CEDH · CASELAW;DECISIONS;ADMISSIBILITY;ENG — 14 novembre 2017

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PLAISIER B.V. against the Netherlands and 2 other applications (see list appended) The European Court of Human Rights (Third Section), sitting on 14   November 2017 as a Chamber composed of:   Helena Jäderblom, President,   Luis López Guerra,   Helen Keller,   Dmitry Dedov,   Alena Poláčková,   Georgios A. Serghides,   Jolien Schukking, judges, and Fatoş Aracı, Deputy Section Registrar , Having regard to the above applications lodged on 28 July 2016, 10   August 2016 and 9 March 2017 respectively, Having deliberated, decides as follows: THE FACTS 1.     The first applicant company, P. Plaisier B.V., is a limited liability company ( besloten vennootschap met beperkte aansprakelijkheid ) incorporated under Netherlands law in 1985 which has its seat in Hendrik-Ido-Ambacht. 2.     The second applicant company, D.E.M. Management Services B.V., is a limited liability company incorporated under Netherlands law in 2002 which has its seat in Haarlem. 3.     The third applicant company, Feyenoord Rotterdam N.V., is a public limited company ( naamloze vennootschap ) incorporated under Netherlands law in 2004 which has its seat in Rotterdam. 4.     All three applicant companies were represented before the Court by Mr G.R. Driessen, a lawyer practising in Rotterdam. A.     Background to the cases 1.     The Budget Agreement for 2013 5.     In 2012 the Netherlands, like other European countries, was faced with its most serious financial difficulties for decades as a result of the worldwide economic crisis obtaining at the time. The economic and social problems to be faced included a drop in trade, production and consumer spending and a rise in unemployment, resulting in higher public spending while tax revenue declined. 6.     On 26 April 2012 five political parties constituting a parliamentary majority reached an agreement on a set of measures intended to meet financial setbacks besetting public finances. The net effect of these measures would be to increase Government revenue by 12.4 billion euros (EUR) in 2013. They would seriously affect purchasing power; but these effects would be spread in a balanced way with a view to sparing low-income households. 7.     The measures included structural reforms of the social-security system, including accelerating the raising of the State pension age from 65 to 67; freezing public sector wages; reform of the health care system; structural tax increases, including raising the taxes on fossil fuel and drinking water as well as on alcohol and tobacco and raising the value-added tax high rate from 19% to 21% (some of this increase going towards financing a reduction of the income tax for low-income households); doubling the tax payable by banks on unsecured debt; and as a temporary measure, the introduction of a “crisis levy” ( crisisheffing ) on wages higher than 150,000 euros (EUR) per annum and on especially generous “golden handshakes”. 8.     The “crisis levy”, in issue in the present cases, was expected to raise EUR 500 million in 2013. 9.     This agreement became known as the “Budget Agreement for 2013” ( Begrotingsakkoord 2013 ). On 27 April 2012 the Minister of Finance ( Minister van Financiën ) forwarded an outline of it, entitled “Stability programme for the Netherlands (updated in April 2012” ( Stabiliteitsprogramma Nederland (april 2012 actualisatie) ), to the European Commission. 2.     The Spring Memorandum 2012 10.     On 25 May 2012 the Government presented a financial memorandum ( Voorjaarsnota 2012 , “Spring Memorandum 2012”) to Parliament. 11.     This memorandum noted that the economy of the Netherlands was in a recession which had begun in the second half of 2011. It set out the effects of financial setbacks on the implementation of the State budget for 2012 and proposed budgetary measures to meet them. 12.     On the spending side, the setbacks included unexpectedly high expenditure on unemployment and public health care. In terms of income, the main setbacks were drops in tax revenue from company tax ( vennootschapsbelasting ) and taxes on wages and income ( loon- en inkomensheffing ) caused by reduced profits and mounting unemployment. In addition, reductions in private spending and investment in housing had caused a drop in revenue from value-added tax and property transfer tax ( overdrachtsbelasting ). 13.     The Government debt had been increased by, among other things, the contribution made by the Netherlands to the second bailout of Greece within the framework of the European Financial Stability Facility, which was booked as part of the Netherlands public debt. 14.     If nothing was done, then in 2012 the ratio of the government deficit to gross domestic product would rise from 2.9% to 4.2%; the ratio of government debt to gross domestic product would rise from 65.3% to 69.7%. Thereafter the ratio of the government deficit to gross domestic product could be expected to rise to 4.4% in 2013 and the ratio of government debt to gross domestic product would level out at 76% in 2015. These were values in excess of those prescribed by European Monetary Union rules, to wit, 3% and 60% respectively (see paragraphs 53 and 55 below). 15.     Further measures envisaged included modernising the labour market, raising the State pension age more quickly than originally planned, reforming the housing market and improving the efficiency of health care. 16.     Attached to this memorandum was an elaborated version of the Budget Agreement for 2013, set out in a document bearing the title “Taking responsibility in a time of crisis” ( Verantwoordelijkheid nemen in crisistijd ). It set out the detail of the various measures proposed. Their aggregate effect was expected to be a EUR 12.4 billion reduction of the budget deficit. 