EHRM, 22-03-2016, nr. 23682/13

The applicant submitted that the domestic authorities had established his liability to pay the tax on the basis of an imprecise and unforeseeable provision and without a proper assessment of the particular circumstances of his case. Moreover, they had failed to make any assessment of proportionality of the interference with his property rights. The applicant therefore considered that the refusal to grant him the tax exemption imposed an excessive individual burden on him, contrary to Article 1 of Protocol No. 1. Whereas the applicant accepted that the domestic authorities enjoyed a wide margin of appreciation in the matters of taxation, he pointed out that it was the Court's well-established case-law that their discretion could not be exercised in a manner incompatible with Article 14 of the Convention.

The applicant pointed out that the reason for the refusal of his request for tax exemption was the fact that, under the domestic authorities’ understanding of section 11(9.5) of the Real Property Transfer Act, the flat he had owned had been suitable for the housing needs of his family, in view of its surface area (section 11(9.3) of the Real Property Transfer Act) and other infrastructural requirements. Further conditions, such as value of the previously owned property (section 11(9.6) of the Real Property Transfer Act), had had no bearing in the domestic authorities' assessment of his case. This had suggested that in a case such as his, where an individual had already owned a real property, the relevant law envisaged the assessment of the suitability of the previously owned property as the central element for deciding on requests for tax exemption when buying a new real property suitable for living. However, in the applicant's view, the domestic authorities had failed to conduct an adequate assessment of the circumstances of his case and thus obviously deprived him of adequate procedural means for the protection of his rights.

The applicant also pointed out that he had not sought any preferential status but had merely requested the authorities to exempt him from the obligation to pay tax due to the particular circumstances of his case. For the applicant it was obvious that he had not sought tax exemption so as to become unjustly enriched, since he had sold his old flat in order to buy a smaller real property adapted to the needs of his family related to the disability of his son.

The applicant further argued that accessibility, as a fundamental feature of housing, qualified as a basic infrastructure equally for all. Thus, any difference in treatment in that respect would imply discrimination. Moreover, in view of the principle of reasonable accommodation, the decisions of the domestic authorities, which failed to adapt the definitions they had used with regard to the particular needs of persons with disabilities, suggested indirect discrimination or discrimination by failure to treat differently people whose situations significantly differed.

In the applicant's view the ground for his discrimination was disability by association related to the needs of his son which had been ignored by the competent domestic authorities. In particular, their assessment of the basic infrastructural requirements for adequate housing had been conducted with regard to the needs of able-bodied people ignoring the fact that the existence of a lift for a disabled person was a fundamental and indispensable feature for housing mandated by the need for an easy and unencumbered access. The authorities had thus discriminated him against by failing to interpret the term ‘property that satisfies a family's housing needs’ in a way taking into consideration the accessibility of the property in question. This discriminatory treatment, in the applicant's view, had no reasonable justification, particularly given that the problem of accessibility impeded his son's possibility to go out of the flat and thereby restricted all his other rights, such as to adequate health treatment, education and personal development. That consequently affected the entire family which had needed to cope with the problem of accessibility and also had to bear a significant financial burden related to his son's disability.

The Government accepted that there had been an interference with the applicant's property rights but they considered that such interference had been lawful, that it had pursued a legitimate aim of securing public finances and that it had been proportionate. Specifically, the Government stressed that the State enjoyed a wide margin of appreciation in matters of taxation and that the domestic authorities had been best placed to assess individual cases. In the case of the applicant, the domestic authorities had sufficiently taken into account his personal situation but had considered that he could not be exempted from taxation as he had not met the requirements under the relevant domestic law.

In particular, the Government submitted that section 11 of the Real Property Transfer Act was clear to the effect that a tax exemption could be granted only if the conditions under that provision had been cumulatively met. In the case at issue, the applicant had failed to meet two conditions. First, the flat he had owned at the moment when he had bought the house objectively satisfied the requirements for adequate housing for him and his family. It had basic infrastructure and satisfied hygiene and technical requirements and the tax authorities had no discretion in assessing the term ‘housing needs’. In the Government's view, the tax authorities were neither equipped nor competent to objectively assess numerous specific housing needs of persons who sought tax exemption. With regard to the second condition, the Government submitted that the applicant had not met the value requirement in that he had owned a flat of a significant value. Therefore, the fact that the building was not equipped with a lift had been of no relevance. It was in fact the intention of the relevant domestic law to provide tax exemption as an assistance to those individuals who were buying their first real property and in particular those who did not have any property of a significant value. In the case at issue, the domestic authorities had acted within their margin of appreciation and they had accordingly assessed that the applicant did not need any such financial assistance, which led to the dismissal of his request for tax exemption. Accordingly, in the Government's view, the applicant had not been required to bear an excessive individual burden.

