The Constitutional Court found no 241 / 2021 Coll.
The Constitutional Court found of 18 May 2021 sp. zn.
Valid
Text versions:
23.06.2021
241
FIND
The Constitutional Court
On behalf of the Republic
The Constitutional Court decided under sp. zn. Pl. Pl. ÚS 97 / 20 on 18 May 2021 in plenary composed of the President of the Court of Paul Rychetský and the Judges Louis David, Jaroslav Fenyk, Josef Fialy, Jan Filip, Jaromír Jirsy, Tomáš Lichovník, Vladimir Sládeček, Radován Suchanek (Judge of the Rapporteur), Pavel Šámal, Vojtěch Šimíček, Milady Tomková, David Uhlíř and Jiří Zemánek, on the motion of the group of senators represented by the Czech Republic, or "and the designation of the point of the United Kingdom ', § 4 (5), § 9 (a), § 4 (1), § 4 (1), § 4 (d), § 4 (d), § 4), paragraph.
as follows:
Motion denied.
Reasons
Subject matter
1. On 15 September 2020, the Constitutional Court received a proposal from a group of 24 Senators (hereinafter referred to as the "applicant '), represented by the lawyer, to abolish certain provisions of the Czech National Council Act No. 338 / 1992 Coll., on Real Estate Tax, as amended, (hereinafter referred to as the" Real Estate Tax Act') concerning the tax exemption of land, taxable buildings and units owned by the Czech Republic. In the petit of her proposal, the appellant seeks the annulment of § 4 (1) (a), § 4 (1) (d) in the words "which is the first owned by the Czech Republic, or" and the designation of the point by the order number "2," § 4 (3), § 4 (5), § 9 (1) (a), § 9 (1) (d) in the words "which is the first owned by the Czech Republic," and the designation by the order number "2" and § 9 (4) in the sentence by the first law.
2. The application was made pursuant to Article 64 (1) (b) of Act No. 182 / 1993 Coll., on the Constitutional Court, for the contradiction of the contested provisions with Articles 1 (1), 99, 101 (3) and (4) of the Constitution of the Czech Republic ("the Constitution ') and Articles 1, 3 (1), 4 (3) and 11 (1) of the Charter of Fundamental Rights and Freedoms (" the Charter').
Arguments of the appellant
3. First of all, the appellant points out that the contested provisions of the Real Estate Tax Act lay down tax exemptions for land, buildings and units, directly from law, regardless of the purpose of the use of the case by the State. The appellant considers as essential the requirement to abolish § 4 (1) (a) and § 9 (1) (a) of the Real Estate Tax Act, listing the exempt land, buildings and units owned by the Czech Republic. According to the appellant, the tax exemption for land, buildings and units owned by the State was established at the time of feudal when the sovereign was "taken as owner of all the land which, partly in the form of a system of holidays, was transferred to other persons - vassals'. This tax exemption or exemption was subsequently transferred to the State. At present, however, such a tax exemption of the state is due to a long-term tradition, not only the archaic but also the unconstitutional one.
4. According to the appellant, the provisions of § 4 (3), first sentence, paragraphs 5 and 9 (4) of the First Real Estate Tax Act follow-up, implement them and their separate existence is therefore legally meaningless. As regards the provisions of § 4 (1) (d) and § 9 (1) (d) of the Real Estate Tax Act, the appellant states that the contested part of it proposes to abolish "although it is possible that the bulk of the land on which the cultural monument is situated and the buildings declared a cultural monument will continue to be exempted, but under general conditions as for each owner - that is to say, the conclusion of an agreement with the Ministry of Culture, whereby the State as owner will act as the relevant contributory organisation or organisational component of the State... There is no reason for the State to have a privileged regime as regards the tax liability arising from the right of ownership... '.
5. In assessing the constitutionality of the State tax exemption from individual taxes, the appellant considers that, inter alia, their budgetary determination must be monitored. The general tax exemption of the State from the taxes it receives is, in its view, fully acceptable as it does not affect the revenue and expenditure of the State budget and prevents unnecessary bureaucratic burdens. However, the situation is quite different for the real estate tax received by municipalities. The tax exemption of the State here leads to a reduction in the budget revenue of the municipal government as an essential element of the democratic rule of law under Article 1 (1) of the Constitution. As a result of this legislation, there is also an unfounded inequality where "two of the same municipalities will have the same size and culture of taxed land, but the tax revenue of one municipality will be disproportionately lower compared to the other, because the State is the principal owner of the land in its territory '. At the same time, the appellant contends that the State, whose land, buildings and units are exempt from real estate tax, also uses the municipality-built and maintained infrastructure resulting in such real estate, public lighting and a number of other activities financed by the municipalities by the real estate tax revenue. According to the appellant, the scope of the tax exemption is to be linked to an activity such as the public utility of the construction or land in question, not to the person of the owner.
