On 22 March 2023, the criminal division of the French Court of Cassation has quashed and cancelled the ruling of the Appeal Court of Chambery rendered on 13 February 2019, which had sentenced the defendant to eighteen months’ imprisonment, six months of which suspended on probation, and had issued a publication measure, for tax fraud and omission of bookkeeping entries.[1]

This ruling provides consequent clarifications on the conditions for the cumulation of criminal and tax sanctions, which confronts the ne bis in idem principle prohibiting the cumulation of proceedings and sanctions regarding identical facts.[2]

As a reminder, the European Court of Human Rights has applied the ne bis in idem principle to financial breaches and crimes[3] from 2014, before specifying that a cumulation of sanction was possible, notably in tax matters, in the name of the complementarity of proceedings.[4]

In 2016 and 2018, the Constitutional Council has established the possibility of cumulating repressive proceedings with complementary administrative proceedings, considering that the collection of tax and the need to fight tax fraud could justify it in some cases[5]. The Constitutional Council has however specified that the principle of cumulation could only apply to the most serious tax cases, the criterion of seriousness being based on the amount of tax defrauded, the nature of the acts committed by the defendant or the circumstances of their commission.[6] The principle of proportionality then requires that the global amount of the sanctions imposed does not exceed the highest amount of one of the incurred sanctions.[7]

Applying the reasoning of the Constitutional Council, the Court of Cassation then held, in a ruling of 11 September 2019, that when a person prosecuted for tax fraud proves having been subject to a tax sanction for the same facts, criminal courts, after having characterized the constituent elements of this crime and prior to the pronouncement of criminal penalties, must verify that the facts are serious enough to justify a complementary criminal penalty. The Court of Cassation also underlined that the courts must justify their decisions, since the seriousness of the case may depend on the amount of tax defrauded, the nature of the actions of the person prosecuted or the circumstances of their intervention, including those constituting aggravating circumstances. Without demonstrating such seriousness, the courts may not issue a conviction.[8]

More recently, on 5 May 2022, the Court of Justice of the European Union, hearing two questions for preliminary rulings, ruled that articles 50[9] and 52 paragraph 1[10] of the Charter of Fundamental Rights of the European Union (“the Charter”) do not preclude a situation whereby the limitation of the duplication of proceedings and penalties of a criminal nature in the event of fraudulent concealment or omissions from a return relating to value added tax provided for by national legislation to the most serious cases is based only on settled case-law interpreting restrictively the legal provisions laying down the conditions for the application of that duplication, provided that it is reasonably foreseeable, at the time when the offence is committed, that that offence is liable to be the subject of a duplication of proceedings and penalties of a criminal nature.[11]

In the same decision, the Court of Justice of the European Union also ruled that these provisions preclude national legislation which does not ensure, in cases of the combination of a financial penalty and a custodial sentence, by means of clear and precise rules, where necessary as interpreted by the national courts, that all of the penalties imposed do not exceed the seriousness of the offence identified.[12]

Under French law, article 1741, paragraph 1[13] of the French Tax Code allows a cumulation of administrative and criminal sanctions, stating that anyone who has fraudulently evaded or attempted to evade the assessment or payment of taxes may be prosecuted, independently of the administrative tax penalties applicable under article 1729[14] of the same Code.

In the present case, the appellant had required his acquittal on appeal on the grounds that his conviction breached the ne bis in idem principle guaranteed by the Charter and the principles of necessity and proportionality of crimes and sanctions. In this regard, he claimed he had already been sentenced, for the same facts, to tax penalties by an administrative court on 6 July 2015.[15] The appellant argued that the ne bis in idem principle and articles 50 of the Charter, 1729, 1741 and 1743 of the French Tax Code and 591 and 593 of the Code of Criminal Procedure had been violated.[16]

In its ruling of 22 March 2023, the Court of Cassation confirms its past decisions in this field, and in application of the precedent of the Court of Justice of the European Union, rules that the cumulation of tax and criminal sanctions is possible on the twofold condition that it is predictable (I) and that the burden resulting from a double conviction is proportionate to the seriousness of the facts committed (II), which in this case had not been verified by the Court of Appeal.

