THIRD SECTION

DECISION

Application no . 46184/16 P. 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 Article may be gauged from the fact that at a stage when the proposed text did not contain such explicit reference to taxes, it was already understood to reserve the States ’ power to pass whatever fiscal laws they considered desirable, provided always that measures in this field did not amount to arbitrary confiscation (see Gasus Dosier- und Fördertechnik , cited above, § 59; N.K.M. v. Hungary , no. 66529/11 , § 45, 14 May 2013; Gáll v. Hungary , no. 49570/11, § 44, 25 June 2013; R.Sz. v. Hungary , no. 41838/11, § 34, 2 July 2013; and Arnaud and Others v. France , nos. 36918/11 and 5 others, § 23, 15 January 2015).

2. Lawfulness and general interest

66. The applicant companies did not dispute that the high wages tax surcharge was “lawful” in the sense that it had a statutory basis and that it served the “general interest”. Their complaints focused on the proportionality of the measure.

3. Proportionality

(a) The applicant companies ’ complaints

67. The applicant companies stated that the introduction of the high wages tax surcharge had not been foreseeable before 25 May 2012 at the earliest, that being the date on which the Spring Memorandum was published (see paragraph 10 above). They submitted that the introduction of the surcharge had been inspired by purely budgetary motives; relying on Pressos Compania Naviera S.A. and Others v. Belgium , 20 November 1995, Series A no. 332, and Joubert v. France , no. 30345/05 , 23 July 2009, t hey argued that these provided no justification for retrospective intervention. As it was, the retrospective nature of the surcharge had made it impossible for the applicant companies to make provision in advance for the increase in their tax liabilities.

68. The measure had further been disproportionate in that it had not provided for an individual assessment of means. Even employers running a loss had been obliged to pay the surcharge. The third applicant in particular submitted that it had been introduced at a particularly difficult time, when it was already in financial difficulties and in danger of losing its licence to play professional football as a result.

69. The measure had affected only the 2.1% of employers in the Netherlands who paid wages of more than EUR 150,000 to at least one employee. The arbitrariness of this legislative choice was illustrated by the fact that the surcharge was levied not only from employers who paid such a wage on a structural basis, but also from employers who paid a basic wage that was lower but in 2012 paid additional incidental sums which lifted the total wages across that threshold. Alternative measures, which in the applicant companies ’ submission would have resulted in a fairer distribution of the burden, had not been considered. In particular, an additional tax bracket for incomes exceeding EUR 150,000 would have spread the load more evenly among all persons earning such high wages.

70. Finally, the impact of the measure on tax revenue had been minute. Total budgeted tax revenue (including social-security contributions) in 2013 had been EUR 235,427,000,000 (see paragraph 21 above); the intended contribution of the high wages tax surcharge, EUR 500,000, had thus come to only 0.2124%. Moreover, it had reduced the budget deficit by no more than 0.08% (see paragraph 22 above). The gains were accordingly disproportionate in relation to the impact on the applicant companies.

(b) Applicable principles

71. According to the Court ’ s well-established case-law, an interference, including one resulting from a measure to secure payment of taxes, must strike a “fair balance” between the demands of the general interest of the community and the requirements of the protection of the individual ’ s fundamental rights. The concern to achieve this balance is reflected in the structure of Article 1 as a whole, including the second paragraph: there must be a reasonable relationship of proportionality between the means employed and the aims pursued. Furthermore, in determining whether this requirement has been met, it is recognised that a Contracting State, not least when framing and implementing policies in the area of taxation, enjoys a wide margin of appreciation and the Court will respect the legislature ’ s assessment in such matters unless it is devoid of reasonable foundation (see, among many other authorities, National & Provincial Building Society, the Leeds Permanent Building Society and the Yorkshire Building Society , cited above, §§ 80-82; and M.A. and 34 Others (dec.), cited above).

(c) Relevant case-law on austerity measures

72. The Court notes at the outset that it has considered austerity measures, some of them highly intrusive, taken by Contracting Parties in response to the financial crisis that has beset Europe since 2008 on previous occasions and deemed them not to violate Article 1 of Protocol No. 1.

