Communicated on 13 January 2021 Published on 1 February 2021

FIFTH SECTION

Application no. 68447/12 Dmytro Oleksandrovych DOVBYSHEV against Ukraine lodged on 9 October 2012

STATEMENT OF FACTS

The applicant, Mr Dmytro Oleksandrovych Dovbyshev , is a Ukrainian national, who was born in 1978 and lives in Chornomorsk .

The facts of the case, as submitted by the applicant, may be summarised as follows.

In 2003 the applicant started a gambling business. He obtained licences of a sixty-month duration ( торгові патенти ), issued in respect of each gambling machine and a bookmaker ’ s office. The annual rates for gambling licences were provided for by law, notably in the Licencing of Certain Kinds of Entrepreneurial Activities Act (“the Licencing Law”). By the end of 2003 the rates, however, were increased by the Ukrainian Parliament when adopting the State Budget Act for the following year. By the end of 2004 those rates were increased again by the State Budget Act for the following year.

The applicant was therefore requested by the tax authorities to pay the difference each time the rates were increased. The applicant complied but in 2006 he closed his gambling business owing to the licence fee increases.

In May 2007 the applicant lodged a claim against the local authorities, submitting that the licence fees had been increased in an unlawful and unpredictable way and seeking a refund for the extra payments made at their request.

On 24 July 2007 the Odessa Regional Commercial Court found for the applicant and ordered the local authorities to return the difference which had been requested from him as a result of the increasing rates. The court stated that the Taxation System Act included the gambling licence fee in the list of national taxes. According to section 7 § 2 of the Taxation System Act, the rates of taxes could not be changed by the State Budget Acts. However, in 2004 and 2005 the rates for the gambling licence fee had been increased precisely by the State Budget Acts adopted on 27 November 2003 and 23 December 2004, respectively. Moreover, section 27 § 3 of the Budget Code provided that any law affecting income or expenses of the public budgets had to be published before 15 August of the preceding year, otherwise its effect had to be deferred for one year. Based on these provisions of domestic law, the court concluded that the applicant had not been obliged to pay the fees that had been increased on the basis of the State Budget Acts.

On 27 May 2009 the Odessa Administrative Court of Appeal quashed the above decision and dismissed the applicant ’ s claim as unfounded. It reasoned that the State Budget Acts for the years of 2004 and 2005 had been valid law and , in particular, there had been no ruling of the Constitutional Court declaring the relevant provisions unconstitutional. In the opinion of the appellate court, the rules of the State Budget Acts prevailed over the rules cited by the first-instance court. Moreover, given that the applicant had not made full advance payment for the whole duration of the gambling licences, he could not benefit from the special guarantee provided for in section 5 § 5 of the Licencing Law entitling certain licence holders to retain the original rate.

On 19 April 2012 the Higher Administrative Court dismissed the applicant ’ s appeal on points of law as unfounded.

Section 27 § 3 of the Budget Code provided that any law affecting income or expenses of the public budgets had to be published before 15 August of the preceding year, otherwise its effect had to be deferred for one year.

According to its preamble, the Taxation System Act determined the fundamental principles of the taxation system in Ukraine, taxes, customs and other mandatory payments to budgets and state trust funds, as well as the rights, obligations and responsibilities of the taxpayer.

Section 7 § 2 of the Act provided that changes in tax rates and the mechanism for collecting taxes, customs and other mandatory payments could not be introduced by the State Budget Act for the relevant year.

According to section 14 of the Act, the fees for the gambling licences were included in the list of national taxes, customs and other mandatory payments.

The Act provided that the duration of the gambling licence was sixty months (section 5 § 4). The gambling licence fee had to be paid every quarter until the 15th day of the month which preceded the reporting quarter. However, the licence holder could make an advance payment for the entire period of the validity of licence. In that case, the licence holder was released from the obligation to make additional payment in the event the licence rate was subsequently increased (section 5 § 5).

Section 4.4.1 of the Act provided that if the norm of the law or another normative legal act issued on the basis of the law, or if the norms of different laws or normative legal acts offered ambiguous or multiple interpretations of the rights and obligations of taxpayers and supervising authorities, the decision taken should be in favour of the taxpayer.

COMPLAINT

The applicant complains under Article 1 of Protocol No. 1 to the Convention that the increase of the gambling licence fees was unforeseeable and contrary to the principle of legal certainty.

QUESTIONS TO THE PARTIES

Has there been a violation of Article 1 of Protocol No. 1 with regard to the increase of the licence fees which the applicant was required to pay? Was the interference lawful? Was it based on legal provisions foreseeable in their application? Did the interference with the applicant ’ s property rights impose an excessive individual burden on the applicant?