3.     Budgetary measures 17.     The various measures agreed in the Budget Agreement (see paragraph 7) were presented to Parliament on 4 June 2012 in the form of the Budget Agreement 2013 (Tax Measures Elaboration) Bill ( wetsvoorstel Wet uitwerking fiscale maatregelen begrotingsakkoord 2013 ). 18 .     The Budget Agreement 2013 (Tax Measures Elaboration) Bill was adopted as an Act which entered into force on 18 July 2012. This Act amended a number of tax laws. 19.     Provision for the “crisis levy” was made by amending the Wages (Tax Deduction) Act 1964 ( Wet op de loonbelasting 1964 ) to introduce a high wages tax surcharge ( pseudo-eindheffing hoog loon ) on wages in excess of EUR 150,000 paid in 2012, this surcharge being levied from the employer not the employee (section 32bd of the Wages (Tax Deduction) Act 1964; see paragraph 56 below). The following is taken from the Explanatory Memorandum ( Memorie van Toelichting ) to the Bill that later became the Budget Agreement 2013 (Tax Measures Elaboration) Act (Parliamentary Documents, Lower House of Parliament ( Kamerstukken II ) 2011-12, 33 287, no. 3, page 9): “Within the framework of the Budget Agreement 2013 a temporary surcharge of 16% will be exacted from employers on wages (including bonuses) paid in 2012 in so far as these exceed a sum of EUR 150,000. The calculation of this employers’ levy will be based on the employee’s wages in the year 2012 so as to put the surcharge into effect in the year 2013. Because of the system of an employers’ levy this surcharge will target employers and not employees and entrepreneurs subject to income tax ( IB-ondernemers ) who are not employers. This choice has been made because of the temporary nature of the measure. In view of the consequences for the attractiveness of the Netherlands for the establishment of businesses ( vestigingsklimaat ) the choice has been made not to introduce a once-only generic levy in the form of an increase of the top income tax rate, now 52%, with an additional tax bracket for incomes starting at EUR 150,000.” 20.     Although the high wages tax surcharge was intended to be a once-only measure, it was prolonged for the year 2014. It was discontinued thereafter. 21.     The Government budget was presented to Parliament on 18   September 2012. It included the measures announced in the Budget Agreement for 2013. Tax revenue was intended to be EUR 139,378,000,000 in 2013 (EUR 235,427,000,000 of social-security contributions ( premies volksverzekeringen ) were included), up from EUR 131,940,000,000 and EUR 223,054,000,000 respectively in 2012. 22.     The applicant companies state that 2.1% of all employers in the Netherlands paid wages surpassing EUR 150,000 to one or more employees. They calculate that the high wages tax surcharge contributed 0.2124% to the 2013 budget (including social-security contributions) and reduced the budget deficit by 0.08%. B.     The circumstances of the cases 23.     The facts of the cases, as submitted by the respective applicant companies, may be summarised as follows. 1.     P. Plaisier B.V. 24.     P. Plaisier B.V. is a financial holding company. It employs one person who is also its sole shareholder. 25.     In 2012 P. Plaisier B.V. paid its employee taxable wages totalling EUR 293,000, from which wage tax ( loonbelasting ) was withheld. In 2013 the applicant paid a high wages tax surcharge of EUR 22,969. 26.     On 22 May 2013 P. Plaisier B.V. lodged an objection ( bezwaar ) against the high wages tax surcharge with the Tax Inspector, who dismissed it on 1 April 2014. 27.     On 8 May 2014 P. Plaisier B.V. lodged an appeal ( beroep ) with the Regional Court ( rechtbank ) of The Hague. As relevant to the case before the Court, it argued that the high wages tax surcharge violated Article 1 of Protocol No. 1 and Article 26 of the International Covenant on Civil and Political Rights in that, firstly, it had not been foreseeable; secondly, it was not justified by a proper assessment of how to distribute the financial burden among taxpayers; and thirdly, it discriminated against employers who paid employees more than EUR 150,000 as compared to employers who paid their employees lesser sums and categories of taxpayers other than employers of natural persons. 28.     The Regional Court gave judgment on 5 January 2015. It considered that the need to reduce the budget deficit constituted a “general interest” for purposes of Article 1 of Protocol No. 1 and the choice of measures to effect this reduction fell within the legislature’s wide margin of appreciation. The high wages tax surcharge was not without reasonable foundation, despite the elements of retrospectivity resulting from its imposition on wages paid in 2012. There was no discrimination contrary to Article 14 of the Convention or Article 26 of the International Covenant on Civil and Political Rights, since the distinction was not made on innate characteristics such as gender, race or ethnicity and in any case was not manifestly without reasonable foundation. 29.     The Tax Inspector and P. Plaisier B.V. agreed to lodge a direct “leapfrog” appeal on points of law ( sprongcassatie ) with the Supreme Court ( Hoge Raad ), bypassing the ordinary appeal stage. 30.     