CEDH · CASELAW;DECISIONS;ADMISSIBILITYCOM;ENG — 19 décembre 2024

.s800EAC49 { font-size:12pt } .sFE10DC93 { margin-top:0pt; margin-bottom:0pt; text-align:center } .sBB9EE52A { font-family:Arial } .s2EF17D91 { margin-top:0pt; margin-bottom:0pt; text-align:center; font-size:2pt } .s5E1364CA { margin-top:0pt; margin-bottom:12pt; text-align:center; page-break-inside:avoid; page-break-after:avoid; font-size:14pt } .s339D85E6 { margin-top:0pt; margin-bottom:14pt; text-align:center; page-break-inside:avoid; page-break-after:avoid } .s5FFF0A77 { margin-top:0pt; margin-bottom:0pt; font-size:1pt } .s10950C61 { margin-top:0pt; margin-bottom:0pt; text-indent:14.2pt; text-align:justify } .s32563E28 { margin-top:0pt; margin-bottom:0pt } .sB9D5CABB { width:28.35pt; display:inline-block } .sA36B60A1 { font-family:Arial; font-style:italic } .s3AAE10DF { margin-top:14pt; margin-bottom:12pt; text-align:justify; page-break-inside:avoid; page-break-after:avoid; font-size:14pt } .s3CA22BA { font-family:Arial; text-transform:uppercase } .s6B505E72 { margin:0pt; padding-left:0pt } .s5E8F5A28 { margin-top:14pt; margin-left:25.5pt; margin-bottom:12pt; text-align:justify; page-break-inside:avoid; page-break-after:avoid; font-family:Arial; font-weight:bold } .s743F3A55 { margin-right:0pt; margin-left:0pt; padding-left:0pt } .s2044A09A { margin-left:6.51pt; margin-bottom:6pt; page-break-inside:avoid; page-break-after:avoid; padding-left:1.99pt; font-weight:normal; font-style:italic } .sAE6FB95D { margin-top:14pt; margin-left:32.01pt; margin-bottom:6pt; text-align:justify; page-break-inside:avoid; page-break-after:avoid; padding-left:1.99pt; font-family:Arial; font-style:italic } .s9F46BEC9 { margin-top:14pt; margin-bottom:12pt; text-align:justify; font-size:14pt } .s2D9C6089 { margin-top:12pt; margin-bottom:12pt; text-indent:14.2pt; text-align:justify; page-break-inside:avoid; page-break-after:avoid } .s69DCC830 { margin-top:36pt; margin-bottom:0pt } .sC986E16F { font-family:Arial; color:#ffffff } .sBD1BE8CC { width:33.89pt; display:inline-block } .sF1EFFD76 { width:136.43pt; display:inline-block } .s5D826FD4 { width:25.88pt; display:inline-block } .s1B61D60 { width:156.43pt; display:inline-block }     FIFTH SECTION DECISION Application no. 46821/16 KIMBERLY-CLARK UKRAINE, TOV against Ukraine   The European Court of Human Rights (Fifth Section), sitting on 19   December 2024 as a Committee composed of:   Armen Harutyunyan , President ,   Andreas Zünd,   Mykola Gnatovskyy , judges , and Martina Keller, Deputy Section Registrar, Having regard to: the application (no.   46821/16) against Ukraine lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) on 28   July   2016 by Kimberly ‑ Clark Ukraine, TOV Z II, a limited liability company registered in Ukraine (“the applicant company”), which was represented by Mr   O.O.   Shemyatkin, a lawyer practising in Kyiv; the decision to give notice of the complaint under Article 1 of Protocol No.   1 to the Convention to the Ukrainian Government (“the Government”), represented by their Agent, Ms M. Sokorenko, and to declare the remainder of the application inadmissible; the parties’ observations; Having deliberated, decides as follows: SUBJECT MATTER OF THE CASE 1.     The present case concerns the refusal by the domestic authorities to return value-added tax (VAT) that the applicant company had allegedly overpaid on import operations. It relied on Article 1 of Protocol No. 1. 2 .     From July to September 2014 the applicant company imported personal care products for infants and women into Ukraine. It indicated on its customs declarations a VAT rate of 20% and paid it accordingly. The applicant company submitted to the Court that this had been done in response to requests from the Ukrainian customs authorities which would have otherwise refused to proceed with the customs clearance of the imported goods. 3.     Several months after the goods had been imported, the applicant company asked the tax authorities to amend the customs declarations by changing the VAT rate for the imported goods from 20% to 7% and to refund the difference of 9,582,030.58 Ukrainian hryvnias (UAH, the equivalent of around 578,000 euros (EUR) at the relevant time). It claimed that the goods were registered as medical products in Ukraine and that it possessed the relevant State registration certificates. As such, its imports should have been eligible for the reduced VAT rate. 4.     The tax authorities rejected the requests, arguing that the imported goods did not constitute medical products and, since the applicant company itself had assigned the VAT rate, it did not have a right to amend the customs declarations. 