6. The basic criteria of the rule of law referred to in Article 1 (1) of the Constitution include that the legal standards are also binding on the legislator itself. If the State has established, in constitutional order, a prohibition on discrimination, the right to equal treatment in similar situations and the equality of ownership, irrespective of the person of the owner, then "exemptions from these constitutional standards cannot be made to the benefit of the State by ordinary law, unless at least explicit constitutional authority is given for such different legislation '. According to the appellant, it cannot be overlooked that the State is acting in a dual capacity - on the one hand, as an overseer himself imposing taxes and, on the other hand, as a legal person involved in activities which are subject to tax. This dual position of the State is, in its view," manifested also in the area of real estate tax, where the State, as legislator, has adopted a law exempting itself from the status of owner on a flat-rate basis, whereas for other exemptions there is some beneficial purpose or reciprocity under international law (exemption of diplomats and other states). The status of the State as the creator of tax laws is not independent of the impact of those laws on its ownership of land, buildings and units. "
7. By exempting itself "on a flat-rate basis, irrespective of the purpose of the use of land or construction ', the State thus rules its ownership over the rights of other owners. This ultimately also distorts competition and the right to pursue an economic activity pursuant to Article 26 (1) of the Charter. The appellant also points out that land, buildings and units from which" the State can carry out an activity from which it has income and profit (contracts for charging the use of the case outside rent and pacht, e.g. short-term accommodation, collection of admission, parking charges... First of all, the State is not an entrepreneur, but it can be in certain activities. Such activities can be carried out in its name and through legal persons established by it, where they are legally separate from the State (state contribution organisation, state funds) but not in property. Thus, the ownership of immovable property is the responsibility of the State and the relevant legal entities have only the right of a different limited disposition with that property.' Such tax inequality must then have a fair reason - for example, the public utility of determining the construction. The appellant also stresses that Article 11 (1) of the Charter provides for equality of ownership, in addition to Article 3 (1) of the Charter guaranteeing fundamental rights and freedoms for all, irrespective of their status. If Article 11 (5) The Charter allows taxes and fees to be imposed only on the basis of the law, then "the constitutional equality of ownership must also be respected by the law which taxes ownership law."
8. According to the appellant, the above-mentioned inequality does not fully address the provisions of the first sentences of Sections 4 (3) and 9 (4) of the Real Estate Tax Act, according to which the tax exemption does not apply to those land, buildings and units owned by the State which are used for business, are leased or smuggled. According to the appellant, "land and goods from which the State has an income but is not a rental (construction for toll recreation of employees and other persons) or the real estate (construction) is used only partially for business (there is a part of the commercial space in the headquarters of the State Office that is not separate units). The definition of entrepreneurship is also of considerable importance, as there may be profitable activities, but the state authority does not see them as business... The state is supposed to proceed so that it does not give itself special privileges. It is therefore intended to exempt certain items for the purpose of their determination (public utility), but regardless of the person of the owner. However, the tax exception should not be exempt itself, and then tax the exception to a particular matter in its possession."
9. The appellant also points out that the contested legislation is contradictory to the constitutional protection of the local authorities under Articles 99 and 101 (3) and (4) of the Constitution. It states that "in order for the administration to be real, its legal and administrative capacity must be supported by its own property base (right to property, own management, local taxes and charges). Otherwise, the implementation of a self-governing decision could be effectively (not legally) vetoed by central State power by the denial of funds for its financial cover '. The state can only intervene in the local government to protect the law. However, the nature of constitutional order must be decisive. The contested provisions of the law interfering with the territorial government are unconstitutional. As these unconstitutional provisions of the Real Estate Tax Act affect the extent of municipal income as basic local authorities, this also affects the territorial authorities as a constitutional institute.
Proceedings before the Constitutional Court
10. The Constitutional Court, pursuant to Article 69 of the Law on the Constitutional Court, as amended, sent the proposal to the Chamber of Deputies and the Senate as parties to the proceedings and to the Government and the Ombudsman as authorities entitled to intervene as interveners.
