20919/92

 AS TO THE ADMISSIBILITY OF Application No. 20919/92 by E. L., R. L. and J. O.-L. against Switzerland The European Commission of Human Rights sitting in private on 16 October 1995, the following members being present: MM. H. DANELIUS, Acting President S. TRECHSEL C.L. ROZAKIS E. BUSUTTIL A.S. GÖZÜBÜYÜK A. WEITZEL J.-C. SOYER H.G. SCHERMERS Mrs. G.H. THUNE Mr. F. MARTINEZ Mrs. J. LIDDY MM. L. LOUCAIDES J.-C. GEUS M.P. PELLONPÄÄ G.B. REFFI M.A. NOWICKI I. CABRAL BARRETO B. CONFORTI N. BRATZA I. BÉKÉS J. MUCHA E. KONSTANTINOV G. RESS A. PERENIC C. BÎRSAN P. LORENZEN K. HERNDL Mr. H.C. KRÜGER, Secretary to the Commission Having regard to Article 25 of the Convention for the Protection of Human Rights and Fundamental Freedoms; Having regard to the application introduced on 29 October 1992 by E. L., R. L. and J. O.-L. against Switzerland and registered on 6 November 1992 under file No. 20919/92; Having regard to : - the reports provided for in Rule 47 of the Rules of Procedure of the Commission; - the observations submitted by the respondent Government on 15 November 1994 and the observations in reply submitted by the applicants on 10 and 11 January, 10 February and 14 June 1995; Having deliberated; Decides as follows: THE FACTS The facts of the case, as submitted by the parties, may be summarised as follows. The applicants, Swiss citizens, are the heirs of Mr. L. who died on 7 October 1985. The first applicant, a housewife born in 1922 and residing at Sarnen, is L.'s widow. The second applicant, a businessman born in 1951 and residing at Sarnen, and the third applicant, a housewife born in 1956 and residing at Ennetmoos, are the children of L. In the proceedings before the Commission, they are represented by Mr. R. Küchler, a lawyer practising in Lucerne. Particular circumstances of the case L. was the proprietor of a mail-order company. It appears that he had not reported to the tax authorities certain monies earned in Germany. Following the advice of a tax adviser, he informed the Sarnen Municipal Tax Office (Gemeindesteueramt) on 21 December 1984 thereof, namely that he had not declared the amount of 270,000 SFr. After the applicant's death on 7 October 1985 the Tax Administration (Steuerverwaltung) of the Canton of Obwalden informed the first applicant on 29 October 1985 of the institution of tax and criminal tax proceedings. On 7 January 1986 the period expired during which the applicant's heirs could have refused the heritage (see below, Relevant domestic law). On 18 August 1990 the Tax Administration found that L. had committed tax evasion and ordered the applicants as heirs to pay taxes of 13,227.90 SFr and a fine of 38,069.60 SFr. On 19 December 1989 the Cantonal Tax Appeals Board (Steuerrekurs- kommission) of the Canton of Obwalden partly upheld the applicants' appeal and reduced the taxes due to 1,481.30 SFr and the fine to 630.90 SFr. The Appeals Board considered in particular that there were no indications that the amount at issue had arisen from evaded monies. The Appeals Board further found that the Tax Administration had not sufficiently expressed itself on L.'s guilt. However, it did not refer the case back for renewed decision, finding that the applicants had had sufficient opportunity to state their views before the Appeals Board itself. In respect of the liability of heirs the Appeals Board referred to Section 130 para. 1 of the Ordinance on Federal Taxes (Beschluss über die direkte Bundessteuer; see below, Relevant domestic law). The Federal Tax Administration (Eidgenössische Steuerverwaltung) then filed an administrative law appeal (Verwaltungsgerichtsbeschwerde) which the Federal Court (Bundesgericht) upheld on 22 May 1992. In the Federal Court's opinion, the Appeals Board had incorrectly distributed the burden of proof, as it fell to the taxpayer to prove that any increase of fortune did not result from undeclared income. The Court concluded that L. had deliberately evaded the entire amount of 270,000 SFr and that L.'s heirs were liable to pay the incurred fine, irrespective of their personal guilt. Insofar as the applicants maintained that the imposition of the fine breached Article 6 para. 2 of the Convention, the Court referred to its case-law according to which the fine concerned the deceased, not the heirs, the latter merely being liable in respect of their part of their inheritance which they were free to refuse. A further confirmation of this could be seen in the fact that the amount of the fine was determined according to the culpability of the deceased. As a result, the Federal Court imposed taxes on the applicants to the amount of 29,470.10 SFr and ordered the Appeals Board again to determine the fine. On 4 February 1993 the Cantonal Appeals Board imposed a fine of 14,678.80 SFr on the applicants. The applicants then filed an administrative law appeal with the Federal Court in which they complained of the amount imposed. On 9 January 1994, the Federal Court upheld the applicants' administrative law appeal and referred the case back to the Cantonal Appeals Board. On 24 July 1995 the Cantonal Tax Appeals Board imposed a fine of 5,513.80 SFr on the applicants. No further appeal was fined against this decision. Relevant domestic law I. According to Section 48 para. 3 of the Swiss Penal Code (Strafgesetzbuch), a fine is extinguished if the convicted person dies (stirbt der Verurteilte, so fällt die Busse weg). II. Section 130 para. 1 of the Ordinance on Direct Federal Taxes (Beschluss über die direkte Bundessteuer) provides inter alia:

