**DISSENTING OPINION**
**of Judge of the Constitutional Court of Ukraine Vasyl Lemak**
Regarding the Decision of the Constitutional Court of Ukraine in the case upon the constitutional complaint of “ANDRITZ HYDRO GmbH” regarding the constitutionality of certain provisions of the Tax Code of Ukraine concerning the protection of taxpayers’ rights.
By this Decision, the Constitutional Court of Ukraine (hereinafter – the Court) declared constitutional paragraph two of subparagraph 120-1.1 of Article 120-1 of the Tax Code of Ukraine (hereinafter – the Code).
I do not agree with such a Decision of the Court for the following reasons.
1. The subject of consideration by the Court in this case was the issue of compliance with the Constitution of Ukraine (hereinafter – the Constitution) of paragraph two of subparagraph 120-1.1 of Article 120-1 of the Code, which stipulates that the absence of registration of a tax invoice and/or adjustment calculation(s) to it in the Unified Register of Tax Invoices by the deadline stipulated in Article 201 of the Code entails the imposition of a fine on the taxpayer – VAT payer in the amount of 50 percent of the amount of VAT specified in such a tax invoice and/or adjustment calculation(s).
The subject of the constitutional complaint was the applicant’s claim that the specified provision of the Code does not comply with Articles 8, 41, 61, 62, 64 of the Constitution, since the specified sanction for a tax offense, according to the applicant, is disproportionate to the possible negative consequences of such an offense, and also due to the fact that the Code does not provide for mandatory proof of the taxpayer’s guilt.
2. In its Decision, the Court stated that the disputed provision of the Code “does not establish an excessive burden on the VAT payer in the form of a fine for non-registration of a tax invoice in a timely manner,” and also indicated that “the Code does not provide for cases where the VAT payer is not guilty.”
I cannot agree with such conclusions of the Court, since they do not take into account the following.
2.1. In its case law, the Court has repeatedly stated that tax legislation must comply with the requirements of fairness and proportionality; the legislator is obliged to respect the principle of proportionality, ensuring a fair balance between the requirements of the public interest and the protection of individual rights (paragraph 4.1 of the Decision of the Court of October 11, 2005 No. 8-rp/2005; paragraph 5.1 of the Decision of the Court of April 6, 2016 No. 11-rp/2016).
The Court has also repeatedly stated that the application of sanctions, which in their nature are close to criminal penalties, requires compliance with all constitutional guarantees provided for in Article 62 of the Constitution, including the principle of presumption of innocence (paragraph 3.1 of the Decision of the Court of May 30, 2001 No. 7-rp/2001; paragraph 2.2 of the Decision of the Court of April 25, 2012 No. 11-rp/2012).
It is obvious that the disputed fine, in the amount of 50 percent of the VAT amount specified in the tax invoice, has all the features of a criminal penalty.
2.2. The Code does not in all cases provide for the mandatory establishment of the taxpayer’s guilt. In particular, Article 109 of the Code, which lists the types of tax offenses, does not contain such a concept as guilt. At the same time, Article 110 of the Code, which discloses the concept of guilt in the context of tax offenses, defines guilt only in the form of intent or negligence. At the same time, the Code does not provide for cases of absence of guilt, such as force majeure or other circumstances beyond the taxpayer’s control.
Thus, the Code does not comply with the requirements of the Constitution regarding the presumption of innocence, as it does not provide for cases where the taxpayer is not guilty, and also does not guarantee the taxpayer the right to prove his innocence.
3. Taking into account the above, I believe that the Court should have declared the disputed provision of the Code unconstitutional.
4. The only thing that prevented the Court from making such a decision was the limited subject of constitutional control (only one provision of the Code was disputed) and the need to reach a compromise in a collegial body.
At the same time, I believe that this Decision of the Court, even in the part where the disputed provision of the Code is declared constitutional, is of great importance, since the reasoning part of the Decision contains a number of important legal positions that should be taken into account by the courts when considering similar cases.
In particular, the Court emphasized that in cases involving sanctions that in their nature are close to criminal penalties, all constitutional guarantees provided for in Article 62 of the Constitution must be observed. The Court also emphasized the need for individualization of legal liability and the presumption of innocence when applying sanctions to taxpayers.
In my opinion, the specified legal positions of the Court can be used by taxpayers to review court decisions in connection with exceptional circumstances.
