In view of the judgement, filed with the secretariat of the Court of the Council of State on 5 November 2001, by which the Administrative Court of Pau, before coming to a decision on the claim of Labeyrie, a financial corporation, for (i) discharge from a supplementary payment on account of corporation tax which was claimed from it in respect of the financial year ending in 1991 and (ii) an order that the State pay it F50.000 pursuant to Article L. 113-1 of the Code of Administrative Justice and Administrative Courts of Appeal, decided, pursuant to the provisions of Article 113-1 of the Code of Administrative Justice, to transfer the papers relating to this claim to the Council of State, andto submit the following questions for examination:
1. In respect of interest for late payment claimed from taxpayers on the basis of Articles 1727 and 1729 of the General Tax Code, can that part which exceeds the rate which would arise from the application of the legal rate of interest be considered to be a penalty within the meaning of internal law and the provisions of Article 6(i) of the European Convention for theSafeguard of Human Rights and of Fundamental Liberties?
2. Does the fact that the rate of interest for late payment is superior to the legal rate of interest amount to discrimination within the meaning of Article 14of the Convention?
GIVES THE FOLLOWING OPINION:
1. In its present form resulting from Law no. 87-502 of 8 July 1987, Article 1727 of the General Tax Code provides: “Failure or insufficiency in the payment, or late payment, in respect of one of the taxes, duties, royalties or sums established or collected by the General Tax Department give rise to the payment of interest for late payment which is due independently of any sanction. This interest is not due if the provisions of Article 1732 or the sanctions set out in Articles 1791 to 1825 Fare applicable./ The rate of interest for late payment is fixed at 0.75% per month. It is applied to the sums for which the taxpayer is liableor whose payment has been deferred.”
The interest for late payment laid down by these provisions aims mainly to make good the prejudice of all kinds suffered by the State by reason of the failure by taxpayers to respect their obligations to declare and pay tax on dates laid down by law. Although the evolution of market rates has produced a relative rise of this rate of interest since it was brought in, this fact does not for this reason give it the nature of a sanction, given that the level has not become manifestly excessive in the light of the average rate used by private lenders for overdrafts which have not been negotiated.
2. Pursuant to the provisions of Article L. 207 of the Book of Tax Procedures: “Whena claim made before a court is wholly or partially allowed, the taxpayer maynot claim damages or any indemnification, except for interest for delay as providedby Article 208”; Article 208 of that Code provides: “When the Stateis ordered by a court to reduce tax or when a reduction is announced by the Administrationfollowing a claim relating to the correction of an error committed in the baseor the calculation of tax, sums already collected are reimbursed to the taxpayerand give rise to the payment of interest for delay at the legal rate (…)/”
Pursuant to the provisions of Article 1 of the First Protocol to the European Convention for the Safeguard of Human Rights and of Fundamental Liberties, which, pursuant to Article 5 of the same Protocol, is to be treated as an additional article of that Convention,: “Each individual and each body corporate has the right to have its property respected. No-one may be deprived of his property other than for public purposes and in the conditions laid down by the law and the general principles of international law. These provisions do not affect the right of States to apply laws which they judge to be necessary to regulate the use of property in conformity with the general interest or to ensure the payment of taxes or other payments or fines.”
According to Article 14 of the same Convention: “The enjoyment of the rights and liberties recognised by this Convention is to be ensured with no distinction whatsoever, based in particular on sex, race, colour, language, religion, political or any other opinions, national or social origin, the fact of being part of a national minority, wealth, birth, or any other situation.”
Although the combined provisions of these articles of the European Convention for the Safeguard of Human Rights and Fundamental Liberties and of its First Additional Protocol may indeed be referred to in order to argue that tax law may be the basis of unjustified discrimination between taxpayers, they have no relevance in the case of relationships between the public authority and a taxpayer in relation to the establishment and collection of tax.
Therefore, an argument based on the existence of a difference in rate between, on the one hand, the interest for late payment laid down by Article 1727 of the General Tax Code and, on the other hand, interest for delay as mentioned in Articles L. 207 and 208 of the Book of Tax Procedures cannot be accepted.
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