7 November 2022

The implementation of the cumulation of criminal and administrative penalties for tax infringements

While the principle of cumulating criminal and administrative penalties for tax infringement is well entrenched, its implementation is subject to conditions that must be specifically substantiated.


The issue relating to the cumulation of criminal and administrative penalties for tax infringements has been addressed in several decisions in the recent years, and the case law in this area has increased recently. We will therefore recall the principle of the possible cumulation of these two kinds of penalties (I) before presenting the latest decisions handed down by the French Supreme Court (Cour de cassation) in this area (II).


I. The possible cumulation of criminal and administrative penalties for tax infringements

The mere cumulation of criminal and administrative penalties for tax infringements clashes with the non bis in idem rule, which prohibits the cumulation of prosecutions and sanctions relating to the same facts.[1]

For many years, the Cour de cassation has held that criminal and tax sanction procedures are, by their nature and purpose, different and independent.[2] It has also ruled that, in matters of fraud, the criminal judge does not have to stay the proceedings pending the decision of the tax judge,[3] and confirmed that the decisions of the tax administration do not supersede that of the French courts of justice, even where the administrative procedure undertaken does not lead to any sanction.[4]

Since 2014, the European Court of Human Rights (hereinafter, the “ECHR”) has applied the non bis in idem principle to financial offences.[5] Nevertheless, it has subsequently specified that a cumulation of criminal and administrative penalties is possible, particularly in tax matters, in accordance with the principle of complementarity of proceedings.[6]

In 2016 and 2018 the French Conseil constitutionnel, which role is to ensure that French laws comply with its Constitution, confirmed the possibility of implementing both criminal and administrative procedures, described as complementary, considering that the collection of public taxes and the need to fight tax fraud justify them under certain circumstances.[7] The Conseil constitutionnel specified its interpretation of the laws, and that the principle of cumulation applies only to the most serious cases of fraudulent dissimulation or omission of tax declarations. Such seriousness may result from the amount of tax evaded, the nature of the actions of the person prosecuted or the circumstances of the offence.[8] In addition, the proportionality principle requires that the total amount of the sanctions cannot exceed the highest amount of one of the sanctions incurred.[9]

Following the same reasoning, the Cour de cassation ruled, on September 11, 2019, that when a defendant prosecuted for tax fraud has been subjected to an administrative penalty for the same facts, the criminal judge must, before imposing criminal sanctions, verify whether the facts of the case are serious enough to justify such additional sanctions. The Court emphasized that judges are required to justify their decision based on the seriousness of the facts, which may result from the amount of tax evaded, the nature of the actions of the defendant or the circumstances of the facts, including those constituting aggravating circumstances. In the absence of a demonstration of such seriousness, the judges cannot sentence the defendant to criminal sanctions when administrative sanctions have already been imposed.[10]

Then, in two decisions of February 23, 2022[11] and September 7, 2022,[12] the Cour de cassation ruled on the possible combination of criminal and administrative sanctions on the basis, respectively, of articles 1728[13] and 1729[14] of the French tax code (code général des impôts), as well as article 1741 of the same code.[15] These first two provisions provide for a financial penalty of an administrative nature, while the third allows for a criminal penalty.

Finally, on May 5, 2022, the Court of Justice of the European Union (hereinafter the “CJEU”), in response to a request for a preliminary ruling by the Cour de cassation, held that French law complied with European law, and more specifically with the non bis in idem principle insofar as the cumulation of prosecutions and penalties was only possible under certain limited conditions, and that, in the case referred thereto, it was aimed at securing the collection of the full amount of tax (VAT in this case), which is an objective of general interest and material with regards to CJEU decisions. It added that the principles of proportionality and necessity of penalties were not infringed and emphasized that such cumulation was possible provided that the law or the case law clearly and precisely define the offences and penalties that they punish, so that the taxpayer can foresee the acts and omissions that may be subject to such cumulation.[16]


II. The demonstration of a sufficient degree of seriousness to justify a combination of criminal and tax penalties

In the February 23, 2022 decision mentioned above, the Cour de cassation insisted on the need to substantiate the cumulation of criminal and administrative penalties imposed by the appeal judges, and thus the seriousness of the facts justifying the imposition of an additional criminal penalty,[17] once the offence of tax fraud has been established, in accordance with the reserve of interpretation adopted by the Conseil constitutionnel[18] and upheld by the CJEU.

The Court indicated that the lack of demonstration of such seriousness must lead to the acquittal of the defendant,[19] recalling that this demonstration can be based on the amount of tax evaded, the nature of the actions of the defendant and the circumstances of the commission of the offence, particularly those which constitute an aggravating circumstance.[20]

Consequently, in this case, it cancelled the appellate decision and referred the case to another appellate court, considering that the factual elements that the initial court of appeal listed were not sufficient for the Cour de cassation to ascertain the seriousness of the offence.[21] In this case however, it was established that the defendant had withdrawn more than 70,000 euros of income from taxation, by qualifying payments received for actual services as mere advance payments on the month when they were invoiced.

Moreover, in a decision of September 7, 2022, the Cour de cassation adopted the same reasoning. In this case, it considered that the appellate judges did not abide by the reserve of interpretation enacted by the Conseil constitutionnel, according to which the criminal judge must ensure, prior to imposing sanctions, that the facts at stake are sufficiently serious to justify the additional criminal penalty.[22]

However, unlike in the February 2022 decision, the Cour de cassation ruled that the case should not be referred to another appellate court on this basis since, in light of the factual elements at stake, it was able to ascertain the seriousness of the facts against the defendant, considering the amount of tax evaded, which was close to €2.5 million.[23]

It thus seems that these two decisions are distinguished by a mere difference of degree, but not in the nature of the assessment made by the Court of Cassation of the seriousness of the facts at stake.


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