As relevant to the case before the Court, P. Plaisier B.V. alleged a violation of Article 1 of Protocol Nol. 1 in that the high wages tax surcharge had been given retroactive effect beyond the date on which it had become foreseeable – in its contention, 18 July 2012, the date of the entry into force of the Budget Agreement 2013 (Tax Measures Elaboration) Act (see paragraph 18 above). It also argued, relying on Article 1 of Protocol No. 1 taken together with Article 14 of the Convention, on Articles 17 and 21 of the Charter of Fundamental Rights of the European Union and on Article 26 of the International Covenant on Civil and Political Rights, that the levy discriminated against employers who paid employees more than EUR   150,000 as compared to employers who paid their employees lesser sums and to categories of taxpayers other than employers of natural persons, such as the self-employed, those who derived income from investments and incorporated bodies, even if they enjoyed an annual income of more than EUR 150,000. 31.     The Supreme Court gave judgment on 25 March 2016. It dismissed P. Plaisier B.V.’s appeal on points of law on summary reasoning, referring to its judgments of 29 January 2016 (ECLI:NL:HR:2016:121 and ECLI:NL:HR:2016:124, see paragraphs 57 and 58 below). 2.     D.E.M. Management Services B.V. 32.     D.E.M. Management Services B.V. is a financial holding company. It employs one person who is also its sole shareholder. 33.     In January 2012 D.E.M. Management Services B.V. paid its employee a bonus of EUR 612,155, which was subject to income tax, in addition to taxable wages totalling EUR 416,315 (of which EUR 239,298 was regular wages paid before 18 July 2012 and EUR 177,017 was regular wages paid after 17 July 2012), from which sums wage tax was withheld. In 2013 the applicant paid a high wages tax surcharge in a total amount of EUR 140,555. 34.     On 22 May 2013 D.E.M. Management Services B.V. lodged an objection against the high wages tax surcharge with the Tax Inspector, who dismissed it on 1 April 2014. 35.     On 8 May 2014 D.E.M. Management Services B.V. lodged an appeal with the North Holland Regional Court. As relevant to the case before the Court, it argued that the high wages tax surcharge violated Article 1 of Protocol No.   1 and Article 26 of the International Covenant on Civil and Political Rights in that, firstly, it had not been foreseeable; secondly, it was not justified by a proper assessment of how to distribute the financial burden among taxpayers; and thirdly, it discriminated against employers who paid employees more than EUR 150,000 as compared to employers who paid their employees lesser sums and categories of taxpayers other than employers of natural persons. 36.     The Regional Court gave judgment in D.E.M. Management Services B.V.’s case on 4 December 2014. It held that in enacting the legislation in issue the legislature had not overstepped its margin of appreciation. However, the bonus had been paid in January 2012, i.e. before the date on which the Budget Agreement for 2013 was reached (26 April 2012 – see paragraph 6 above); this meant that in respect of the bonus the high wages tax surcharge had not been foreseeable. The Regional Court ordered the repayment of the corresponding amount of tax paid (EUR 97,155). 37.     Both D.E.M. Management Services B.V. and the Tax Inspector appealed to the Court of Appeal of Amsterdam. 38.     The Court of Appeal gave judgment on 28 May 2015. As relevant to the case before the Court, it held that the measure in issue was in accordance with domestic law and served a legitimate aim. Taking the view that the introduction of the high wages tax surcharge could not be viewed in isolation, divorced from the other budgetary measures announced in the Budget Agreement for 2013, it held that it had been the conscious decision of the legislature to introduce the levy in the form chosen and that alternative possibilities had been considered but rejected for practical reasons. The high wages tax surcharge was therefore not devoid of reasonable foundation and came within the legislature’s margin of appreciation. Although the measure amounted to retroactive taxation, this also was a conscious choice made in order to levy the tax already in 2013; this, too, was justified by the serious budgetary problems existing at the time and accordingly not disproportionate. Responding to a discrimination complaint, it found that in terms of Netherlands tax law the situations were not comparable; that moreover the measure had been designed so as not to render the Netherlands unattractive for foreign investors, which constituted objective and reasonable justification; and that there was accordingly no discrimination contrary to Article 14 of the Convention or Article 26 of the International Covenant on Civil and Political Rights. It accordingly quashed the Regional Court’s judgment and dismissed the applicant company’s appeal. 39.     D.E.M. Management Services B.V. lodged an appeal on points of law ( cassatie ) to the Supreme Court. As relevant to the case before the Court, the applicant company alleged a violation of Article 1 of Protocol No. 1 in that the high wages tax surcharge had been given retroactive effect beyond the date on which it had become foreseeable – in its contention, 18   July 2012, the date of the entry into force of the Budget Agreement 2013 (Tax Measures Elaboration) Act (see paragraph 18 above). It also argued, relying on Article   1 of Protocol No. 1 taken together with Article 14 of the Convention, on Articles 17 and 21 of the Charter of Fundamental Rights of the European Union and on Article 26 of the International Covenant on Civil and Political Rights, that the levy discriminated against employers who paid employees more than EUR 150,000 as compared to employers who paid their employees lesser sums and to categories of taxpayers other than employers of natural persons, such as the self-employed, those who derived income from investments and incorporated bodies, even if they enjoyed an annual income of more than EUR 150,000. 