Information Note on the Court’s case-law No. 104

January 2008

Imbert de Tremiolles v. France - 25834/05

Decision 4.1.2008 [Section III]

Article 1 of Protocol No. 1

Article 1 para. 1 of Protocol No. 1

Peaceful enjoyment of possessions

Method of calculation of wealth tax combined with application of a ceiling such that liability did not exceed disposable income: inadmissible

In 1997 the applicants’ assets were subject to the wealth tax provided for in the General Tax Code. However, in a prior declaration presented to the director of the Inland Revenue Service, they challenged the lawfulness of the methods that made them subject to the wealth tax. They argued that the wealth tax plus all the other charges they had to pay amounted to more than their earnings from their assets. They submitted that although the wealth tax had been limited to 85% of their income, that ceiling was confiscatory and seriously undermined their financial situation, especially as the ceiling did not apply to their property taxes, which amounted to 30% of their total taxation, so that 85% was a completely unrealistic ceiling. Lastly, in the alternative, they maintained that those assets which had not produced any income should be exempted from the wealth tax. The Inland Revenue Service rejected their complaint and the applicants took the matter before the tribunal de grande instance , which found against them. The Court of Appeal dismissed their subsequent appeal and upheld the first-instance judgment. It held that the method of taxation, and in particular the ceiling applied, were not at variance with the reasoning behind the decisions of the Constitutional Council and were not confiscatory for the purposes of Article 1 of Protocol No. 1. The wealth tax was part of the taxation system as long as its modus operandi and the calculation method used were detailed in a Law that was not contrary to constitutional principles, its purpose was the evident one of being in the public interest to which all taxes contributed, and the proportionality between the means employed and the aim pursued could not be seriously contested in law, in particular the principle of the ceiling, striking a fair balance between the demands of the general interest and the protection of human rights. The applicants appealed to the Court of Casssation, which upheld the Court of Appeal’s judgment.

The applicants were again obliged, a few years later, to pay the wealth tax. They once again challenged the lawfulness of the way in which they had been subjected to this tax. The Inland Revenue Service rejected their complaint. The applicants took the matter before the tribunal de grande instance , which found against them. They did not appeal as the court had delivered its judgment in terms almost identical to those used by Court of Cassation in its decision concerning the payment of the wealth tax for 1997, so they considered that an appeal was unlikely to succeed.

Inadmissible under Article 1 of Protocol No. 1: Concerning the lawfulness of the interference with the right protected  by the first paragraph of that Article, the wealth tax, which had been introduced by a Finance Act, was payable by individuals whose net taxable assets exceeded a certain value. It had been introduced as a solidarity tax, to serve the public interest by financing part of the minimum welfare benefit. As to the requirement that the interference with the applicant’s right be proportionate to the general-interest aims pursued, the manner in which the legislation concerned was applied and, in particular, the tax ceiling and the assets taken into account to calculate it, lay within the margin of appreciation the States enjoyed in that area, in particular in implementing tax policy. First of all, the General Tax Code provided for a ceiling intended to ensure that persons subject to the wealth tax were not required to pay more than they earned. In the domestic courts the applicants had raised questions regarding the payment of taxes in excess of the ceiling of 85% of their income provided for in the General Tax Code and the notion of the reference income taken into account for tax purposes. The tax authorities who had calculated the taxes the applicants had to pay and the domestic courts which had examined their case, basing their decisions on the precise wording of the relevant Article of the General Tax Code, had considered that the reference income mentioned in the Article concerned was financial income (and not income in kind, such as usufruct, as the applicants had claimed), excluding housing tax and property tax, which were not income-based. Secondly, the courts to which the applicants had appealed had examined their situation in concreto . The Court of Appeal had found that the method of calculating the wealth tax, with its ceiling for one of the years concerned, had not generated wealth tax and income tax in excess of their income. The Court of First Instance had found that the applicants could not really claim that the wealth tax had actually caused their assets to diminish, as their own declarations showed that they had increased substantially from one year to the next. Accordingly, in view of the margin of appreciation which the States were afforded in this sphere, the payment of the tax in question had not affected the applicants’ financial situation seriously enough for the measure to be considered disproportionate or an abuse of a State’s right, acknowledged in Article 1 of Protocol No. 1, to secure the payment of taxes and other contributions: manifestly ill-founded .

© Council of Europe/European Court of Human Rights This summary by the Registry does not bind the Court.

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