7
International scientific conference
Protection of the financial interests of the European Union of 25: new challenges, old obstacles
Sopot, Poland - March 16-19, 2006
Session 1
Protection of the financial interests of the European Union - the cooperation of today
Part I
Harmonisation of the measures in the field of theprotection of the financial interests of theCommunity: national perspectives
Panel discussion
Harmonisation of the criminal law with EU instruments with respect to the protection of the financial interests of the Community
The current legal framework
provided for by the Italian substantive criminal law
in regards to the protection of the financial interests
of the European Communities
with specific reference to the crime of contraband
by
Gabriele DONÀ[(]
Centre for Criminal Tax Law (Turin, Italy)
Introduction
In the light of the theme treated in this panel, I deem it useful to describe briefly the current Italian legal framework concerning penalties applicable to a particular crime defined in order to protect the financial interests of the European Communities, i.e. the crime of contraband.
Why do I want to discuss contraband? For a number of reasons:
First, it is a part of the theme of this panel.
In fact, we will see that the current legal framework concerning penalties provided for by the Italian criminal law is the result also of the implementation of legal tools adopted by the European Union, for instance the so-called P.I.F. Convention of 26 July 1995[1].
Second, because it is a topic that perhaps is not well known.
In fact, it appears that most of the debate on the subject of protecting the EC financial interests, at least in Italy, centres more on offences affecting the so-called “EC expenditure” (i.e., subventions, contributions, etc., provided for by the various European policies) or even, when looking at the area of the so-called “EC revenue”, on VAT related frauds, and finally on crimes such as money laundering and corruption.
These are undoubtedly important criminal issues but I think that the national provisions regarding penalties for customs laws violations are also very important and deserving of attention.
Third, for practical reasons.
In fact, the growing globalization of markets has caused huge increases in the volume of commercial traffic into the European Community; this naturally leads to a higher probability that customs frauds will be perpetrated.
Further, with the entry into the European Union of 10 new Member States in 2004, the EC customs border has moved further South and East.
It follows that these new Member States, which include Poland (our host today), should certainly be interested in this topic, because they are directly involved in the collection of customs duties, which constitute an important part of the revenue in the EC budget.
Hence the necessity to foster the mutual understanding of one another’s national laws in that area.
Legal framework
As is known, according to the Council Decision 2000/597/EC, Euratom of 29 September 2000 on the system of the European Communities’ own resources[2], in particular Article 2(1), “revenue” of the EC budget is listed as follows:
“1. Revenue from the following shall constitute own resources entered in the budget of the European Union:
(a) levies, premiums, additional or compensatory amounts, additional amounts or factors and other duties established or to be established by the institutions of the Communities in respect of trade with non-member countries within the framework of the common agricultural policy, and also contributions and other duties provided for within the framework of the common organisation of the markets in sugar;
(b) Common Customs Tariff duties and other duties established or to be established by the institutions of the Communities in respect of trade with non-member countries and customs duties on products coming under the Treaty establishing the European Coal and Steel Community;
…”.
Therefore, the system of the European Communities’ own resources is based in part on customs revenues (which we will refer to with the generic term of customs duties) the collection of which has been delegated to each Member State.
It is therefore immediate to conclude that actions to evade the payment of these duties affect negatively the EC budget.
In the Italian system, the criminal protection of the European Communities’ revenues from customs duties is covered by the norms of the Decree n. 43 of 23 January 1973 (hereinafter, t.u.l.d.).
In observance to the principle of assimilation, the same provisions that also protect Italy’s own financial interests related to imports protect the EC financial interests arising from customs.
Indeed, Article 34 t.u.l.d. explicitly includes among the “borders rights”, not only the “rights of monopoly, border duties and any other consumption tax to the benefit of the State” (which are part of Italy’s jurisdiction), but also the “import and export duties, levies and other taxes to import or export provided for by EC Regulations and its implementation provisions”.