40.     The Supreme Court gave judgment on 25 March 2016. It dismissed D.E.M. Management Services B.V.’s appeal on points of law on summary reasoning, referring to its judgments of 29 January 2016 (ECLI:NL:HR:2016:121 and ECLI:NL:HR:2016:124, see paragraphs 57 and 58 below). 3.     Feyenoord Rotterdam N.V. 41.     Feyenoord Rotterdam N.V. is a professional club football employer. In 2012 it employed a number of persons including professional football players to whom it paid wages in excess of EUR 150,000. 42.     Feyenoord Rotterdam N.V.’s accounting year ran from 1 July to 30   June. Its net worth ( eigen vermogen ) was EUR 21,057,000 negative in 2010-2011; EUR 9,515,000 negative in 2011-2012; EUR 6,200,000 negative in 2012-2013; and EUR 3,000,000 positive in 2013-2014. 43.     In accordance with the financial rating system of the Royal Dutch Football Association ( Koninklijke Nederlandse Voetbalbond , “KNVB”), the KNVB licensing committee relegated Feyenoord Rotterdam N.V. to the lowest financial category in 2010-2011. This endangered Feyenoord Rotterdam N.V.’s licence to take part in professional football competitions. Feyenoord Rotterdam N.V. was promoted to a higher category in 2011-2012 after injections of outside capital and an issue of new shares. 44.     In 2012 Feyenoord Rotterdam N.V. paid wages exceeding EUR 150,000 to twenty-five employees. In 2013 it paid a high wages tax surcharge of EUR 593,472. 45.     On 8 May 2013 Feyenoord Rotterdam N.V. lodged an objection against the high wages tax surcharge with the Tax Inspector, who dismissed it on 3   April 2014. 46.     On 22 April 2014 Feyenoord Rotterdam N.V. lodged an appeal with the Regional Court of The Hague. As relevant to the case before the Court, it argued that the high wages tax surcharge violated Article 1 of Protocol No.   1 in that, firstly, it had not been foreseeable; secondly, it was not justified by a proper assessment of how to distribute the financial burden among taxpayers; and thirdly, it imposed an “unreasonable and excessive burden” on the company itself given the state of its finances. It also argued, relying on Article 14 of the Convention and Article 26 of the International Covenant on Civil and Political Rights, that the surcharge discriminated against employers who paid employees more than EUR 150,000 as compared to employers who paid their employees lesser sums and categories of taxpayers other than employers of natural persons. 47.     The Regional Court gave judgment on 19 January 2015. It held that in enacting the legislation in issue the legislature had not overstepped its margin of appreciation. Feyenoord Rotterdam N.V. had not borne an “individual and excessive burden”, given that its financial situation had improved considerably despite the high wages tax surcharge. 48.     Feyenoord Rotterdam N.V. appealed to the Court of Appeal of The Hague. In addition to restating the arguments made before the Regional Court, in particular those under Articles 14 of the Convention and 26 of the International Covenant on Civil and Political Rights, it submitted that the improvement of its financial situation (pointed out by the Regional Court) had been due to injections of capital by outside investors and transfers of players rather than increased profits. 49.     The Court of Appeal of the Hague gave judgment on 22 December 2015. As relevant to the case before the Court, it held that the measure in issue was in accordance with domestic law and served a legitimate aim. Taking the view that the introduction of the high wages tax surcharge could not be viewed in isolation, divorced from the other budgetary measures announced in the Budget Agreement for 2013, it held that it had been the conscious decision of the legislature to introduce the levy in the form chosen and that alternative possibilities had been considered but rejected for practical reasons. The high wages tax surcharge was therefore not devoid of reasonable foundation and came within the legislature’s margin of appreciation. Although the measure amounted to retroactive taxation, this also was a conscious choice made in order to levy the tax already in 2013; this, too, was justified by the serious budgetary problems existing at the time and by the need to forestall preemptive measures aimed at evasion by taxpayers and accordingly not disproportionate. It was reflected in the Court’s case-law, in particular M.A. and 34 Others v. Finland (dec.), no.   27793/95, 10 June 2003, and Huitson v. the United Kingdom (dec.), no.   50131/12, 13 January 2015, that Article 1 of Protocol No. 1 did not as such prohibit retrospective legislation; although this case-law specifically concerned legislation intended to close technical loopholes in tax legislation to abusers, it did not follow that retroactive taxation was limited to such cases. The Cour of Appeal of The Hague continued its assessment, considering that at an individual level, admittedly the applicant company had been faced with a considerable financial burden as a result of the measure in issue. However, the question whether the improvement of the applicant company’s financial situation was due to improved profits or to increases from other sources was irrelevant to the question whether the applicant company had had to bear an “individual and excessive burden” within the meaning of Article 1 of Protocol No. 1. What mattered was not whether the surcharge was high in an absolute sense, or higher than average, but whether as a result the applicant company was faced with a burden that should count as excessive in the light of the particular facts and circumstances affecting it. The applicant company’s total financial situation was defined by its assets as much as by its profits, and should be considered not only with reference to the tax year in issue but also in light of the situation obtaining in subsequent years.   