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ECtHR / Application no. 66529/11 / Judgment

N.K.M. v. Hungary
Policy area
Taxation
Deciding body type
European Court of Human Rights
Deciding body
Court (Second Section)
Type
Decision
Decision date
14/05/2013
ECLI (European case law identifier)
ECLI:CE:ECHR:2013:0514JUD006652911

Χάρτης των Θεμελιωδών Δικαιωμάτων της Ευρωπαϊκής Ένωσης

Title IV: Solidarity

Article 34 - Social security and social assistance

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  • ECtHR / Application no. 66529/11 / Judgment
    Key facts of the case:
     

    1) The case originated in an application (no. 66529/11)  against the Republic of Hungary lodged with the Court under Article 34 of the Convention for the Protection of Human Rights and Fundamental Freedoms (“the Convention”) by a Hungarian national, Ms N.K.M. (“the applicant”), on 19 October 2011. The President of the Section acceded to the applicant’s request not to have her name disclosed (Rule 47 § 3 of the Rules of Court).

    ...

    3) The applicant complained under Article 1 of Protocol No. 1 – read alone and in conjunction with Article 13 – that the imposition of a 98% tax on the upper bracket of her severance constituted an unjustified deprivation of property, or else taxation at an excessively disproportionate rate, with no remedy available.
    Moreover, she argued under Article 8 that the legal presumption of the impugned revenues contravening good morals amounted to an interference with her right to a good reputation.
    She finally asserted that Article 14 of the Convention read in conjunction Article 1 of Protocol No. 1 had been violated because only those dismissed from the public sector were subjected to the tax and because a preferential threshold was applicable to only a group of those concerned.
     
    ...

    6) The applicant, civil servant for thirty years, had been in the service of a government ministry. On 27 May 2011 she was dismissed, with effect from 28 July 2011. Her dismissal was part of a wave of similar measures throughout the entire civil service.

    7) On dismissal, the applicant was statutorily entitled to two months’ salary for June and July 2011 during which time she was exempted from working. In addition, she was to receive severance pay amounting to eight months’ salary in application of section 19(2) g) of Act no. XXIII of 1992 on the Status of Civil Servants, as well as to an unspecified sum corresponding to unused leave of absence.
    These benefits – in so far as they did not represent compensation for unused 2011 leave of absence – were subsequently taxed at 98% in their part exceeding 3.5 million Hungarian forints (HUF)[1]. The exceeding part was HUF 2.4 million[2]. This represented an overall tax burden of approximately 52% on the entirety of the severance, as opposed to the general personal income tax rate of 16% in the relevant period.
    The tax amount in question was never disbursed to the applicant, but was withheld by the employer and directly transferred to the tax authority.
     
    Outcome of the case:
     
    For these reasons, the Court unanimously
    1. Declares the complaints concerning Article 1 of Protocol No. 1, read alone and in conjunction with Articles 13 and 14 of the Convention, admissible and the remainder of the application inadmissible;
    2. Holds that there has been a violation of Article 1 of Protocol No. 1;
    3. Holds that there is no need to examine separately the complaint under Article 1 of Protocol No. 1 read in conjunction with Article 13 of the Convention;
    4. Holds that there is no need to examine separately the complaint under Article 1 of Protocol No. 1 read in conjunction with Article 14 of the Convention;
    5. Holds
    (a)  that the respondent State is to pay the applicant, within three months from the date on which the judgment becomes final in accordance with Article 44 § 2 of the Convention, the following amounts, to be converted into the currency of the respondent State at the rate applicable at the date of settlement:
     
    (i)  EUR 11,000 (eleven thousand euros), plus any tax that may be chargeable, in respect of pecuniary and non-pecuniary damage;
     
    (ii)  EUR 6,000 (six thousand euros), plus any tax that may be chargeable to the applicant, in respect of costs and expenses;
     
    (b)  that from the expiry of the above-mentioned three months until settlement simple interest shall be payable on the above amounts at a rate equal to the marginal lending rate of the European Central Bank during the default period plus three percentage points;
    1. Dismisses the remainder of the applicant’s claim for just satisfaction.

     

  • Paragraphs referring to EU Charter

    70) As regards the personal burden which the applicant sustained on account of the impugned measure, the Court notes that she had to suffer a substantial deprivation of income in a period of considerable personal difficulty, namely that of unemployment. The Court would observe in this context that Article 34 of the Charter of Fundamental Rights of the European Union (see paragraph 20 above) endorses benefits providing protection in the case of loss of employment, and that according to the European Court of Justice, the aim pursued by severance – that is, helping dismissed employees find new employment – belongs within legitimate employment policy goals (see paragraph 21 above). For the Court, it is quite plausible that the element that she was subjected to the impugned measure while unemployed, together with the unexpected and swift nature of the change of the tax regime which made any preparation virtually impossible for those concerned, exposed the applicant to substantial personal hardships.