73. Some of the measures accepted by the Court have resulted in a temporary reduction of income for certain segments of the population. In 2010 Romania reduced public-sector wages by 25% for six months in order to balance the State budget (see Mihăieş and Senteş v. Romania (dec.), nos. 44232/11 and 44605/11, § 8, 6 December 2011). In 2012 Portugal reduced the holiday and Christmas allowances payable to certain categories of public-section pensioners whose monthly pensions were higher than EUR 600 and suspended them altogether for pensioners whose monthly pensions were higher than EUR 1,100, which in the cases of two applicants led to a reduction of pension payments approaching 11% (see Da Conceição Mateus and Santos Januário v. Portugal (dec.), nos. 62235/12 and 57725/12, 8 October 2013, passim ); the Portuguese budget deficit had risen steeply from 3.5% in 2008 to 10% in 2009 and 9% in 2010 ( ibid. ).

74. Others have taken the form of a temporary additional income tax. In 2013 Portugal subjected public-sector pensions to a solidarity contribution of 3,5% on a part corresponding to the first EUR 1,800 a month and 16% on the part exceeding it, which in the case before the Court reduced the applicant ’ s pension income by 4,6% (see Da Silva Carvalho Rico v. Portugal (dec.), no. 13341/14, § 12, 1 September 2015).

75. Others still have resulted in a permanent or semi-permanent reduction of income for certain segments of the population. In 2010 Romania abolished a number of special pension regimes applicable to particular categories of retired public-sector employees, resulting in the case of five applicants in a diminution of their pensions by approximately 70% (see Frimu and Others v. Romania (dec.), nos. 45312/11 and 4 others, § 5, 7 February 2012). Also in 2010 Greece reduced public-sector wages with retroactive effect by percentages ranging from 12% to 30%, further reducing them later that year by an additional 8%, and reduced holiday and Christmas allowances for higher-earning public-sector employees (see Koufaki and Adedy v. Greece (dec.), nos. 57665/12 and 57657/12, 7 May 2013, passim ); the budget deficit at that time was 12.7% of gross domestic product and the government debt was 120% of gross domestic product ( ibid. , § 17).

76. Yet further measures have resulted in a reduction of individuals ’ assets. Thus, in a measure that has come to be known as the “haircut”, individual private investors have had to accept the outcome of negotiations between the International Monetary Fund, the euro zone Governments and the European Central Bank on the one hand and institutional investors – banks, hedge funds – on the other resulting in the compulsory exchange of Greek Government bonds held by them for replacement bonds with a nominal value 53.5% lower, reduced yield rates and much delayed redemption dates (see Mamatas and Others v. Greece , nos. 63066/14 and 2 others, §§ 22 and 48-51, 21 July 2016).

(d) The present cases

77. The Court notes the following features of the high wages tax surcharge in issue in the present cases.

78. The Resolution of the European Council on the Stability and Growth Pact (see paragraph 53 above) and Article 126 TFEU (see paragraph 54 above) commit the European Union Member States to avoid excessive government budget deficits and correct any that occur. Article 1 of Protocol (No. 12) to the Treaty on the Functioning of the European Union (Protocol on the excessive deficit procedure) limits permissible deficits to 3 % for the ratio of the planned or actual government deficit to gross domestic product at market prices and 60 % for the ratio of government debt to gross domestic product at market prices (see paragraph 55 above).

79. In the Spring Memorandum of 25 May 2012 (see paragraph 10 above) the Government recognised the likelihood that its deficits would exceed the permitted limits and the danger that they would continue to rise to unsustainable levels (see paragraph 14 above). The Government budget for 2013 included countervailing measures (see paragraph 21 above).

80. Those countervailing measures were the result of an encompassing political agreement reached beforehand (see paragraph 7 above). Intended to spread the burden equitably across the domestic economy, they included – in addition to a “crisis levy” – 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; and structural tax increases, including higher 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 the latter increase going towards financing a reduction of the income tax for low-income households) and doubling the tax payable by banks on unsecured debt.

81. The “crisis levy”, which eventually was implemented in the form of the high wages tax surcharge here in issue, was intended from the outset to be a temporary measure and was discontinued after 2014. It was levied from employers who in the previous year had paid one or more employees wages in excess of EUR 150,000. Its amount was 16% of the excess.

82. There can be no doubt that the Netherlands were entitled in principle to take far-reaching measures to bring its economy back into line with its international obligations, as indeed were the other Member States whose measures – some of which continue to affect the financial position of entire segments of their societies to the present day – have been the object of applications to the Court. This entitlement is however subject to the proviso that no “individual and excessive burden” be imposed on any person.