Observation of Parliament's chambers
11. The Chamber of Deputies, signed by its President, stated that the Real Estate Tax Act was adopted by the Czech National Council at its fifth parliamentary term at its 35th meeting on 4 May 1992. In the Collection of Laws the law was declared in 71 of 1 July 1992. The provisions in Articles 4 (3) and 9 (4) of the First Real Estate Tax Act were then amended by the later amendment made by Act No. 483 / 2001 Coll., which was submitted as House Press 974 in the third parliamentary term. The draft Act was discussed at first reading on 29 June 2001 and ordered to the Committee on Budgets and Public Administration, Regional Development and the Environment. The Committee on Budgets discussed it on 10 October 2001, its resolution (House Press 974 / 1) contained an amendment to the provisions of Paragraph 4 (3) of the Real Estate Tax Act which the appellant challenged. The Committee on Public Administration, Regional Development and the Environment then discussed the draft law on 9 October 2001. The second reading of the draft law took place on 16, 17 and 30 October 2001 and the amendments were processed as print 947 / 3. The third reading of the draft law took place on 1 November 2001, with the approval of the draft law by the Chamber of Deputies. Further amendments to the contested provisions of the Real Estate Tax Act have been made by the statutory measures of Senate No. 344 / 2013 Coll., on the amendment of tax laws in connection with the recdification of private law and on the amendment of certain laws. This legal measure of the Senate was approved by the Chamber of Deputies by its resolution published in the Collection of Laws under No. 382 / 2013 Coll. Finally, the President of the Chamber of Deputies notes that the above-mentioned laws were approved by a constitutional procedure, signed by the relevant constitutional authorities and duly declared in the Collection of Laws.
12. It is submitted from the Senate's observations that the exemption of the State from the obligation to pay real estate tax was already contained in the Real Estate Tax Act when it was adopted in 1992, which was subsequently rectified into the legal order of the Czech Republic and maintained until now, however the contested parts of the provisions of Sections 4 and 9 of that Act were amended several times. The last more significant change was made by the Senate Act No. 344 / 2013 Coll., including the amendment to the Real Estate Tax Act. The Senate's proposal for this legal measure was submitted in the 9th term of office of the Senate as Document No 184. By Resolution 152 of 7 October 2013, this draft legal measure of the Senate was recommended for approval by the Committee on Economic, Agriculture and Transport, as amended. The Constitutional Legal Committee, to which the Senate's proposal for legal action was also ordered to discuss, has not adopted a resolution. The Senate proposal for legal action was discussed by the Senate on 9 and 10 October 2013. Perhaps the most debatable topic in the debate in the Senate's negotiations was the issue of taxing investment funds - on the contrary, the contested provisions "remained in the Senate's interest during the debate '. The Senate adopted the draft legislative measure as amended (Resolution 352), with 55 of the 62 senators in favour of the proposal in vote 22.
Government observations
13. The Constitutional Court received on 21 October 2020 a notification from the Government, signed by the Minister of Justice, that the Government approved its entry into the proceedings by order No 1058 of 19 October 2020 and proposes that the Constitutional Court reject the application in full.
14. On 26. 11. 2020, the Government's observations on the application for annulment of the contested provisions of the Real Estate Tax Act were delivered to the Constitutional Court. In its statement, the Government initially states that the assessment of the need for a tax burden and the "specific method of parametrization of the tax 'is a matter of purely political and cannot be assessed in court proceedings. Unlike the appellant, it is convinced that" in the contested cases, the personal exemption is as valid (legitimate) as it would have been since it leads to the same objective and is based on the fact that the public service activity of the State is undoubtedly predominant and it is therefore sufficient only to negatively define cases where the State is not exempted'. The government considers the choice of this legislative technique a political issue. According to the Government, the proposed binding of the State's exemption from real estate tax on a given activity would make the legislation very case-law, which would result in higher costs of managing real estate tax.
15. The Government also does not agree with the appellant's assertion that "the State, like any other owner, requires infrastructure for immovable property and the provision of various services financed by the municipality, inter alia, on the proceeds of real estate tax," states that "the municipality has a constitutional right to self-administration, but that right cannot result in a state of de facto autonomy of the municipality independent of the State. The municipality does not provide itself with all public services and other activities relevant to the existence of the municipality and its inhabitants, as the State and the county also participate in these activities to a significant extent." Moreover, taxes are essentially "unintended cash transactions', which makes it impossible to accept the appellant's argument that the proceeds of real estate tax are linked to the construction or maintenance of local infrastructure. Furthermore, the Government stresses that the State is exempted only in the" position of a supreme body ', not in cases where it acts as a private body. It is not possible to talk about a flat-rate exemption from real estate tax. According to the Government, a certain inequality is created by each tax exemption, and it does not consider the tax exemption of the State to be exceptional. The Government considers that "the reason for the distinction of the State's exemption from real estate tax in the case where, through the real estate cases in question, it essentially exercises state power is morally neutral and rational and therefore completely legitimate'. The State is not in a comparable position with other, non-supranational entities in the position of a supranational body, therefore the contested legislation cannot be contrary to the principle of equality. Similarly, the State in the position of a supranational entity does not compete with the private sector, i.e." in the case of the liberation of real estate, nor does any competition essentially take place '. The tax exemption of the State from real estate tax, according to the Government, does not even interfere with the right to self-government, as "fiscal autonomy of municipalities must not be detrimental to state power' and the municipality and the State must also participate in governance.