5 .     In December 2014 the applicant company instituted court proceedings seeking to annul the authorities’ refusal to amend the declarations and to recover the allegedly overpaid VAT. It claimed that it had indicated the higher VAT rate in its customs declarations in error. 6.     On 29 January 2015 the Kyiv Circuit Administrative Court ordered the tax authorities to refund the overpaid VAT to the applicant company. It found that the imported goods could be classified as medical products and thus were subject to the 7% VAT rate. The court held that the applicant company had the right to amend the customs declarations and claim back the overpaid tax. 7.     On 21 May 2015 the Kyiv Administrative Court of Appeal quashed the above-mentioned decision and dismissed the applicant company’s claim as unfounded. It held that the imported goods did not qualify for the reduced VAT rate as their purpose was personal hygiene and not medical use. Referring to the domestic case-law concerning the absence of a right to amend the value of imported goods after the completion of customs clearance, save in the event of an error by customs officials, it held that the applicant company was precluded from amending the customs declarations since it had determined the applicable VAT rate on its own, without the involvement of the State authorities. 8.     On 28   January   2016 the Higher Administrative Court upheld the decision of the appellate court. Relying, inter alia , on the case-law of the Supreme Court of Ukraine concerning the inability to amend the value of imported goods save in the event of an error by customs officials (see paragraph 17 below), it held that the applicant company did not have a right to claim back the allegedly overpaid taxes. 9 .     On 30 May 2018 the Grand Chamber of the Supreme Court rejected the request made by the applicant company to reopen proceedings as unfounded, considering that the case-law cited by it did not disclose any divergence from established case-law. relevant domestic law and practice VAT on medical products Domestic law 10 .     Under section 193.1 of the Tax Code, as in force at the material time, the general VAT rate was 20%. For the import of medical products, it was reduced to 7%. To benefit from the reduced VAT rate, medical products had to correspond to the definition contained in the Government’s Technical Guidelines ( Технічний регламент ) no. 753 which included, inter alia , goods that “supported the anatomy or physiological process” of a human being. In addition, according to the Government’s Resolution no. 216, the documents confirming that certain goods belonged to the category of “medical products” included a State registration certificate of a medical product. 11 .     In 2014 the Ministry of Health and the State Fiscal Service issued several recommendations concerning the application of the reduced VAT rate to medical products holding State registration certificates. None of those recommendations, however, were legally binding, and the domestic authorities, including the courts, were not obliged to follow them. Case-law of domestic courts 12 .     According to the available case-law of the domestic cassation courts, the majority of the judgments concerning the application of the 7% VAT rate to the import of personal care products were delivered after the final resolution of the applicant company’s claim (see, for example, judgments in cases nos. K/800/15415/15 of 19 April 2016; 813/6877/14 of 7 August 2018; 813/1046/15 of 28 August 2018; 815/5023/16 of 9 April 2019; 826/2277/15 of 4   June   2019; 813/1046/15 of 31   March   2023; and 820/4260/16 of 27   June   2023). In those cases, the Higher Administrative Court and the Supreme Court confirmed the taxpayers’ right to a reduced VAT rate. In some of those cases, the claimants indicated a 7% VAT rate on their customs declarations and later successfully challenged the rejection of those declarations by the authorities. Amendment of customs declarations and refunds of overpaid customs duties Domestic law 13 .     In accordance with sections 269 and 301 of the Customs Code 2012, taxpayers were allowed to amend customs declarations within three years of the completion of the customs clearance of imported goods. If approved by the customs authorities, such amendments were recognised as grounds for a refund of overpaid customs duties. 14 .     