Given that between 2011 and 2014 the applicant company’s financial situation had improved to the point where it fully satisfied the requirements of the Royal Dutch Football Association, the burden imposed on the applicant company individually did not constitute an unjustified interference with its property rights any more than the general measure did. 50.     Responding to Feyenoord Rotterdam N.V.’s arguments under Articles 14 of the Convention and 26 of the International Covenant on Civil and Political Rights, the Court of Appeal found that in terms of Netherlands tax law the situations were not comparable; that moreover the measure had been designed so as not to render the Netherlands unattractive for foreign investors, which constituted objective and reasonable justification; and that consequently there was no discrimination contrary to Article 14 of the Convention or Article 26 of the International Covenant on Civil and Political Rights. It accordingly confirmed the Regional Court’s judgment. 51.     Feyenoord Rotterdam N.V. lodged an appeal on points of law with the Supreme Court. As relevant to the case before the Court, it relied on Article 1 of Protocol No. 1, both taken alone and taken together with Article   14 of the Convention, and Article 26 of the International Covenant on Civil and Political Rights. As relevant to the case before the Court, it argued that the levy was unlawful in that it imposed a tax on employers and employees simultaneously, contrary to the system of the Wages (Tax Deduction) Act; that imposing a higher income tax on high-income wage-earners would have been a better alternative; that budgetary interests alone could not justify retrospective tax legislation; that the legislation in issue imposed an “individual and excessive burden” on employers in the applicant company’s position because, unable to foresee the imposition of the levy, they had had no opportunity to make prior provision for it; and that the levy discriminated against the small minority of employers who paid employees more than EUR 150,000 as compared to employers who paid their employees lesser sums and to categories of taxpayers other than employers of natural persons, such as the self-employed, those who derived income from investments and companies, even if they enjoyed an annual income of more than EUR 150,000. In the alternative, Feyenoord Rotterdam N.V. suggested that the levy should be calculated only from the date on which it became foreseeable – in its contention, 25 May 2012, the date of the Spring Memorandum (see paragraph 10 above). 52.     The Supreme Court gave judgment on 25 March 2016. It dismissed the applicant company’s appeal on points of law on summary reasoning, referring to its judgments of 29 January 2016 (ECLI:NL:HR:2016:121 and ECLI:NL:HR:2016:124, see paragraphs 57 and 58 below). C.     Relevant European Union law 53.     As relevant to the case before the Court, the Resolution of the European Council on the Stability and Growth Pact, 17 June 1997, Official Journal C 236, 02/08/1997, reads as follows: “THE MEMBER STATES 1.     commit themselves to respect the medium-term budgetary objective of positions close to balance or in surplus set out in their stability or convergence programmes and to take the corrective budgetary action they deem necessary to meet the objectives of their stability or convergence programmes, whenever they have information indicating actual or expected significant divergence from those objectives; ... 4.     will launch the corrective budgetary adjustments they deem necessary without delay on receiving information indicating the risk of an excessive deficit; 5.     will correct excessive deficits as quickly as possible after their emergence; this correction should be completed no later than the year following the identification of the excessive deficit, unless there are special circumstances; ...” 54.     As relevant to the case before the Court, the Treaty on the Functioning of the European Union (TFEU) provides as follows: Article 126 “1.     Member States shall avoid excessive government deficits. 2.     The Commission shall monitor the development of the budgetary situation and of the stock of government debt in the Member States with a view to identifying gross errors. In particular it shall examine compliance with budgetary discipline on the basis of the following two criteria: (a)     whether the ratio of the planned or actual government deficit to gross domestic product exceeds a reference value, unless: -     either the ratio has declined substantially and continuously and reached a level that comes close to the reference value, -     or, alternatively, the excess over the reference value is only exceptional and temporary and the ratio remains close to the reference value; (b)     whether the ratio of government debt to gross domestic product exceeds a reference value, unless the ratio is sufficiently diminishing and approaching the reference value at a satisfactory pace. The reference values are specified in the Protocol on the excessive deficit procedure annexed to the Treaties. ... 9.     