16. According to the Government, the proposal to abolish Paragraph 4 (5) of the Real Estate Tax Act is also unfounded, according to which the tax exemption under Section 4 (1) of that Act also applies to part of the land. The need for such an adjustment is demonstrated by the Government on the example of land built by railway lines [Paragraph 4 (1) (o) of the Real Estate Tax Act] - if it were not for the contested provision, it would be a question of whether the tax exemption could be applied in the case of such land, since the plot is partly built by the construction of the runway, which would be evidence of the tax exemption, but at the same time it is not entirely built. The Government points out that, without Paragraph 4 (5), the Real Estate Tax Act would not "explicitly regulate the rule that only part of the parcels can be taken into account for the purposes of the exemption. According to Section 2 (1) of the Real Estate Tax Act, the entire plot is then taxed. It follows that, without the provision in question, there would be an interpretation against which either the parcel as a whole is exempted or is not exempted at all ', in which case an interpretation which is more favourable to the taxpayer would have to be chosen, namely that the parcel is exempt as a whole. This extension of the tax exemption from part of the parcels to the whole parcels would ultimately lead to a reduction in municipal tax revenue.
Replication of the appellant
17. The Constitutional Court sent the appellant a reply to the above observations by the chambers of Parliament and the Government as intervener. On Parliament's observations, the appellant stated that the two chambers only submitted a "technical 'statement on the process of adopting a law on which it had no comments. In reply, the appellant pointed out that it is aware of the discretion of the Constitutional Court in the assessment of tax issues, but in the present case it is so important that it requires intervention by the Constitutional Court. This importance lies in the fact that the State, in the position of a supreme body, has established a tax advantage for its ownership of real estate and has thereby misused its position as owner as legal persons, which other owners cannot do. Such a procedure is in addition to the burden of municipal revenue. The appellant does not agree with the Government's claim that the State is tax exempt only when it exercises state authority and refers in detail to its proposal. It states that, for example, real estate tax for recreation or training of employees does not have to be paid by the State, while other owners do. The appellant maintains that the tax exemption is to apply to real estate intended for a particular beneficial purpose and is not to be linked to the owner's person. This would provide tax exemptions against, for example, the buildings of the Central Bohemian Region in the performance of public administration on the territory of the city of Prague or the town of Šlapanika in the exercise of the jurisdiction of the municipality with extended competence in the building of the branch of the City Office of Šlapanika in the territory of Brno.
Communication from the Ombudsman
18. The Ombudsman informed the Constitutional Court, by means of a communication dated 12 October 2020, that he did not intervene in the proceedings.
Oral proceedings
19. The Constitutional Court concluded that further clarification of the case cannot be expected from oral proceedings and therefore, in accordance with Article 44 of the Law on the Constitutional Court, as amended, it decided on the case without its regulation.
Proceedings before the Constitutional Court
20. Under Article 64 (1) (b) of the Law on the Constitutional Court, a group of at least 17 senators has the right to apply for annulment of the law or its individual provisions. A group of 24 senators, represented pursuant to paragraphs 29 to 31 of the Constitutional Court Act, as amended, has submitted a proposal. In accordance with Section 64 (5) of the Law on the Constitutional Court, as amended by Act No. 320 / 2002 Coll., the signing document signed by each of the 24 Senators was attached to the application. The appellant is therefore actively legitimised to submit the proposal.
21. At the same time, the Constitutional Court found no reason for inadmissibility of the application under Section 66 of the Law on the Constitutional Court, as amended by Act No 48 / 2002 Coll., nor a reason for termination of proceedings under Section 67 of the same Act. The Constitutional Court finds that, pursuant to Article 87 (1) (a) of the Constitution, it is competent to consider an application which fulfils all the legal requirements. That is why he has accepted his meritorial assessment.
