Sponsored briefing: Romanian criminal judicial bodies must comply with fiscal courts’ final judgments

The Decision of the Romanian Constitutional Court no. 102/17.02.2021 is set to completely change the approach towards tax evasion cases, stating that criminal prosecution bodies must from now on give appropriate consideration to final decisions rendered by fiscal courts that establish the existence or non-existence of a prejudice brought to the consolidated State budget.

In many cases, criminal prosecution bodies are notified regarding a possible tax evasion offence, following fiscal audits carried out by the National Agency for Fiscal Administration. The latter issues administrative and fiscal documents that may be challenged separately, before fiscal courts.

Challenging these documents, namely the tax audit reports and the tax assessment notices therefore leads to fiscal disputes, which are often settled before the criminal investigation is completed.

In many cases, fiscal courts ruled that a prejudice brought to the State budget by the analysed transactions is non-existent. Even so, criminal judicial bodies ignored the fiscal courts’ final decisions and conducted their own analysis of the circumstances, including from the perspective of the existence and length of a prejudice.

Prior to the Constitutional Court’s intervention, the national legislation allowed criminal judicial bodies to establish the existence and length of a prejudice, independently from the findings and conclusions of fiscal courts, given that the final decisions thereof enjoyed res judicata authority, except for the cases concerning the existence of the offence.

This legal provision has been rightly criticised precisely because it allows criminal courts to infringe the res judicata authority, therefore leading to the failure to observe essential law principles.

The Constitutional Court has, however, highlighted that the settlement of criminal cases often depends on the resolution of issues that have a different legal nature (fiscal, civil, administrative etc.), called prior issues.

As an example, it was shown that such issue would be the prejudice caused, in case of tax evasion offences, by the existence of the fact that the deed concerns the job duties of the defendant, in cases of offence of abuse of office or establishing the capacity of a citizen or a stateless person, in case of offences perpetrated abroad.

National case-law is not consistent, however, given that certain courts analysed any and all aspects regarding the existence of the offence, practically ignoring the final decisions rendered by other courts, while other courts recognised without reserves the res judicata authority of the pre-existing final decisions.

The Constitutional Court has however reiterated that the res judicata authority is an important effect of court judgments, as these are jurisdictional documents issued by a public power of the State, a characteristic which makes court judgments distinctive from other legal documents. It is presumed to express the truth and should not be contradicted by another decision, in order to ensure both a uniform implementation of justice and the security of legal relations as a requirement of the rule of law.

Since the national legislation did not include a definition of the concept of ‘circumstances concerning the existence of the offence’ and the delimitation criteria is not sufficiently clear, the meaning of the expression was interpreted too broadly, and therefore susceptible to a wide degree of interpretations.

In conclusion, the Constitutional Court has acknowledged that the use of this expression violates the right to a fair trial and has declared it unconstitutional.

Therefore, as of the date when the Decision of the Constitutional Court was published in the Official Gazette of Romania (7 April 2021), the criminal judicial bodies should observe the res judicata authority of final decisions rendered by fiscal courts that establish the existence or non-existence of a prejudice brought to the State, an essential component of the tax evasion offence.

The resolution rendered by fiscal courts thus acquires a special importance in the handling of tax evasion cases.

However, it remains to be seen to what extent the criminal judicial bodies will follow the indications of the Constitutional Court or will identify their own way of interpreting the effects of this decision.