If a Member State persists in failing to put into practice the recommendations of the Council, the Council may decide to give notice to the Member State to take, within a specified time limit, measures for the deficit reduction which is judged necessary by the Council in order to remedy the situation. In such a case, the Council may request the Member State concerned to submit reports in accordance with a specific timetable in order to examine the adjustment efforts of that Member State. ... 11.     As long as a Member State fails to comply with a decision taken in accordance with paragraph 9, the Council may decide to apply or, as the case may be, intensify one or more of the following measures: —     to require the Member State concerned to publish additional information, to be specified by the Council, before issuing bonds and securities, —     to invite the European Investment Bank to reconsider its lending policy towards the Member State concerned, —     to require the Member State concerned to make a non-interest-bearing deposit of an appropriate size with the Union until the excessive deficit has, in the view of the Council, been corrected, —     to impose fines of an appropriate size. The President of the Council shall inform the European Parliament of the decisions taken.” 55.     As relevant to the case before the Court, Protocol (No. 12) to the Treaty on the Functioning of the European Union (Protocol on the excessive deficit procedure) provides as follows: Article 1 “The reference values referred to in Article 126(2) of the Treaty on the Functioning of the European Union are: -     3 % for the ratio of the planned or actual government deficit to gross domestic product at market prices; -     60 % for the ratio of government debt to gross domestic product at market prices.” D.     Relevant domestic law 1.     The Wages (Tax Deduction) Act 1964 56.     At the relevant time, the Wages (Tax Deduction) Act 1964, in its relevant parts, provided as follows: Section 1 “A direct tax referred to as wage tax shall be levied from employees or the person whose duty it is to withhold the tax ( inhoudingsplichtige ) ...” Section 20 “1.     The tax due on a wage period of one year shall be the amount of the tax calculated on the taxable wage for the calendar year minus the exempt amount ( heffingskorting ) for purposes of the wage tax. 2.     The exempt amount for purposes of the wage tax shall be no higher than the amount of the tax due for the wage period of one year.” Section 26 “... 4.     For the purpose of this section, the following shall be considered to be annual wages ( jaarloon ): a.     if the employee has been paid wages by the person whose duty it is to withhold the tax during the entire preceding calendar year: the wages paid during that year; b.     if the employee has been paid wages by the person whose duty it is to withhold the tax during part of the preceding calendar year: the amount of the wages paid during that year, reduced to an annual wage; c.     in other cases, the wages to be paid during the calendar year, if wages were to be received from the person whose duty it is to withhold the tax during the entire year. ...” Section 32bd “1.     For purposes of application of this section, wages from present employment on which wage tax has been levied in the previous calendar year in application of sections ... 26 ... shall, in deviation, to that extent, from what is provided elsewhere in or pursuant to this Act, be considered to be wages enjoyed on 31 March of the calendar year, to be taxed as a component of the final levy ( eindheffingsbestanddeel ) at a rate of 16%, to the extent that wages in the preceding calendar year exceeded EUR 150,000. ...” 2.     Relevant domestic case-law 57.     In its judgment of 29 January 2016, ECLI:NL:HR:2016:121, the Supreme Court held, inter alia : “2.3.4.     In so far as the point of appeal ( middel ) is intended to argue that the crisis levy makes a discriminatory distinction between employers who, in 2012, employed employees who enjoyed wages exceeding EUR 150,000 and other employers, it cannot succeed ... The choice of the legislature to tax employers of employees whose wages exceeded EUR 150,000 with an extra levy of 16 per cent of the excedent wage is not without reasonable foundation. The legislature has accordingly not overstepped the wide margin of appreciation which it enjoys in matters of taxation. ... 2.4.1.     Point of appeal III argues that the Court of Appeal was wrong to dismiss the argument of the interested parties that the crisis levy violates the right to peaceful enjoyment of possessions laid down in Article 1 of Protocol No. 1 to the Convention. The point of appeal states that the crisis levy was introduced with (substantively) retroactive effect, in that the levy concerns wages enjoyed in 2012 whereas the crisis levy entered into force on 1 January 2013 and the first announcement of the intention to introduce it was made in the course of 2012. According to the point of appeal, the legislature thus failed adequately to do justice to the justified expectations of the interested parties and saddled them with an excessive burden. The point of appeal concludes that the legal regulation of the crisis levy thus fails to meet the ‘fair balance’ test applied by the Court [i.e. the European Court of Human Rights] in applying Article 1 of Protocol No. 1 and must therefore be struck down. 2.4.2.     