Constitutional conformity of the legislative process
22. In proceedings for the annulment of laws or their individual provisions, the Constitutional Court pursuant to § 68 (2) of the Law on the Constitutional Court, as amended by Act No. 48 / 2002 Coll., first assesses the constitutional conformity of the legislative process. The Constitutional Court has verified that the observations of the parties correspond to the facts. In response to the Chamber of Deputies, the Constitutional Court adds that some of the contested provisions of the Real Estate Tax Act, in addition to Act No. 483 / 2001 Coll. and the statutory measure of the Senate No. 344 / 2013 Coll. were gradually amended by Act No. 315 / 1993 Coll., No. 65 / 2000 Coll., No. 342 / 2005 Coll. and No. 23 / 2015 Coll. In the case at hand, the Constitutional Court, on the basis of the observations of the parties and of publicly available parliamentary and senate information (https: / / www.psp.cz and https: / / www.senat.cz), found and for brief reasons only [e.g. the findings of 17.12.2019 sp. zn. These facts were also not contested by the appellant (see paragraph 17 above).
Text of the contested provisions
23. The valid and effective wording of the contested provisions of Section 4 of the Real Estate Tax Act and its context is as follows (the contested parts of the provisions are marked in bold):
(1) Land tax exemption
(a) land owned by the Czech Republic;
(...)
(d) land forming one functional unit with a taxable construction of a publicly accessible monument building declared a cultural monument, which is:
1. owned by the Czech Republic; or
2. accessible for educational reasons under a written contract concluded between the Ministry of Culture and the owner,
(...)
(3) The land referred to in paragraph 1 (a) shall be exempt from land tax if it is not used for business, hire or hire-purchase; if such land is leased or smuggled to a municipality, region or organisation of the State or a contribution organisation, they shall be exempted provided that they are not used for business. The land referred to in paragraph 1 (d) to (g), (l), (r), (t) and (u) shall be exempt from the land tax if it is not used for business, hire or hire. The land referred to in points (a), (b) and (t) of paragraph 1 shall be exempt from the land tax if the construction right is not established.
(...)
(5) The exemption provided for in paragraph 1 shall also apply to part of the land.
24. The valid and effective wording of the contested provisions of Paragraph 9 of the Real Estate Tax Act and its context are as follows (the contested parts of the provision are marked in bold):
(1) Exemptions from the tax on buildings and units
(a) taxable buildings or taxable units owned by the Czech Republic;
(...)
d) Taxable buildings of a publicly accessible memorial building declared a cultural monument
1. owned by the Czech Republic; or
2. accessible for educational reasons under a written contract concluded between the Ministry of Culture and the owner; the contract shall specify the time and spatial extent of disclosure and specify its regime in accordance with the monument value and other means of use of the object,
(...)
(4) Taxable buildings, with the exception of residential buildings, and taxable units which include a non-residential space other than a cellar or chamber referred to in paragraph 1 (a), are exempt from tax on buildings and units if they are not used for business, rented or smuggled; if they are leased or smuggled into a municipality, region or organisational component of a State or a contribution organisation, they shall be exempt provided they are not used for business. The taxable buildings or taxable units referred to in paragraph 1 (e), (f), (u) and (v) shall be exempt from tax on buildings and units if they are not used for business, hire or hire. The exemption from the tax on buildings and units referred to in paragraph 1 (r) shall not apply to the taxable building and the taxable unit, provided that it is centrally heated and connected to the heating distribution system under the Energy Act.
Substantial assessment of the proposal
General considerations
25. The real estate tax is the property tax entrusted, the object of which is both land on the territory of the Czech Republic registered in the Real Estate Register (Section 2 (1) of the Real Estate Tax Act) and the taxable buildings and units defined by law (Section 7 of the same Act). The proceeds of this tax belong to the municipality in whose territory the taxed property is situated [Paragraph 4 (1) (a) of Act No 243 / 2000 Coll., on the budgetary determination of the proceeds of certain taxes to the local authorities and certain state funds (Law on the Budget Determination of Taxation), as amended by Act No 344 / 2013 Coll.]. At the same time it is the only tax in the tax system of the Czech Republic for which the municipality is entitled to at least partially influence its amount by means of the so-called local coefficient, and hence the size of the tax revenue or budget revenue (cf. Marková, H. Financial management of the local authorities. Prague: Charles University in Prague, 2008, p. 54). Unlike local taxes, however, the State manages the collection of this tax for municipalities (Financial Administration of the Czech Republic). In doing so, law school points out that "municipalities... do not refund the state's real estate tax in any way, only collect revenues. Their net income on this tax is thus significantly higher than would have been if they were at the same time obliged to manage it" (Butcher, K. Exclusive tax revenues of municipalities. Commission Implementing Regulation (EU) No 540 / 2011 of 25 May 2011 implementing Regulation (EC) No 1107 / 2009 of the European Parliament and of the Council as regards the list of approved active substances (OJ L 153, 11.6.2011, p. 1). On average, the income from real estate tax amounts to less than 3% of the total tax revenue of municipalities' budgets, but in particular for smaller municipalities it can reach up to 10% (Raddan, M. Local taxes. Praha: Wolters Kluwer, 2012, p. 195; Butcher, K., cit. d., there).