Customs duties are therefore placed on an equal footing with national taxes and any conduct to evade the payment of them constitutes contraband.
As is known, goods of EC origin or originating from third Countries but which are in free circulation in the EC (because of customs duties having already been collected in another Member State) can no longer be object of contraband since no further customs duties are due.
Therefore, contraband as it regards EC financial interests can exist only for goods of origin outside the EC that have not yet been put into free circulation in the Community and the basis of this crime is the removal of goods from customs duties provided for by EC Regulations.
Offences
In Italy, the crime of contraband is described and provided for by Articles 282, 283, 284, 285, 286, 287, 288, 289, 290, 291, 292 t.u.l.d..
One of the characteristics of the crime of contraband is the large number of cases, deriving from the variety of hypotheses listed by the t.u.l.d..
Nevertheless, these hypotheses can be broadly subdivided into two groups plus a stand-alone special provision.
First, one can identify a group of hypotheses dealing with “movement of goods” which include a number of subcases depending on the place where the offence is committed; for instance, the following are listed: land borders, border lakes, seas, airspaces, etc. (Articles 282-286 and 288 t.u.l.d.).
A second group of hypotheses refers to particular conducts; for instance, the following are listed: the destination or intended use of the goods (imported with exemption or reduction of duties) are different from the one for which the exemption or the reduction have been granted; artificial manipulations of goods object of operations of re-import or of temporary re-export; etc. (Articles 287 and 289-291 t.u.l.d.).
Finally, a stand-alone special provision which does not require any particular conduct is applicable when the previous hypotheses do not apply (Article 292 t.u.l.d.).
At any rate, disregarding the above subdivision, one can certainly talk about the unitary character of contraband, since this offence always consists in the removal of goods from the payment of customs duties.
Article 293 t.u.l.d. deals instead with the attempt of contraband.
This provision states that, in case of attempt of contraband, is applicable the same penalty which is provided for in case of committed contraband.
As we can see, as far as the penalty is concerned, two actions with different affecting outcomes have been made equivalent; it is a legislative technique which is often used in laws that deal with finance and monetary issues.
We must however raise the question that this mandated equivalence may not conform to the general principles of EC law.
Indeed, one might ask whether the Court of Justice of the European Communities - if it were called to rule on whether the criminal penalties provided for by the Italian customs law abide with the principle of proportionality - would deem Article 293 t.u.l.d. compatible with this principle, since equal penalties are applied to conducts (crime committed vs crime attempted) whose consequences have had objectively different results.
Penalties
Sanctions provided for by the Italian legislation in case of contraband include both criminal penalties (pecuniary and custodial ones) and administrative penalties (fines only).
The current framework is the result also of some important legal changes which were introduced in 1999 and 2000.
The following acts are relevant:
- Decree n. 507 of 30 December 1999, which has partially de-penalized contraband;
- Law n. 300 of 29 September 2000, by which Italy has ratified the P.I.F Convention.
As is known, the objective of the P.I.F. Convention of 1995 was to introduce in each Member State a common definition of fraud affecting the EC financial interests and establish uniform criteria as it regards the penalties.
Indeed, Article 1 P.I.F., as it regards the revenue of the EC budget, defines fraud affecting the EC financial interests as follows:
“1. For the purposes of this Convention, fraud affecting the European Communities’ financial interests shall consist of:
…
(b) in respect of revenue, any intentional act or omission relating to:
- the use or presentation of false, incorrect or incomplete statements or documents, which has as its effect the illegal diminution of the resources of the general budget of the European Communities or budgets managed by, or on behalf of, the European Communities,
- non-disclosure of information in violation of a specific obligation, with the same effect,
- misapplication of a legally obtained benefit, with the same effect.[3]
2. Subject to Article 2 (2), each Member State shall take the necessary and appropriate measures to transpose paragraph 1 into their national criminal law in such a way that the conduct referred to therein constitutes criminal offences.[4]
…”.
This definition of fraud includes contraband since, as said above, customs duties are one of the European Communities’ own resources.
