SECOND SECTION

CASE OF P.G. v. HUNGARY

(Application no. 18229/11)

JUDGMENT

STRASBOURG

23 September 2014

This judgment is final but it may be subject to editorial revision.

In the case of P.G. v. Hungary,
The European Court of Human Rights (Second Section), sitting as a Committee composed of:
	Helen Keller, President,
	András Sajó,
	Robert Spano, judges,
and Abel Campos, Deputy Section Registrar,
Having deliberated in private on 2 September 2014,
Delivers the following judgment, which was adopted on that date:
PROCEDURE
1.  The case originated in an application (no. 18229/11) 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, Mr P.G. (“the applicant”), on 17 March 2011. The President of the Section acceded to the applicant’s request not to have his name disclosed (Rule 47 § 4 of the Rules of Court).
2.  The applicant was represented by Mr A. Kádár, a lawyer practising in Budapest. The Hungarian Government (“the Government”) were represented by Mr Z. Tallódi, Agent, Ministry of Public Administration and Justice.
3.  The applicant complained under Article 1 of Protocol No. 1 – read alone and in conjunction with Article 14 of the Convention – that the imposition of 98% tax on the upper bracket of his severance payment constituted an unjustified deprivation of property, or else taxation at an excessively disproportionate rate, with no remedy available.
4.  Moreover, he argued under Article 8 that the legal presumption of the impugned revenues contravening good morals represented an interference with his right to a good reputation. Lastly, he argued that the tax in question – in reality, of a punitive character – had not been imposed in judicial proceedings conducted before the civil or the criminal courts – which, in his view, amounted to a breach of Article 6 of the Convention.
5.  On 19 February 2014 the application was communicated to the Government.
THE FACTS
I.  THE CIRCUMSTANCES OF THE CASE
6.  The applicant was born in 1952 and lives in Budapest.
7.  In 2006 the applicant concluded an employment contract with a State-owned financial institution. His contract was amended in 2009 stipulating, in case of ordinary dismissal, severance payment equal to one month’s salary and remuneration corresponding to a notice period of eight months.
8.  On 22 June 2010 the applicant’s employment was terminated by mutual agreement. Under this agreement, on 25 June 2010 his former employer paid him, after taxes, a net amount of 17,994,127 Hungarian forints (HUF) (approximately 58,800 euros (EUR)), amounting to seven months’ salary.
9.  Under new legislation (see paragraph 10 below) the gross amount corresponding to the above payment was subsequently taxed at a 98% rate in its part exceeding HUF 3.5 million; the income tax and social security contributions already paid (see paragraph 8 above) were deducted from the tax payable. Thus, the applicant had to pay an additional HUF 14,162,433 as special tax, until 20 May 2011.
II.  RELEVANT DOMESTIC LAW
10.  For relevant domestic law, see the judgments N.K.M. v. Hungary (no. 66529/11, §§ 8-19, 14 May 2013); Gáll v. Hungary (no. 49570/11, §§ 8-18, 25 June 2013) and R.Sz. v. Hungary (no. 41838/11, §§ 8-17, 2 July 2013).
THE LAW
I.  ALLEGED VIOLATION OF ARTICLE 1 OF PROTOCOL NO. 1 OF THE CONVENTION
11.  The applicant complained about the imposition of 98% tax on part of his remuneration due on termination of his employment. He relied on Article 1 of Protocol No. 1 as well as Articles 6, 8 and 14 of the Convention.
The Government did not dispute the applicant’s allegations.
12.  The Court notes that the application is not manifestly ill-founded within the meaning of Article 35 § 3 (a) of the Convention. It further notes that it is not inadmissible on any other grounds. It must therefore be declared admissible.
13.  The Court considers that the application falls to be examined under Article 1 of Protocol No. 1 alone (see R. Sz., cited above, §§ 62 to 70). It observes that virtually identical circumstances gave rise to a violation of that provision in that case (see R. Sz., cited above, §§ 54-62); and is satisfied that there is no reason to hold otherwise in the present application.
It follows that there has been a violation of Article 1 of Protocol No. 1.
14.  Relying on Article 41 of the Convention, the applicant claimed 52,775 euros (EUR) in respect of pecuniary and EUR 6,000 in respect of non-pecuniary damage.
15.  The Government contested these claims.
16.  On the basis of equity, the Court awards the applicant EUR 43,900 in respect of pecuniary and non-pecuniary damage combined.
17.  The applicant also claimed EUR 4,430 for the costs and expenses incurred before the Court.
18.  The Government contested this claim.
19.  Regard being had to the documents in its possession and to its case-law, the Court considers it reasonable to award the sum of EUR 3,000 under this head.
20.  The Court considers it appropriate that the default interest rate should be based on the marginal lending rate of the European Central Bank, to which should be added three percentage points.
FOR THESE REASONS, THE COURT, UNANIMOUSLY,
1.  Declares the application admissible;

2.  Holds that there has been a violation of Article 1 of Protocol No. 1 of the Convention;

3.  Holds
(a)  that the respondent State is to pay the applicant, within three months, the following amounts, to be converted into the currency of the respondent State:
(i)  EUR 43,900 (forty-three thousand nine hundred euros), plus any tax that may be chargeable, in respect of pecuniary and non-pecuniary damage combined;
(ii)  EUR 3,000 (three 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;
4.  Dismisses the remainder of the applicant’s claim for just satisfaction.
Done in English, and notified in writing on 23 September 2014, pursuant to Rule 77 §§ 2 and 3 of the Rules of Court.
	Abel Campos	Helen Keller
	Deputy Registrar	President