83. It is the applicant companies ’ case that “individual and excessive burdens” were placed on them. The Court now turns to the detail of their complaints.

i. Retrospectivity

84. The Court accepts that the surcharge had retrospective effects. It observes, however, that retrospective tax legislation is not as such prohibited by Article 1 of Protocol No. 1. It has accepted that the public interest may override the interest of the individual in knowing his or her tax liabilities in advance, provided that there are specific and compelling reasons for this. Thus, in National & Provincial Building Society, Leeds Permanent Building Society and Yorkshire Building Society , cited above, § 81, the Court found that the retrospective enactment of legislation designed to deny private entities a windfall resulting from a changeover to a new tax regime beset with inadvertent defects did not constitute a violation. In M.A. and 34 Others (dec.), cited above, the Court accepted as legitimate retrospective legislation aimed at pre-empting the unintended application of a more favourable tax rate to gains resulting from the exercise of stock options acquired under employers ’ stock options incentive programmes before the due date originally set. In Huitson v. the United Kingdom (dec.), no. 50131/12, §§ 28-31, 13 January 2015, the Court held that the United Kingdom was entitled to legislate retroactively in order to prevent the applicant from misusing the double taxation treaty between it and the Isle of Man in such a way as to reduce his effective income tax rate to a very low percentage, cutting his expenses and securing for him an unfair advantage over commercial competitors. The case of Di Belmonte v. Italy (No. 2) (dec.), no. 72665/01, 3 June 2004 differs from the other cases mentioned in that the retrospectivity of the tax legislation in issue was deemed not disproportionate not because of the aim pursued by the measure, but because of the brevity of the time that had passed between the taxable event – the fact of a judgment awarding the applicant payment of compensation for expropriated property becoming final – and the entry into force of the legislation in issue (twenty days) and also because of the relatively limited financial impact of the tax in issue (20% of the value of the property).

85. As to measures taken by Contracting States to combat the financial crisis, the Court notes that retrospectivity was also a feature of the reduction of public-sector wages in issue in Koufaki and Adedy (see paragraph 75 above) and the “haircut” complained of in Mamatas and Others (see paragraph 76).

86. The Pressos Compania Naviera S.A. and Others and Joubert judgments, relied on by the applicant companies, are inapposite in that they concern legislative intervention in pending judicial proceedings not retroactive tax legislation.

87. The present cases are also distinguishable from N.K.M. v. Hungary , Gáll and R.Sz. v. Hungary , all cited above, in which Article 1 of Protocol No. 1 was found to have been violated because the retrospective imposition of a tax ostensibly introduced in pursuit of social justice deprived the applicants of the greater part of a severance allowance that constituted a statutorily guaranteed, acquired right serving the special social interest of reintegration into the labour market (see N.K.M. v. Hungary , § 75; Gáll , § 74; and R.Sz. v. Hungary , § 61).

88. Finally, it cannot be considered that the considerations that guided the legislature of the Netherlands in acting as it did were “merely budgetary”: in common with Greece, Portugal and other Member States of the European Union, the Netherlands was concerned to meet its obligations under European Union law without delay, in circumstances aggravated by a financial and economic crisis of a magnitude seldom seen in peacetime.

ii. The alleged lack of an individual assessment of means

89. The first two applicant companies, P. Plaisier B.V. and D.E.M. Management Services B.V., are both financial holding companies employing only one person who is their sole shareholder (see paragraphs 24 and 32 respectively). Neither claimed to have suffered any disproportionate loss as a result of the high wages tax surcharge, or suggested that an individual assessment of whether they had the means to pay it would have made any difference to them.

90. The third applicant, Feyenoord Rotterdam N.V., a professional club football employer many of whose players were paid high wages, did claim that the surcharge had endangered its standing as a professional club football employer. However, it was able to obtain outside funding sufficient to resolve its difficulties (see paragraph 43 above).

iii. The proportion of taxpayers affected

9 2 . The Court is not disposed to doubt that employers who could afford a payroll comprising employees to whom they paid more than EUR 150,000 per annum were relatively few in number in the Netherlands and that accordingly the high wages tax surcharge affected only a small proportion of taxpayers. It must be acknowledged that the Netherlands legislature had other choices available, such as the introduction of an additional tax bracket applicable to all taxpayers earning income in excess of a certain sum.