The Government also argued that there had been no discriminatory treatment of the applicant related to the disability of his child since the reason for the dismissal of his tax exemption request was his financial situation. This had an objective and reasonable justification in that the State had sought to protect financially disadvantaged individuals, which the applicant was not given that he had owned an adequate flat.

The Government further stressed that the State, as a party to the CRPD, had implemented a number of positive measures aimed at securing accessibility for disabled people and that almost seventy per cent of public buildings in Zagreb had undergone adaptation to that effect. Moreover, a recent visit by the United Nations Special Rapporteur on Disability to Croatia had applauded these efforts made by the State. With regard in particular to the tax exemptions under the Real Property Transfer Act, the Government stressed that the positive measures implemented by the State were primarily aimed at financially disadvantaged individuals and they could not address the needs of all vulnerable groups. However, the State had put in place various tax advantages for disabled persons related, for instance, to income and health services taxation. Moreover, in harmonising its activities with the relevant international requirements, the State had adopted the National strategy for securing equal opportunities for the persons with disability for the period between 2007 and 2015, and is actively conducting various activities at the national and local levels for meeting the needs of disabled people.

The third-party interveners submitted that the relevant standards of the CRPD, in particular related to the concepts of accessibility, non-discrimination and reasonable accommodation, should inform the Court in assessing the State's compliance with its Convention obligations concerning people with disabilities. They in particular submitted that there was an intimate link between accessibility and reasonable accommodation which ultimately had the same goal of ensuring effective enjoyment and exercise of rights on an equal basis with others. There were, however, differences between the two concepts in that the measure of general accessibility should be provided in anticipation of the accessibility needs of the disabled population, whereas reasonable accommodation included specific measures directed at a particular individual with a disability, which should be provided immediately.

The third-party interveners further pointed out that international human rights law had developed to ensure prohibition of discrimination by association, which concerned instances where an individual was discriminated against not on the grounds of his or her own characteristic but due to his or her relationship to someone else who had such a characteristic. This principle was well-enshrined in several jurisdictions across Europe and could also be found in the Croatian Prevention of Discrimination Act. There had also been an increasing call by international human rights mechanisms for positive measures to be taken by the State to ensure access to housing by persons with disabilities. National jurisdictions, in particular within the European Union, had started to implement these actions, some of which also included tax reductions or exemptions.

The third-party interveners also stressed that the enjoyment of rights by persons with disabilities should be secured without any discrimination. Moreover, living in inaccessible homes hindered participation in the life of the community and led to isolation and segregation of the disabled individual and the entire family. In particular, the third-party interveners emphasised that failure to provide reasonable accommodation amounted to disability-based discrimination.

The Court notes that the central tenet of the applicant's complaint is his alleged discriminatory treatment in the application of the relevant tax legislation, contrary to Article 14 of the Convention taken in conjunction with Article 1 of Protocol No. 1. The Court will therefore address his complaint in this respect on the basis of the relevant principles following from its case-law under Article 14 of the Convention.

The Court has consistently held that Article 14 complements the other substantive provisions of the Convention and its Protocols. It has no independent existence since it has effect solely in relation to ‘the enjoyment of the rights and freedoms’ safeguarded thereby. Although the application of Article 14 does not presuppose a breach of those provisions — and to this extent it is autonomous — there can be no room for its application unless the facts at issue fall within the ambit of one or more of them. The prohibition of discrimination enshrined in Article 14 thus extends beyond the enjoyment of the rights and freedoms which the Convention and the Protocols thereto require each State to guarantee. It applies also to those additional rights, falling within the general scope of any Convention Article, for which the State has voluntarily decided to provide (see, among many other authorities, E.B. v. France [GC], no. 43546/02, §§ 47–48, 22 January 2008; and Carson and Others v. the United Kingdom [GC], no. 42184/05, § 63, ECHR 2010).

The Court has established in its case-law that only differences in treatment based on an identifiable characteristic, or status, are capable of amounting to discrimination within the meaning of Article 14 (see Eweida and Others v. the United Kingdom, no. 48420/10, § 86, 15 January 2013).