26. The tax exemption enshrined in Sections 4 and 9 of the Real Estate Tax Act constitutes a significant correction element in the real estate tax determining the part of the tax subject on which the tax is not collected (Janošíková, P. In Janošíková, P., Carrot, P. et al., Financial and Tax Law. 2. Plzeň: Aleš Čenek, 2016, p. 309). The provisions of Sections 4 and 9 of the Real Estate Tax Act apply to a whole range of land, buildings and taxable units owned by several groups of owners - other than the State, for example, to public higher education institutions [§ 4 (1) (r) of the same Act], associations, trade unions or employers' organisations [§ 9 (1) (f) of the same Act] or to counties in relation to real estate in their territorial area [§ 4 (1) (t) and § 9 (1) (t) of that Act]. If the tax exemption is provided for in the contested provisions, this exemption is never applicable to land, buildings and taxable units used for business purposes (Section 4 (3), first sentence and Section 9 (4), first sentence of the First Real Estate Tax Act).
27. The Constitution establishing the legal personality of municipalities (local authorities) provides that they have their own assets and operate under their own budget (Article 101 (3) of the Constitution). It is true that "territorial authorities representing the territorial community of citizens must be free to decide, through the autonomous decision-making of their representative bodies, how they will dispose of the funds they are equipped to carry out their tasks. It is the management of its property separately on its own account and its own responsibility is an attribute of self-government. The existence of own and sufficient financial or property resources is therefore a prerequisite for the effective performance of the functions of the local authority" [finding of 9.7.2003 sp. zn. Pl. ÚS 5 / 03 (N 109 / 30 SbNU 499; 211 / 2003 Coll.)]. The ownership of the property and the existence of own income are therefore a key economic precondition for the territorial administration, which is also highlighted by the European Charter of Local Government [cf. Marková, H. Public law corporations and their financial resources. In Žák Krzyžanková, K. (ed.) Right as a multidimensional phenomenon. A tribute to Ales Gerloch for his 65th birthday. Plzen: Aleš Čenek, 2020, p. 726, pp. 731-732]. Of Articles 8, 100 (1), 101 (1) and 104 (2) The Constitution is then taken into account that "the right of local authorities to take decisions on their own responsibility and at the same time of public interest, in the framework of decentralised autonomous areas, defined by the constitutional order and the laws of the local authorities, on their matters within their territory and for their decisions to bear public liability '(finding of 12 May 2020 sp. zn. III. ÚS 709 / 19, likewise Philip, J. In Bahěľová, L., Filip, J., J., Molek, P., Podhrazký, M., Sukánek, R., Šiměmělek, V., Exhunek, L. Constitution of the Czech Republic. Comment. Praha: Linde, 2010, p. 1106 et seq.).
28. Following the above, however, it should be stressed that "the guarantee of territorial self-government under the Constitution is laconic '[the finding of 5.2. 2003 sp. zn. Pl. ÚS 34 / 02 (N 18 / 29 SbNU 141; 53 / 2003 Sb.)] and that the scope for the exerting intervention of the Constitutional Court into the Tax Act would only be opened if" if it was found and demonstrated that the legislation in question practically makes it impossible for... certain categories of municipalities, in particular small ones, their self-existence, i.e. that their income would fall below the level which would prevent the exercise of self-government within the meaning of Article 8 of the Constitution' [the Council of 20. 11.
29. The Constitutional Court generally underlines the review of tax laws. In particular, it points out in the long term that, in view of the principle of judicial self-restraint, "it cannot assess the optimisation of the tax system or assess tax laws from the point of view of the fulfilment of the basic functions of taxes... '[see, for example, the finding of 28.6.2016 sp. zn. If the Constitutional Court had acceded to it, it would have entered into the field of individual policies whose rationality could not be well assessed from the point of view of constitutionality" [finding of 21 April 2009 sp. zl. ÚS 29 / 08 (N 89 / 53 SbNU 125; 181 / 2009 Coll.)]. For these reasons, the Constitutional Court also reviews the selected elements of the legislation on tax and tax law (in particular tax rates) only to the "proportionality test in the narrower sense, which, in the case of taxes (similar to, for example, the setting of an upper limit on financial penalties), consists in excluding their extreme disproportionality. The interference with the property law must not lead to such a fundamental change in the property situation of the entity concerned that it would thwart the very substance of the property... or that the boundaries of the public mandatory cash performance by the individual against the State would have acquired a strangling (choking) effect" [finding of 10.7.2014 sp. zn. Pl. ÚS 31 / 13 (N 138 / 74 SbNU 141; 162 / 2014 Sb.), and the finding of 13.8.2002 sp. zn. Pl. ÚS 3 / 02 (N 105 / 27 SbNU 177; 415 / 2002 Sb.) and of 18.8.2004 sp. Pl. Pl. ÚS 7 / 03 (N 113 / 34 SbNU 165; 512 / 2004 Coll.].].