In considering the ground of appeal the starting point is the following. Taxes, in principle, constitute an interference with the peaceful enjoyment of possessions guaranteed by Article 1 of Protocol No. 1. The second paragraph of this Article however makes explicit provision for general justification of the interference caused by a fiscal measure (see Burden v. the United Kingdom [GC], no. 13378/05, § 59, ECHR 2008). This does not alter the fact that also in the field of taxation, according to the standing case-law of the European Court of Human Rights, the interference must be ‘lawful’, pursue a ‘legitimate aim’ and respect a ‘fair balance’ between the interests of the affected individual and the general interest. In considering the question whether the third condition has been met, the legislature in matters of taxation must be left a wide margin of appreciation (see N.K.M. v. Hungary , no. 66529/11, §§ 57 and 61, 14 May 2013). When, as in the present case, the alleged incompatibility of a levy with the exercise of property rights as protected by Article 1 of Protocol No. 1 is based on the argument that the justified expectations of the interested parties were violated in the introduction of the tax measure in issue, the question is whether in such introduction the ‘fair balance’ mentioned has been observed (see N.K.M. , cited above, § 61). 2.4.3.     The crisis levy involved a new levy, which in principle was to be applied once only, on employers who in 2012 employed one or more employees whom they paid wages exceeding EUR 150,000. By virtue of the crisis levy the employers owe 16 percent of the excedent wages in tax. They cannot recover this levy from the employees. 2.4.4.     In early 2012 employers were unaware of the imminence of the crisis levy. 2.4.5.     In considering whether a ‘fair balance’ was not observed in the introduction of the crisis levy as a result, it must be taken into consideration that not every change of tax legislation constitutes a violation of the peaceful enjoyment of possessions prohibited by Article 1 of Protocol No.   1. Citizens cannot in reason trust that tax rates will remain unchanged. Employers and employees accordingly could not expect in early 2012 that the rates of the wage and income taxes in force at the time would remain valid thereafter. That does not alter the fact that they did not need to expect that they would owe more tax on the wages payable at the time than flowed from the legislation in force. As far as wages enjoyed prior to the first announcement are concerned, the introduction of the crisis levy accordingly affected expectations that the employers concerned could derive from the legislation as it existed at the time. 2.4.6.     A violation of expectations that persons concerned may derive from existing legislation up until the moment a change of that legislation is announced is not ipso facto contrary to Article 1 of Protocol No. 1. Such an interference may be justified if technical shortcomings in that existing legislation require reparation. Such may be the case, for example, when taxpayers have tried to profit from a loophole in the law (a ‘windfall’) and the new regulation purports to prevent this (compare National & Provincial Building Society, Leeds Permanent Building Society and Yorkshire Building Society v. the United Kingdom , 23 October 1997, § 81, Reports of Judgments and Decisions 1997 ‑ VII; M.A. and 34 others v. Finland (dec.), no. 27793/95, 10 June 2003; and N.K.M. , cited above, § 74). The crisis levy, however, cannot be considered to be such a reparative measure. 2.4.7.     Persons whose duty it was to withhold wage tax were therefore entitled, until the first announcement on 25 May 2012, to assume in good faith that the wages that their employees enjoyed during that period would not be taxed more heavily than followed from the tax legislation in force at the time. To that extent the introduction of the crisis levy has damaged justified expectations of the persons concerned. 2.4.8.     If, as in the present case, the introduction of a new or greater levy runs counter to the justified expectations of the persons concerned, there is, in principle, no ‘fair balance’. That is otherwise only if there are specific and compelling reasons for this attack on justified expectations (compare N.K.M. , §§ 74-75). 2.4.9.     This raises the question whether such reasons exist in relation to the introduction of the crisis levy. It must be established in this connection that the legislature, as a consequence of the seriously deteriorated economic prospects for 2013, had to reduce the budget deficit for that year (...). The crisis levy was part of a wider whole (‘package’) of measures to that end. The economic necessity of ensuring the stability of the European Monetary Union played a role. In addition, the provisions of the so-called Stability and Growth Pact (Council Regulation (EC) 1466/97 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies, Council Regulation (EC) 1467/97 on speeding up and clarifying the implementation of the Excessive Deficit Procedure, and the Resolution of the European Council on the Stability and Growth Pact, 17 June 1997) compel the taking of drastic measures. 2.4.10.     The ‘package’ comprised a series of diverse measures necessary to ensure that a large number of political parties would agree with them in order that a political majority be secured. 2.4.11.     The calculation of the amount to be handed over in 2013 by a person whose duty it was to withhold wage tax was based on the wages enjoyed by the employee in the preceding calendar year 2012. This approach was chosen because of the need to reduce the budget deficit in 2013 from the 4.5% expected by the Netherlands Bureau for Economic Policy Analysis ( Centraal Planbureau , ‘CPB’) to 3%. If for the purposes of calculating the high wages tax surcharge the wages for the calendar year 2013 were to be used, it would only be possible to calculate and hand over the levy in 2014 (...) and it would not be possible to effect the necessary contribution to the budgetary aims for 2013. There was considerable urgency in realising this budgetary aim in connection with the confidence of the financial markets and the credibility of the Netherlands within the EU (...). 