Under the Government’s Regulation no.   450 of 21   May   2012 on Customs Declarations ( Положення про митні декларації ) (“Regulation no.   450”), as in force at the material time, any amendments to customs declarations after the completion of the customs clearance had to be made by the customs authorities by issuing an amendment form ( аркуш коригування ). There were three situations in which an amendment form could be issued (paragraph 37). While two of them pertained to amendments initiated by the taxpayers, when such amendments did not necessitate recalculating customs duties, the third situation required the State Treasury’s prior confirmation that the funds had already been returned from the State budget. Following amendments to Regulation no.   450 that entered into force on 1   February 2017, new grounds for issuing an amendment form were introduced, namely, to rectify information involving, inter alia , the refund of customs duties. 15.     The Regulation of the State Customs Service no. 618 of 20 July 2007 on the procedure for refunding taxpayers’ funds recorded in the relevant accounts of the customs authorities as prepayment, customs or other payments erroneously and/or excessively made to the State budget controlled by the customs authorities ( Порядок повернення платникам податків коштів, що обліковуються на відповідних рахунках митного органу як передоплата, і митних та інших платежів, помилково та/або надмірно сплачених до бюджету, контроль за справлянням яких здійснюється митними органами ) (“Regulation no.   618”) established the procedure for refunding overpaid customs duties. It required taxpayers seeking a refund to submit a written request within 1095 days, together with copies of the customs declarations and documents demonstrating that they had overpaid. As a rule, the customs authorities were required to examine such requests and provide a response to the taxpayer within one month. Case-law of domestic courts 16 .     The practice of domestic cassation courts differed as to whether taxpayers prior to the amendments to Regulation no. 450 (see paragraph 14 above) had the right to amend customs declarations when such amendments involved recalculating the already settled amounts of customs duties. Thus, in a series of judgments the claimants’ claims were rejected (see, for example, judgments in cases nos.   826/12909/15 of 24   February   2016; 813/1915/15 of 7   July   2016; 815/441/17 of 23   October   2018; 813/6707/14 of 18   October 2019; and 815/6006/16 of 6   May   2020). In similar circumstances, however, there were cases in which the courts upheld the claimants’ right to amend customs declarations (see, for example, judgments in cases nos. 810/467/15 of 25 November 2015; 826/15842/13-a of 15   March   2016; 826/17492/13-a of 26   May   2016; 810/467/15 of 18   May 2017; 813/1046/15 of 28 August 2018; 813/8046/14 of 15   April 2021; and 813/1046/15 of 31   March 2023). 17 .     In parallel, domestic cassation courts developed case-law concerning the inability of taxpayers to amend the value of the imported goods and to claim a refund of the allegedly overpaid customs duties, save in the event of an error by customs officials (see, for example, judgments in cases nos.   21 ‑ 205a14 of 9 December 2014; and 21-324a14 of 7 July 2015). THE COURT’S ASSESSMENT 18.     The applicant company complained that the refusal by the domestic authorities to refund the overpaid amounts of VAT had breached Article 1 of Protocol No. 1 because domestic law and practice lacked consistency and clarity. Referring to the Court’s findings in S.A.   Dangeville v.   France (no.   36677/97, ECHR 2002-III), the applicant company asserted that it had at least had a legitimate proprietary interest in being able to obtain the refund of the overpaid VAT. 19.     The Government stated that the applicant company had not had a legitimate expectation of obtaining a refund of the allegedly overpaid tax within the meaning of Article   1 of Protocol   No.   1, as it had not been determined by law. They also asserted that there had been no interference with the applicant company’s possessions since the company itself had determined the applicable VAT rate. Conversely, they then argued that the interference had been lawful, proportionate and pursued a legitimate aim. 20.     The Court finds that it is not necessary to address all the Government’s objections, as the application is inadmissible for the following reasons. 21.     The applicant company’s complaint is limited to the question of whether the domestic authorities’ refusal to refund the allegedly overpaid tax was unlawful. It did not argue that this refusal had upset the fair balance that must be maintained between the demands of the public interest and the need to protect its rights (see, for example, “Bulves” AD v.   