriate for ensuring collection of all the VAT due on their territory and for preventing fraud (judgment of 20 March 2018, Menci, C‑524/15, EU:C:2018:197, paragraph 18 and the case-law cited).
27


Second, under Article 325(1) TFEU, Member States are required to counter fraud and any other illegal activities affecting the financial interests of the European Union through effective deterrent measures. The financial interests of the European Union include, in particular, revenue arising from VAT (judgment of 20 March 2018, Menci, C‑524/15, EU:C:2018:197, paragraph 19 and the case-law cited).
28


Lastly, in accordance with the settled case-law of the Court, while the choice of penalties remains within their discretion, Member States must ensure that infringements of EU law, including the harmonised rules deriving from the VAT Directive, are penalised under conditions, both procedural and substantive, which are analogous to those applicable to infringements of national law of a similar nature and importance and which, in any event, make the penalty effective, proportionate and dissuasive (see, to that effect, judgments of 21 September 1989, Commission v Greece, 68/88, EU:C:1989:339, paragraph 24; of 8 July 1999, Nunes and de Matos, C‑186/98, EU:C:1999:376, paragraph 10; and of 3 May 2005, Berlusconi and Others, C‑387/02, C‑391/02 and C‑403/02, EU:C:2005:270, paragraph 65).
29


It follows from all the foregoing that, even though the penalties established by Member States in order to counter infringements of harmonised VAT rules fall within their procedural and institutional autonomy, that autonomy is nevertheless limited by, first, the principle of equivalence, which means that those penalties must be analogous to those applicable to infringements of national law of a similar nature and importance that affect national financial interests, and, second, the principle of effectiveness, which requires that such penalties be effective and dissuasive, in addition to the principle of proportionality, the application of which is not in point in the present case.
34


Thus, the Court has repeatedly held that, in order to ensure that all VAT revenue is collected, and thereby that the financial interests of the European Union are protected, the Member States have freedom to choose the applicable penalties, which may take the form of administrative penalties, criminal penalties or a combination of the two (judgments of 26 February 2013, Åkerberg Fransson, C‑617/10, EU:C:2013:105, paragraph 34; of 5 December 2017, M.A.S. and M.B., C‑42/17, EU:C:2017:936, paragraph 33; and of 20 March 2018, Menci, C‑524/15, EU:C:2018:197, paragraph 20).
35


It is true that the Court has also held that criminal penalties may be essential to combat certain cases of serious VAT fraud in an effective and dissuasive manner. Accordingly, in that regard, Member States are required to adopt criminal penalties that are effective and dissuasive (see, to that effect, judgment of 5 December 2017, M.A.S. and M.B., C‑42/17, EU:C:2017:936, paragraphs 34 and 35).
36


The freedom of choice of Member States is, moreover, limited by the PFI Convention. Under Article 2(1) of that convention, Member States must take the necessary measures to ensure that fraud affecting the financial interests of the European Union, as defined in Article 1(1) of the convention, including VAT fraud (judgment of 8 September 2015, Taricco and Others, C‑105/14, EU:C:2015:555, paragraph 41), is punishable by criminal penalties, including, at least in cases of serious fraud, namely those involving a minimum amount which may not be set by Member States at a sum exceeding EUR 50000, penalties involving deprivation of liberty which can give rise to extradition.
45


That interpretation cannot be called into question by the argument of the German and Netherlands Governments that the phrase ‘any other illegal activities’ contained in Article 325(1) TFEU refers solely to acts of the same nature and gravity as fraud. As observed by the Advocate General in points 68 and 69 of his Opinion, the term ‘illegal activities’ usually denotes unlawful behaviour, and the use of the word ‘any’ indicates the intention to encompass all unlawful behaviour, without distinction. Furthermore, in view of the importance that should be accorded to protecting the financial interests of the European Union, which in itself constitutes an objective of the latter (see, to that effect, judgment of 18 November 1999, Commission v Council, C‑209/97, EU:C:1999:559, paragraph 29), the concept of ‘illegal activities’ cannot be interpreted restrictively.
49


Given that they display a high degree of severity (judgment of 20 March 2018, Menci, C‑524/15, EU:C:2018:197, paragraph 33), fines of that kind are such as to lead taxable persons to abandon any notion to delay or omit VAT payment and are thus dissuasive in nature. In addition, those fines, coupled with the mechanism for receiving a reduction and the requirement to pay default interest, encourage defaulting taxable persons to discharge the amount of tax payable as soon as possible and may, therefore, be regarded, in principle, as effective (see, by analogy, judgment of 20 June 2013, Rodopi-M 91, C‑259/12, EU:C:2013:414, paragraph 40).
59


In view of those factors, those two offences cannot be regarded as being of a similar nature and importance, within the meaning of the case-law referred to in paragraph 28 above. Where two categories of offences can be distinguished by various circumstances concerning both the constituent elements of the offence and the degree of ease with which it can be detected, those differences mean, in particular, that the Member State concerned is not required to have an identical system of rules for the two categories of offences (judgment of 25 February 1988, Drexl, 299/86, EU:C:1988:103, paragraph 22).