I. The cumulation of criminal and tax sanctions is possible if it is predictable

In its judgment of 5 May 2022, the Court of Justice of the European Union ruled that national regulations restricting the rights and freedoms guaranteed by the Charter are acceptable only if they are provided for by rules that make the law predictable for those subject to it. Thus, European Union law does not preclude Member States from limiting the fundamental right stated in Article 50 of the Charter, which provides that “No one shall be liable to be tried or punished again in criminal proceedings for an offence for which he or she has already been finally acquitted or convicted within the Union in accordance with the law”, in order to allow a cumulation of sanctions, provided that this limitation is reasonably predictable at the time the offence is committed.[17]

The Court of Justice of the European Union has specified that the criterion of predictability of the law does not preclude the use of professional advice in assessing the potential consequences of a given act.[18]

In its ruling of 22 March 2023, the Court of Cassation ruled that the provisions of the French Tax Code do not conflict with the requirements of clarity and precision imposed by the principle of predictability resulting from the combined application of articles 50 and 52 of the Charter.[19] Hence, the criminal court must, when trying an accused tax evader who can prove that he or she has already been convicted of the same crime, verify that it was reasonably predictable for the accused, at the time of the commission of the crime, that he or she was likely to be the subject of multiple criminal proceedings and sanctions, taking into account the accused’s profession and the legal advice he or she may have sought.[20]

In the present case, the Court of Cassation points out that the Appeal Court had not checked if it was reasonably predictable for the accused that the offense committed could be subject to a cumulation of criminal and tax sanctions[21]. However, The Court of Cassation does not censor the Court of Appeal’s ruling on this ground since, at the moment of the facts, articles 1729 and 1741 of the French Tax Code allowed for the cumulation of sanctions, no matter the facts causing it, the concealment exceeding the tenth of the taxable amount, in such way that the Court of Cassation was able to control the predictability of the cumulation for the accused.[22]

II. The cumulation of criminal and tax sanctions is possible if the burden of the two cumulated sanctions is proportionate to the seriousness of the facts

Relying on the aforementioned precedent of the Constitutional Council[23] and on its own case law[24], the Court of Cassation reiterates that when a person accused of tax fraud can prove that he or she has been personally sanctioned for the same facts, the criminal court must, after having characterized the constituent elements of this crime under article 1741 of the French Tax Code, and prior to pronouncing criminal sanctions, verify that the facts in question present a degree of seriousness such as to justify additional criminal sanctions. The court must give reasons for its decision, and the seriousness of the offence may depend on the amount of tax evaded, the nature of the actions of the person prosecuted, or the circumstances in which they were committed, including those constituting aggravating circumstances. In the absence of such seriousness, the court cannot issue a conviction.[25]

The Court of Cassation also points out that in case of a cumulation of sanctions, the principle of proportionality implies that the global amount of the sanctions imposed cannot exceed the highest amount of one of the sanctions incurred, the criminal court being responsible for controlling the respect of the proportionality only when it imposes a sentence of a similar nature.[26]

By this ruling and in application of the most recent precedent of the Court of Justice of the European Union[27], the Court of Cassation further rules that criminal courts must ensure that the burden resulting from the cumulated sanctions, no matter their nature, is not excessive with regards to the seriousness of the crime, and must justify their decision based on these elements.[28]

In the present case, the Court of Cassation underlines that, prior to imposing a sentence, the appeal court had not examined whether the criminal sanction was justified in view of the seriousness of the facts in question, while the defendant had argued that he had been subject to a tax sanction based on article 1729 of the French Tax Code. Furthermore, the appeal court had not motivated its decision on the proportionality of the criminal sanction based on the tax sanction already imposed and on the concrete seriousness of the facts committed. These elements have led the Court of Cassation to censor the court of appeal’s decision.[29]