Council of State on Retroactivity of Milder Repressive Law in Tax Matters

Extract

[...] The novelty of the decision of October lies in the recognition by the Council of State that the principle of the milder law must also apply when this law is adopted after the appeal decision. [...]

[...] The administration therefore imposed on the company two fines corresponding to 50% of the amount of the transactions for which no invoice had been issued, applied under the first phase of paragraph 3 of section I of article 1737 of the CGI. The tax administration refused to apply the reduced rate of provided for by the fiscal provisions in force at the time. This reduced rate could have been applied if the supplier had provided proof, within thirty days following the summons of the tax administration, that the operation had been regularly accounted for. However, in the meantime, a new law has been introduced, relaxing the conditions under which the rate of can be applied instead of the rate of 50%. [...]

[...] These are two fundamental principles that complement each other in a sense because the immediate application of the milder penal law allows for the respect of the proportionality of penalties because in this case not applying the new law would be a disproportion of the penalty for the taxpayer. This solution adopted by the Council of State is considered as an expansion of its jurisprudence. An expansion of the Council of State's jurisprudence For a long time, the principle of retroactivity of the milder law in tax matters was accepted for tax penalties. However, until the decision of October the Council of State had not accepted the application of this principle when the new law was promulgated after a conviction on appeal condemning the taxpayer. [...]

[...] It was admitted that the retroactivity of the milder repressive law could be applied to fiscal penalties, but only if this law was in force at the time when the incriminated facts occurred or at the time when the first instance decision was rendered. However, the Council of State's decision extends this principle to include cases where the new law intervenes after a court of appeal has been rendered. Thus, this decision made by the Council of State can highlight a certain willingness to reconcile two principles: the non-retroactivity of the penal law applicable in fiscal matters and the proportionality of penalties. II. [...]

[...] If the Council of State recognizes the principle of retroactivity of the milder law at the stage of cassation there is a certain willingness to reconcile non-retroactivity in tax matters and the proportionality of penalties (II). I. The recognition of the principle of retroactivity of the milder law at the stage of cassation In fact, the Council of State recalls first the principle of non-retroactivity applicable to tax matters then applies an exception, The retroactivity of the milder repressive law in tax matters applicable at the stage of cassation A reminder of the principle of non-retroactivity applicable to fiscal measures The principle of non-retroactivity in tax matters is a fundamental concept that aims to ensure legal security and predictability for taxpayers. [...]