2.4.12.     In addition, the legislature has considered it necessary to choose an arrangement that could be introduced speedily and the implementation of which by persons whose duty it was to withhold wage tax and the Tax and Customs Administration ( Belastingdienst ) was kept simple (...). This choice was justified in view of the acute budgetary needs and the incidental character of the arrangement. The choice of a yardstick that would be simple to put into effect was the annual wage for the year 2012 as the basis for the levy ( heffingsgrondslag ). This choice too was justified because connecting to the annual wage would reduce to a minimum the risk of problems in introduction and implantation and the situation required these to be reduced to a minimum. The effect thereof was that an employer would be confronted in 2013 with an extra burden relating to the high wages which he had had paid to his employees in 2012 on the basis of contracts of employment, both before and after the announcement of the crisis levy. It was acceptable to involve in the basis for the levy wages paid before that announcement in order to secure already in 2013 the necessary revenue on the basis of a simple arrangement. 2.4.13.     The serious nature of the budgetary problems, as sketched above, which made it necessary to take drastic measures which would lead to a reduction of the budget deficit in 2013, and the need in this connection to arrive at a simple and practicable arrangement, entail that there were sufficient specific and compelling reasons to arrive at the introduction of the crisis levy, even to the extent that it is levied on a basis which includes wages paid before the first announcement of the levy. This leads to the conclusion that at the regulatory level the crisis levy must not be set aside on the ground that it violates Article 1 of Protocol No. 1. To that extent, point of appeal III fails.” 58.     In a second judgment of the same date, ECLI:NL:HR:2016:124, the Supreme Court restated the above reasoning and approved a prolongation of the measure applicable to the tax year 2013. COMPLAINTS 59.     The applicant companies complained under Article 1 of Protocol No.   1 to the Convention that they had been subjected to a tax with retrospective effect. They also complained under this Article that the high wages tax surcharge had been imposed without regard for possible individual hardship, had been targeted at an unaccountably small group of employers and had been disproportionate in relation to the tax revenue actually raised. 60.     The applicant companies complained under Article 14 of the Convention taken together with Article 1 of Protocol No. 1 that the high wages tax surcharge had been applied arbitrarily to only a small proportion of taxpayers. THE LAW A.     Joinder of the applications 61.     Given their common factual and legal background, the Court decides that the three applications should be joined pursuant to Rule 42 § 1 of the Rules of Court. B.     Complaints under Article 1 of Protocol No. 1 62.     The applicant companies allege violations of Article 1 of Protocol No. 1, which provides as follows:   “Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.” 63.     The applicant companies complained that the high wages tax surcharge, being retrospective, had been unforeseeable. They also complained that it had failed to take account of individual financial circumstances, had affected only a very small group of employers, and had caused disproportionate hardship to individuals in relation to its impact on the Government budget. 1.     The applicable rule 64.     As the Court has often held, Article 1 of Protocol No. 1 guarantees in substance the right of property. It comprises three distinct rules. The first, which is expressed in the first sentence of the first paragraph and is of a general nature, lays down the principle of peaceful enjoyment of property. The second, in the second sentence of the same paragraph, covers deprivation of possessions and makes it subject to certain conditions. The third, contained in the second paragraph, recognises that the Contracting States are entitled to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties. However, the three rules are not “distinct” in the sense of being unconnected: the second and third rules are concerned with particular instances of interference with the right to peaceful enjoyment of property and should therefore be construed in the light of the general principle enunciated in the first rule (see, among many other authorities, Sporrong and Lönnroth v. Sweden , 23 September 1982, § 61, Series A no. 52; Gasus Dosier- und Fördertechnik GmbH v. the Netherlands , 23 February 1995, §   55, Series A no. 306 ‑ B; National & Provincial Building Society, Leeds Permanent Building Society and Yorkshire Building Society v. the United Kingdom , 23 October 1997, § 78, Reports of Judgments and Decisions 1997 ‑ VII; M.A. and 34 Others v. Finland (dec.), no. 27793/95, 10   June   2003; and as a recent example, Béláné Nagy v. Hungary [GC], no.   53080/13, § 72, ECHR 2016). 65.     The most natural approach, in the Court’s opinion, is to examine the applicant companies’ complaints under the head of “securing the payment of taxes”, which comes under the rule in the second paragraph of Article 1 of Protocol No. 1. That paragraph explicitly reserves the right of Contracting States to pass such laws as they may deem necessary to secure the payment of taxes. The importance which the drafters of the Convention attached to this aspect of the second paragraph of the