Article 2 P.I.F. states that each Member State has the obligation to:
“1…take the necessary measures to ensure that the conduct referred to in Article 1, and participating in, instigating, or attempting the conduct referred to in Article 1 (1), are punishable by effective, proportionate and dissuasive criminal penalties, including, at least in cases of serious fraud, penalties involving deprivation of liberty…, it being understood that serious fraud shall be considered to be fraud involving a minimum amount to be set in each Member State. This minimum amount may not be set at a sum exceeding ECU 50 000.
2. However in cases of minor fraud involving a total amount of less than ECU 4 000 and not involving particularly serious circumstances under its laws, a Member State may provide for penalties of a different type from those laid down in paragraph 1.
…”[5].
In actual fact, the Italian legislation already imposed severe pecuniary and custodial penalties.
Therefore, to conform fully to the P.I.F. Convention, Italy only had to establish administrative penalties for cases of minor fraud and stronger criminal penalties for cases of serious fraud.
Consequently, Italy has adopted:
- the Decree n. 507 of 30 December 1999, by which the new Article 295-bis has been inserted into the t.u.l.d.; this provision established a partial de-penalization of contraband, depending on the amount of customs duties due and the existence (or not) of aggravating circumstances;
- the Law n. 300 of 29 September 2000, by which a new paragraph (3) has been added to Article 295 t.u.l.d.; this provision provided for an aggravating circumstance in case of evasion of customs duties beyond a specific amount.
Let us examine now the legal framework concerning penalties.
With reference to the simple cases of contraband referred to in Articles 282, 283, 284, 285, 286, 287, 288, 289, 290, 291, 292 t.u.l.d., the pecuniary criminal penalty of no less than two times and no more than ten times the customs duties due applies.
Article 294 t.u.l.d. states the following:
“In the cases of contraband, where due to the author’s conduct it has not been possible to ascertain totally or partially the quality, the quantity and the value of the goods, the pecuniary criminal penalty up to [€ 516,46] applies instead of the proportional penalty.
At any rate, the penalty can be no less than the double of the customs duties due with reference to the quantity of goods that it has been possible to ascertain”.
Article 295 t.u.l.d., which is applicable if some defined aggravating circumstances are present, provides for an increase of the said pecuniary criminal penalties[6] (1) or even for the penalty of the deprivation of liberty[7] (2).
The above mentioned Article 295-bis t.u.l.d. (introduced in 1999) states the following:
“In the cases contemplated by Articles 282, 283, 284, 285, 286, 287, 288, 289, 290, 291, 292 and 294, if the amount of the customs duties due does not exceed [€ 3.999,96] and the circumstances indicated by Article 295(2) do not apply, instead of the criminal penalty provided for by those Articles, a pecuniary administrative penalty of no less than two times and no more than ten times the customs duties due shall be imposed. In the cases listed by Article 294, the administrative penalty can however be no less than [€ 516,46].
The administrative penalty can be increased up to half if the circumstance indicated by Article 295(1) applies.
…”.
Therefore, contraband has been only partially de-penalized: when customs duties due are less than € 3.999,96, the penalty will be of an administrative nature; whereas above such amount contraband is still considered a criminal offence.
However, the de-penalization applies only when the conduct corresponds to either the simple cases referred to in Articles 282, 283, 284, 285, 286, 287, 288, 289, 290, 291, 292 and 294 t.u.l.d or the aggravated case referred to in Article 295(1) t.u.l.d. - all normally punished with a pecuniary criminal penalty.
On the contrary, the aggravated cases listed by Article 295(2) t.u.l.d., which are also punished with the penalty of the deprivation of liberty, have been excluded from the de-penalization.
Therefore, in these cases, the conduct maintains its criminal character and it is irrelevant whether the customs duties due are less than € 3.999,96.
The reason for a specific amount listed as the upper limit for de-penalization arises from the necessity to conform to Article 2(2) of the P.I.F. Convention.