"If the evasion is discovered only after the death of the person liable to pay taxes, proceedings are instituted and carried out against his heirs. Irrespective of personal guilt, these will be jointly liable for the deceased person's evaded taxes and the fine incurred by him up to an amount not exceeding their share in the estate."

"Wird die Hinterziehung erst nach dem Tode des Steuerpflichtigen entdeckt, so wird das Verfahren gegenüber seinen Erben angehoben und durchgeführt, und diese haften bis zur Höhe ihrer Erbteile solidarisch für die vom Erblasser hinterzogene Steuer und die von ihm verwirkten Bussen ohne Rücksicht auf ein eigenes Verschulden." III. Section 560 para. 4 of the Swiss Civil Code (Zivilgesetzbuch) provides that, upon inheriting the estate, "the debts of the deceased person shall become the personal debts of the heirs" ("die Schulden des Erblassers werden zu persönlichen Schulden der Erben"). According to Section 566 para. 1 of the Swiss Civil Code, "the legal and instituted heirs have the possibility to refuse the inheritance which has fallen to them" ("die gesetzlichen und eingesetzten Erben haben die Befugnis, die Erbschaft, die ihnen zugefallen ist, auszuschlagen"). COMPLAINTS The applicants complain under Article 6 para. 2 of the Convention that they have been convicted of an offence which they did not commit and irrespective of any personal guilt. The applicants submit that in fact the proceedings were carried out against them and not the deceased. For instance, if the heirs voluntarily report the tax evasion of the deceased to the tax authorities, the fine will be reduced by one quarter. PROCEEDINGS BEFORE THE COMMISSION The application was introduced on 29 October 1992 and registered on 6 November 1992. On 5 September 1994 the Commission decided to communicate the application to the respondent Government, pursuant to Rule 48 para. 2 (b) of the Rules of Procedure. The Government's written observations were submitted on 15 November 1994. The applicants replied on 10 and 11 January 1995 and 10 February 1995. They submitted further observations on 14 June 1995. THE LAW The applicants complain under Article 6 para. 2 (Art. 6-2) of the Convention that they have been convicted of an offence irrespective of any personal guilt. According to Article 6 para. 2 (Art. 6-2) of the Convention, "everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law". The Government contest, with reference to the decision of the Federal Court, that the applicants were charged with a criminal offence. It is submitted that the proceedings at issue established the guilt of the deceased, not of the applicants. Furthermore, according to Section 566 of the Swiss Civil Code, the applicants were not obliged to accept the inheritance. Indeed, the applicants only become liable to the extent that they have inherited, and not in respect of the entire estate. Finally, the names of the heirs assuming the deceased's fine will not be listed in the criminal register. The Government point out that under Swiss law the estate has no legal personality and that the heirs, as it were, represent the deceased in proceedings where only the latter, not the heirs, is the accused. By envisaging the responsibility of the heirs, the law aims at discouraging a person from withdrawing taxes during his lifetime. In the present case, the guilt of the deceased was established. In the applicants' opinion, the Government are begging the question when they invoke the decision of the Federal Court to substantiate their views. In fact, it transpires from the case-law of the Federal Court that criminal tax proceedings clearly fall under the guarantees of Article 6 (Art. 6) of the Convention, and that the statutory provisions on the punishment of tax evasion clearly constitute criminal provisions. The applicants find it difficult to understand why a different solution should apply in the case of proceedings instituted against the heirs of a person who evaded taxes. It is not possible merely to charge the estate but not the heirs. Even if it is assumed that the deceased was culpable (schuldhaft), such culpability cannot be transposed on the heirs. The applicants refer to various Swiss authors according to which the liability of heirs for tax fines of the deceased clearly breaches the presumption of innocence enshrined in Article 6 para. 2 (Art. 6-2) of the Convention. This view is also maintained by certain cantonal courts. Having examined these complaints the Commission finds that they raise serious questions of fact and law which are of such complexity that their determination should depend on an examination of the merits. The application cannot, therefore, be regarded as being manifestly ill- founded within the meaning of Article 27 para. 2 (Art. 27-2) of the Convention, and no other ground for declaring it inadmissible has been established. For these reasons, the Commission, unanimously, DECLARES THE APPLICATION ADMISSIBLE, without prejudging the merits of the case. Secretary to the Commission Acting President of the Commission (H.C. KRÜGER) (H. DANELIUS)