A landmark judgement decided by the Constitutional Court, relates to the issue of VAT penalties together with criminal charges. Malta’s VAT legislation allows heavy administrative fines for late VAT payments, in conjunction with court proceedings which could lead to an effective prison term.
The decision taken in the court judgment, Anthony Farrugia v. Prime Minister, may lead to amendments in the local tax legislation. The Constitutional Court declared that if local VAT legislation is in breach of fundamental human rights, the individual is to be tried twice for the same offence.
The plaintiff, Farrugia argued that Article 83(3) of the Value Added Tax Act breached his right as he was penalised twice for the same offence. Furthermore, it was argued that the abovementioned article, allowing for both an administrative fine as well as court proceedings against a person violates the ne bis in idem principle. This rule is afforded protection by virtue of Article 39(9) of the Constitution of Malta and Article 4 of Protocol Number 7 of the European Court of Human Rights, the right not to be punished or else tried twice.
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