30. It can therefore be concluded that "the assessment of the suitability and necessity of the various components of tax policy is left to the discretion of the democratically elected legislator as long as the impact of the tax on persons does not have a suffocating effect (not extremely disproportional) and does not further violate the principle of Accesoric and Non-Accessional Equality '(the finding of 28 June 2016 sp. zl. ÚS 18 / 15). Extreme discrimination can be discussed only in a situation where the tax is liable to intervene in property rights in a way that would destroy the substance of the property itself or destroy the taxable person's property base [cf., for example, the finding of 13.8.2002 sp. zn. Pl. ÚS 3 / 02 (N 105 / 27 SbNU 177; 405 / 2002 Coll.) or the finding of 21.4.2009 sp. zn. Pl. ÚS 29 / 08 (N 89 / 53 SbNU 125; 181 / 2009 Coll.), recital 53]. At this point, the Constitutional Court only briefly states that, in order to distinguish between Accesoric and Non-Accesoric Equality, the Court of First Instance stated in detail in the judgment of 28 March 2006 in the Pl. ÚS 42 / 03 (N 72 / 40 of the SbNU 703; 280 / 2006 Coll.), in which it defined Accesoric Equality as an equality in relation to another fundamental law or freedom, whereas non-accesoric equality as a universal equality before the law. In the decision of 15.3.2016 sp. zn. The Charter only benefits people, i.e. individuals as dignified human beings. The equality is a category relative to the breach of which it is necessary to treat different entities in the same or comparable situation in a different manner without having objective and reasonable reasons for such an approach [finding of 15.3.2016 sp. zn.
Application of the general bases of the constitutional review to the contested provisions
31. Based on those provisions of the Constitutional Code and the legal opinions expressed in its relevant findings, the Constitutional Court has reached the following conclusions in an abstract check of the constitutionality of the contested provisions of the Real Estate Tax Act.
32. Paragraph 4 (1) (a) of the Real Estate Tax Act exempts land owned by the Czech Republic from the land tax. In this case, the substantive scope of the tax exemption is limited by the provisions of Paragraph 4 (3) of the Real Estate Tax Act (which the appellant also requests to be abolished), according to which the State-owned land is exempted if "it is not used for business, leased or smuggled; if such land is leased or smuggled to a municipality, region or organisation of the State or a contribution organisation, they shall be exempt provided that they are not used for business'.
33. Similarly designed provision § 9 (1) (a) of the Real Estate Tax Act introduces tax exemptions for taxable buildings and taxable units owned by the Czech Republic. According to Section 9 (4) of the Real Estate Tax Act, taxable buildings, with the exception of residential buildings, and taxable units, which include non-residential premises other than a cellar or chamber, referred to in Section 9 (1) (a) are then exempt from tax on buildings and units, "if they are not used for business, rented or smuggled; if they are leased or smuggled into a municipality, county or organisational component of a State or a contribution organisation, they shall be exempt provided that they are not used for business'.
34. First of all, the Constitutional Court notes that the appellant itself does not object to the "choking effect '(extreme discrimination) of the contested legislation, since it must, moreover, be assessed by the view of taxpayers in favour of whom the exclusion of the" choking effect' is based and not by the view of the municipalities as recipients of the real estate tax. The contested provisions of the Real Estate Tax Act do not include the rules on the tax rate or the amount of the local real estate tax coefficient which in itself could directly cause a "choking effect 'on taxpayers. For this reason, the Constitutional Court also did not proceed to review the contested provisions precisely by testing the exclusion of extreme disproportionality [see, to that effect, the finding of 10.7.2014 sp. zl. ÚS 31 / 13 (N 138 / 74 CollNU 141; 162 / 2014 Coll.)].
