This Latin term means: not twice for the same thing.
ECHR
The ne bis in idem principle is enshrined, amongst other places, in the Charter of Fundamental Rights of the European Union and in the European Convention for the Protection of Human Rights and Fundamental Freedoms (ECHR). In essence, this means that no one may be tried or punished again for a criminal offence for which they have been irrevocably acquitted or convicted.
But what if the private limited company, the shareholder and/or the director are all penalised?
European Court
In that context, a case has been brought before the European Court of Justice Italian case brought before the court. In that case, an Srl (an Italian legal entity comparable to the Dutch BV) had failed to fulfil its obligation to pay the VAT it owed (on time). The amount of VAT in question is more than €1 million.
The Italian tax authorities issue a tax assessment for this offence. This assessment is, of course, imposed on the Srl, as it was the company that should have paid the VAT. In this tax assessment, the VAT is increased by an administrative fine of 30%. The legal entity does not contest this assessment but pays it in full. As a result, the tax assessment and the administrative fine included therein are definitively established.
Director
Under Italian law, the director of the legal entity is also subject to criminal prosecution for failing to ensure that the Srl paid its VAT on time. The director argues that a penalty has already been imposed for the failure to pay VAT on time: the administrative fine.
The Court has ruled that the director may be prosecuted under criminal law, despite the limited liability company having already been definitively penalised with an administrative fine. After all, the director and the legal entity are not the same person. They may be tried and punished separately from one another, even if the offence in question is the same.
The Netherlands
Could a situation like this also arise in the Netherlands?
In a situation where a Dutch private limited company (BV) fails to declare turnover, the company will be subject to a corporate tax assessment with a fine (or other penalty). A distribution may be deemed to have been made to the shareholder in their private capacity. The additional income tax assessment may then be increased by a fine (or other penalty).
Technically, this is not the same offence. The private limited company fails to declare the correct turnover in its corporation tax return, whereas the shareholder fails to declare a distribution of profits. However, the shareholder is likely to perceive this as double punishment. The Court of Appeal’s judgment described in this article offers no relief.