93 . It appears however from the drafting history of section 32db of the Wages (Tax Deduction) Act 1964 (see paragraph 18 above) that the possibility of introducing an additional tax bracket, which would have brought highly-paid employees, self-employed workers with high incomes and the independently wealthy within the scope of the measure, was considered but rejected. In view of the reasons given – namely, the temporary nature of the measure and the expected increased difficulty of attracting new businesses – that choice cannot, in the Court ’ s opinion, be dismissed as devoid of reasonable foundation.

iv. The disproportionate impact of the measure as compared to actual revenue

94 . In Mamatas and Others , the applicants argued as the present applicant companies did that the positive effect of the measure to which they had been subjected – to wit, the inclusion of private investors in the “haircut” despite their having had no voice in the negotiations, unlike institutional investors – had been minimal. They argued that the reduction of Greece ’ s public debt had been no greater than 0.7 to 0.8%; in contrast, the corresponding loss to small savers like themselves, and the social problems thereby caused, had been excessive (see § 75 of the judgment). For its part, the Court held that the involvement of the applicants in the “haircut” had been an unavoidable part of the restructuring of Greece ’ s public debt and for that reason appropriate and necessary (see paragraphs 115-116).

9 5 . Taking a different perspective, the Court notes that the contribution of the revenue expected to be created by the high wages tax surcharge to the reduction of the budget deficit for 2013 (namely EUR 500 million out of EUR 12,4 billion – see paragraphs 8 and 16 above) was in excess of 4%, a proportion which the Court is not disposed to dismiss as insignificant.

9 6 . Moreover, even though in percentage terms the positive effect of the measure in issue in the present cases may well have been of a similar order of greatness when set off against the total Government debt, it does not appear that its individual impact on the present applicant companies was anything like as dramatic as that of the “haircut” on private investors holding Greek Government bonds. Also for that reason it is not possible for the Court to find that the harm done by the measure was disproportionate in relation to its benefits.

9 7 . Finally and more generally, the Court cannot accept the applicant ’ s argument that the legislative interference in issue affected so few taxpayers that its impact on the State budget was minimal, and that other measures would have resulted in more meaningful revenue. In this connection it reiterates that, provided that the legislature chose a method that could be regarded as reasonable and suited to achieving the legitimate aim being pursued, it is not for the Court to say whether the legislation represented the best solution for dealing with the problem or whether the legislative discretion should have been exercised in another way (see James and Others , cited above, § 51).

(e) Conclusion

98 . Taking into account the margin of appreciation which States have in taxation matters, the Court considers that the measure taken by the respondent Contracting Party did not upset the balance which must be struck between the demands of public interest and the protection of the applicant companies ’ rights. It follows that this part of the application is manifestly ill-founded and must be rejected in accordance with Article 35 §§ 3 (a) and 4 of the Convention.

C. Complaints under Article 14 of the Convention taken together with Article 1 of Protocol No. 1

99 . The applicant companies complained of discrimination as compared to employers who paid no employees wages higher than EUR 150,000. They also claimed to have been discriminated against as compared to employers who had employed a person for only part of 2012, even though that person ’ s total wages including those paid by a different employer might total more than EUR 150,000, and as compared to taxpayers who were not employers.

100 . Article 14 of the Convention provides as follows:

“The enjoyment of the rights and freedoms set forth in [the] Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.”

101 . The Court notes that this complaint, in essence, coincides with the complaint that the high wages tax surcharge affected only a very small group of employers. It considers that this complaint is already adequately addressed by what it has held under Article 1 of Protocol No. 1 taken alone (see paragraphs 9 2 and 9 3 above).

102 . Accordingly, this complaint is likewise 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,

Decides to join the applications;

Declares the applications inadmissible.

Done in English and notified in writing on 7 December 2017 .

FatoÅŸ Aracı Helena Jäderblom              Deputy Registrar President

APPENDIX

List of Applications

1. 46184/16 P. Plaisier B.V. v. the Netherlands

2. 47789/16 D.E.M. Management Services B.V. v. the Netherlands

3. 19958/17 Feyenoord Rotterdam N.V. v. the Netherlands