Bulgaria , no.   3991/03, §§   66 ‑ 70, 22   January   2009; Sierpiński v.   Poland , no.   38016/07, §   80, 3   November 2009; and S.A. Dangeville , cited above, §§ 59-61). 22.     In this regard, the Court considers it necessary to reiterate that in the tax sphere the States may be afforded some degree of additional deference and latitude in the exercise of their fiscal duties under the lawfulness test and that, in view of the complexity of the relevant field of regulation, corporate entities, as opposed to individual taxpayers, may be required to act with additional caution and diligence by consulting competent specialists in this sphere   (see OAO Neftyanaya Kompaniya Yukos v.   Russia , no.   14902/04, §   559, 20 September 2011). 23.     The Court further notes the contradictions within the applicant company’s submissions concerning the validity of its claim for a refund under domestic law. On the one hand, it argued that the domestic law governing the application of a reduced VAT rate lacked clarity, was not precise and was marred by divergent case-law. On the other hand, it asserted that Ukrainian law recognised its legitimate proprietary interest and expectation of being able to obtain a refund of the overpaid tax. The Court does not consider it necessary to resolve this inconsistency for the applicant company. It reiterates that in order to constitute a valid claim against the State for the tax paid in error and therefore to amount to a “possession” within the meaning of the first sentence of Article 1 of Protocol No. 1, it should, in particular, be based on a right expressly provided for either in domestic law or another source of law, such as, for instance, a “perfectly clear, precise and directly applicable” Community norm (see S.A. Dangeville , cited above, § 47, and Aon Conseil and Courtage S.A. and Christian de Clarens S.A. v. France , no. 70160/01, §   42, 25 January 2007). As the applicant company itself admitted, at the time when it lodged its claim for a refund with the authorities, the domestic legal provisions governing the application of the reduced VAT rate to “medical products” lacked the required clarity and therefore, in the Court’s view, they could hardly serve as a basis for “a claim which was sufficiently established to be enforceable” within the meaning of Article   1 of Protocol   No.   1 (see Gratzinger and Gratzingerova v.     the   Czech   Republic (dec.) [GC], no.   39794/98, § 74, ECHR 2002 ‑ VII). 24.     In addition, the Court cannot overlook the inconsistent nature of the applicant company’s submissions concerning the reasons for the alleged overpayment of the impugned tax. In the proceedings before the Court the applicant company blamed the customs authorities (see paragraph 2 above), whereas in the domestic proceedings it admitted that it had been a self ‑ inflicted error (see paragraph 5 above). Either way, it was the applicant company’s own decision to indicate a higher VAT rate in its customs declarations, and the Court finds no basis in the case file for holding the authorities accountable for that choice. 25.     The Court further reiterates that it has only limited power to deal with alleged errors of fact or law committed by the national courts, to which it falls in the first place to interpret and apply the domestic law (see   Kopecký v.   Slovakia [GC], no. 44912/98, § 56, ECHR 2004-IX). Having regard to the information before it, the Court finds no reason to conclude that the domestic courts’ decisions in the applicant company’s case, when viewed from the perspective of Article 1 of Protocol No. 1, were manifestly unreasonable or arbitrary. 26.     Even though the interpretation made by the domestic courts was unfavourable to the applicant company, the effects of such an interpretation, however unjust it might appear compared with the solutions adopted by the domestic courts in similar proceedings, cannot be regarded in itself as incompatible with the Convention (see and compare Petrescu and Others v.   Romania (dec.), no. 31390/18, § 71, 7 March 2023). 27.     It follows therefore that the applicant company’s complaint under Article 1 of Protocol No. 1 is manifestly ill ‑ founded and must be rejected in accordance with Article   35 §§   3 (a) and 4 of the Convention. For these reasons, the Court, unanimously, Declares the application inadmissible. Done in English and notified in writing on 23 January 2025.     Martina Keller   Armen Harutyunyan   Deputy Registrar   President