Generally, in order for an issue to arise under Article 14 there must be a difference in the treatment of persons in analogous, or relevantly similar, situations (see X and Others v. Austria [GC], no. 19010/07, § 98, 19 February 2013). However, not every difference in treatment will amount to a violation of Article 14. A difference of treatment is discriminatory if it has no objective and reasonable justification; in other words, if it does not pursue a legitimate aim or if there is not a reasonable relationship of proportionality between the means employed and the aim sought to be realised (see Fabris v. France [GC], no. 16574/08, § 56, ECHR 2013 (extracts); Weller v. Hungary, no. 44399/05, § 27, 31 March 2009; and Topčić-Rosenberg v. Croatia, no. 19391/11, § 36, 14 November 2013).

Moreover, Article 14 does not prohibit Contracting Parties from treating groups differently in order to correct ‘factual inequalities’ between them. Indeed, the right not to be discriminated against in the enjoyment of the rights guaranteed under the Convention is also violated when States without an objective and reasonable justification fail to treat differently persons whose situations are significantly different (see Thlimmenos v. Greece [GC], no. 34369/97, § 44, ECHR 2000-IV; Stec and Others v. the United Kingdom [GC], nos. 65731/01 and 65900/01, § 51, ECHR 2006-VI; and Sejdić and Finci v. Bosnia and Herzegovina [GC], nos. 27996/06 and 34836/06, § 44, ECHR 2009).

The Court has also accepted that a general policy or measure that has disproportionately prejudicial effects on a particular group may be considered discriminatory notwithstanding that it is not specifically aimed at that group, and that discrimination potentially contrary to the Convention may result from a de facto situation (see D.H. and Others v. the Czech Republic [GC], no. 57325/00, § 175, ECHR 2007-IV; and Kurić and Others v. Slovenia [GC], no. 26828/06, § 388, ECHR 2012 (extracts)). This is only the case, however, if such policy or measure has no ‘objective and reasonable’ justification, that is, if it does not pursue a ‘legitimate aim’ or if there is not a ‘reasonable relationship of proportionality’ between the means employed and the aim sought to be realised (see S.A.S. v. France [GC], no. 43835/11, § 161, ECHR 2014 (extracts)).

The Contracting States enjoy a certain margin of appreciation in assessing whether and to what extent differences in otherwise similar situations justify a different treatment. The scope of the margin of appreciation will vary according to the circumstances, the subject matter and the background. The same is true with regard to the necessity to treat groups differently in order to correct ‘factual inequalities between them’ (see Stummer v. Austria [GC], no. 37452/02, § 88, ECHR 2011).

On the one hand, wide margin is usually allowed to the State under the Convention when it comes to general measures of economic or social strategy, for example (see Hämäläinen v. Finland [GC], no. 37359/09, § 109, ECHR 2014). This also includes measures in the area of taxation. However, any such measures must be implemented in a non-discriminatory manner and comply with the requirements of proportionality (see R.Sz. v. Hungary, no. 41838/11, § 54, 2 July 2013). On the other hand, if a restriction on fundamental rights applies to a particularly vulnerable group in society that has suffered considerable discrimination in the past, then the State's margin of appreciation is substantially narrower and it must have very weighty reasons for the restrictions in question. The reason for this approach, which questions certain classifications per se, is that such groups were historically subject to prejudice with lasting consequences, resulting in their social exclusion. Such prejudice could entail legislative stereotyping which prohibits the individualised evaluation of their capacities and needs. The Court has already identified a number of such vulnerable groups that suffered different treatment on account of their characteristic or status, including disability (see Glor, cited above, § 84; Alajos Kiss v. Hungary, no. 38832/06, § 42, 20 May 2010; and Kiyutin v. Russia, no. 2700/10, § 63, ECHR 2011). Moreover, with regard to all actions concerning children with disabilities the best interest of the child must be a primary consideration (see paragraph 34 above; Article 7(2) CRPD). In any case, however, irrespective of the scope of the State's margin of appreciation the final decision as to the observance of the Convention's requirements rests with the Court (see, inter alia, Konstantin Markin v. Russia [GC], no. 30078/06, § 126, ECHR 2012 (extracts)).

Lastly, as to the burden of proof in relation to Article 14 of the Convention, the Court has held that once the applicant has shown a difference in treatment, it is for the Government to show that it was justified (see D.H. and Others, cited above, § 177;Kurić and Others, cited above, § 389; Vallianatos and Others v. Greece [GC], nos. 29381/09 and 32684/09, § 85, ECHR 2013 (extracts)).