Criminal proceedings against Petar Dzivev and Others.
Date: 2019-01-17
18


In addition, that court states that the issue whether the transitional rule in Article 9 of the ZIDNPK also concerned ongoing preliminary investigations was not clear. That provision would appear to have given rise to extensive and contradictory case-law. In Interpretation Decision No 5/14, the Varhoven kasatsionen sad (Supreme Court of Cassation, Bulgaria) confirmed that there could be no exception to the principle that the courts have exclusive jurisdiction in matters of criminal justice. In that regard, the referring court states that that principle is of particular significance under national law, especially in cases in which special investigation methods are used, which include the interception of telecommunications. However, referring to the judgment of the Court of Justice of 17 December 2015, WebMindlicences (C‑419/14, EU:C:2015:832, paragraph 91), that court asks whether the guidance provided by that interpretative judgment also applies where compliance with EU law is at issue.
24


In order to answer that question, it should be noted that EU law, in its present state, does not make provision for rules, which may be applied to the circumstances of the case, relating to the procedure for the taking of evidence and the use of that evidence in VAT-related criminal proceedings. Therefore, that sphere falls, in principle, within the competence of the Member States (see, to that effect, judgments of 17 December 2015, WebMindLicenses, C‑419/14, EU:C:2015:832, paragraph 65, and of 2 May 2018, Scialdone, C‑574/15, EU:C:2018:295, paragraph 25).
25


That being so, 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 (judgment of 5 June 2018, Kolev and Others, C‑612/15, EU:C:2018:392, paragraph 50 and the case-law cited).
26


Since the European Union’s own resources, by virtue of Article 2(b) of Decision 2007/436, include revenue from the application of a uniform rate to the harmonised VAT assessment bases determined in accordance with EU rules, there is a direct link between the collection of VAT revenue in compliance with the EU law applicable and the availability to the EU budget of the corresponding VAT resources, since any lacuna in the collection of the first potentially causes a reduction in the second (judgment 5 December 2017, M.A.S. and M.B., C‑42/17, EU:C:2017:936, paragraph 31, and of 5 June 2018, Kolev and Others, C‑612/15, EU:C:2018:392, paragraph 51).
27


To ensure that all that revenue is collected and, thereby, to ensure the financial interests of the European Union, Member States are free to choose the applicable penalties, which may take the form of administrative penalties, criminal penalties or a combination of the two. Criminal penalties may nevertheless be essential to combat certain serious cases of VAT evasion in an effective and dissuasive manner, as is required by Article 2(1) of the PFI Convention, read in conjunction with Article 1(1) of that convention (see, to that effect, judgments of 20 March 2018, Menci, C‑524/15, EU:C:2018:197, paragraph 20; of 2 May 2018, Scialdone, C‑574/15, EU:C:2018:295, paragraph 36, and of 5 June 2018, Kolev and Others, C‑612/15, EU:C:2018:392, paragraph 54).
28


In that regard, Member States must ensure that infringements of EU law, including the harmonised rules deriving from Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1), 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, judgment of 2 May 2018, Scialdone, C‑574/15, EU:C:2018:295, paragraph 28).
29


The Member States must also ensure that the rules of criminal procedure, laid down by national law, permit effective investigation and prosecution of offences linked to such conduct (see, to that effect, judgments of 17 December 2015, WebMindLicenses, C‑419/14, EU:C:2015:832, paragraph 65, and of 5 June 2018, Kolev and Others, C‑612/15, EU:C:2018:392, paragraph 55).
30


It follows that, even though the penalties and administrative and/or criminal procedures relating to those 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 the principle of effectiveness, which requires that such penalties be effective and dissuasive, in addition to the principle of proportionality and the principle of equivalence, the application of which is not in point in the present case (see, to that effect, judgment of 2 May 2018, Scialdone, C‑574/15, EU:C:2018:295, paragraph 29).
31


In that context, it is primarily for the national legislature to take the necessary measures. It is for the national legislature, where required, to amend the legislation and to ensure that the procedural rules applicable to the prosecutions of offences affecting the financial interests of the European Union are not designed in such a way that there arises, for reasons inherent in those rules, a systemic risk that acts that may be categorised as such offences may go unpunished, and also to ensure that the fundamental rights of accused persons are protected (judgment of 5 June 2018, Kolev and Others, C‑612/15, EU:C:2018:392, paragraph 65).
32


The Court has held that it is for the national courts to give full effect to the obligations under Article 325(1) TFEU and to disapply national provisions which, in connection with proceedings concerning serious VAT infringements, prevent the application of effective and deterrent penalties to counter fraud affecting the financial interests of the Union (judgment of 5 December 2017, M.A.S. and M.B., C‑42/17, EU:C:2017:936, paragraph 39).
33


However, the obligation to ensure the effective collection of the European Union’s resources does not dispense national courts from the necessary observance of the fundamental rights guaranteed by the Charter and of the general principles of EU law, given that the criminal proceedings instigated for VAT offences amount to an implementation of EU law, within the meaning of Article 51(1) of the Charter. In criminal law, those rights and those principles must be respected not only during the criminal proceedings, but also during the stage of the preliminary investigation, from the moment when the person concerned becomes an accused (see, to that effect, judgments of 5 December 2017, M.A.S. and M.B., C‑42/17, EU:C:2017:936, paragraph 52; of 5 June 2018, Kolev and Others, C‑612/15, EU:C:2018:392, paragraphs 68 and 71, and of 20 March 2018, Di Puma and Zecca, C‑596/16 and C‑597/16, EU:C:2018:192, paragraph 31 and the case-law cited).
35


In that regard, it follows, in particular, from the requirements derived from the principle of legality and the rule of law that the exercise of the power to impose penalties cannot take place, as a matter of principle, outside the legal limits within which an administrative authority is authorised, in accordance with the law of the Member State by which it is governed, to act (see, by analogy, judgment of 1 October 2015, Weltimmo, C‑230/14, EU:C:2015:639, paragraph 56).
36


In addition, the interception of telecommunications amounts to an interference with the right to a private life, enshrined in Article 7 of the Charter. Such an interference may be allowed, in accordance with Article 52(1) of the Charter, only if it is provided for by law and if, while respecting the essence of that right and subject to the principle of proportionality, it is necessary and genuinely meets objectives of general interest recognised by the Union (see, to that effect, judgment of 17 December 2015, WebMindLicenses, C‑419/14, EU:C:2015:832, paragraphs 71 and 73).
39


It follows that EU law cannot require a national court to disapply such a procedural rule, even if the use of that evidence gathered unlawfully could increase the effectiveness of criminal prosecutions enabling national authorities, in some cases, to penalise non-compliance with EU law (see, by analogy, with regard to domestic rules of procedure conferring the force of res judicata on a decision of a court, judgment of 24 October 2018, XC and Others, C‑234/17, EU:C:2018:853, paragraph 53 and the case-law cited).
40


In that regard, the fact, pointed out by the referring court, that the unlawful act committed is due to the imprecise nature of the provision transferring power at issue in the main proceedings is irrelevant. The requirement that any limitation on the exercise of the right conferred by Article 7 of the Charter must be in accordance with the law means that the legal basis authorising that limitation should be sufficiently clear and precise (see, to that effect, judgment of 17 December 2015, WebMindLicenses, C‑419/14, EU:C:2015:832, paragraph 81). It is also of no relevance that, in the case of one of the four defendants in the main proceedings, only the interception of telecommunications initiated on the basis of authorisations granted by a court lacking jurisdiction could prove his guilt and justify a conviction.