35. The Constitutional Court has also examined whether the contested provisions are capable of intervening in the right of municipalities to self-administration under Article 8 of the Constitution in a manner which justifies the annulment of the contested provisions. The Constitutional Court replied to this question in the light of the finding of 20 November 2007 sp. zn. Pl. ÚS 50 / 06 (N 196 / 47 CollNU 557; 18 / 2008 Coll.) negative. As already follows from paragraph 25, the proceeds of real estate tax on average account for only less than 3% of the total tax revenue of municipalities, while municipalities collect the net revenue from that tax without refunding the costs of its administration to the State. The tax exemption of part of the land, buildings and units owned by the State cannot, in view of the relatively low share of the income of the municipalities arising from real estate tax on total revenues, result in a "rolling effect '. Even for the smallest municipalities, where the income of real estate tax may amount to up to 10% of their tax revenue, it cannot be concluded that the contested legislation would make it impossible for them to exist alone or that their income would fall below the level which would prevent the exercise of their own administration under Article 8 of the Constitution (see paragraph 28 above). Nor does the appellant object to such an effect of the contested legislation. In addition, the Constitutional Court notes that Article 9 (3) of the European Charter of Local Government, for which the Czech Republic has made a reservation (see Notice of the Ministry of Foreign Affairs No. 181 / 1999 Coll., on the adoption of the European Charter of Local Government), is not applicable in the present case. Notwithstanding the above, the European Charter of Local Government as an international agreement which is not directly enforceable (self-execution)," does not guarantee the full freedom of the Territorial Authority' [the finding of 5.2. 2003 sp. zn.
36. The appellant further argues that, by using the municipalities of the public goods (infrastructure, lighting, etc.) which lead to its properties (see paragraph 5 above), the State, whose certain real estate is tax-exempt, fails to recognise the fact that taxes are non-refundable and non-equivalent in cash, i.e. there is an immediate lack of direct consideration for the tax paid (see Karfiková, M., Boháč, R. In Karfiková, M. and kol. Praha: Wolters Kluwer, 2018, p. 150). Moreover, the same argument as the appellant put forward against the tax exemption of certain state-owned real estate could also be applied to land owned by all other groups of owners (see paragraph 26 above), which could call into question the rationale of the tax exemption on real estate as such.
37. The applicant further disputes the compatibility of the contested legislation with the general principle of equality referred to in Articles 1 and 3 (1) of the Charter and the equality of ownership of all owners under Article 11 (1) of the Charter. As outlined by the Constitutional Court in paragraph 30 above, the distinction leading to a breach of the principle of equality is inadmissible in two respects: it may act both as an Accesorial Principle and as a non-Accesorial Principle consisting of the exclusion of the libel of the legislature in the distinction between the rights of certain groups of entities - in fact it is the principle of equality before the Law [finding of 21 April 2009 sp. zl. ÚS 29 / 08 (N 89 / 53 SbNU 125; 181 / 2009 Coll.)]. The municipalities do not bear witness to non-accesorial equality as a general equality before the law pursuant to Article 1 of the Charter [finding of 15 March 2016 sp. zl. ÚS 30 / 15 (N 42 / 80 CollNU 517; 239 / 2016 Coll.), recital 26].
38. The tax exemption legislation, which is essentially part of all tax laws, is (without the Constitutional Court negating the above) primarily a matter of tax policy in which the Constitutional Court should intervene as a "negative legislator '[cf. the finding of 12.2.2002 sp. zn. Pl. ÚS 21 / 01 (N 14 / 25 CollNU 97; 95 / 2002 Coll.]], rather exceptionally (see paragraph 29 above). Infringement of the principle of equality, including its connection to the protection of property rights under Article 11 (1) of the Charter, is necessarily subject to different treatment of entities in the same or comparable situation, without there being objective and reasonable grounds for the different approach applied [cf. Done at Brussels, 28 June 2016. The Constitutional Court stated that the inadmissible differential treatment" consists in a different tax burden on the other group, with this difference in tax burden on that group because it is higher', stressing that "the existence of objective and reasonable reasons explaining both the existence of the different treatment, the intensity and the form of that different treatment, is decisive in concluding the constitutionality or the unconstitutional nature of that solution '.
39. Although the Constitutional Court is aware of the particularities of real estate tax (paragraph 25), it cannot be concluded that the State would be in a fully comparable position with other entities on tax matters. The appellant can be held to be correct in that the contested legislation also exempts the land, buildings and units owned by the State in which many non-sovereign and fiscal public administration is carried out, as opposed to the administration of the Supreme Court, by means of private law (Hendrich, D. In Hendrich, D. et al., Administrative Law. General section 8. Prague: C. H. Beck, 2012, p. 12). However, the tax exemption also applies to those properties in which there is no public authority (the Supreme Public Administration) is regarded by the Constitutional Court as being proportionate and non-constitutional, as it is in principle always a public service activity.
40. In particular, the tax exemption for those land, buildings and taxable units owned by the State which are used for business (whether by the State itself or by an entity from the State itself) should be considered. In such a case, however, the provisions of § 4 (3), first sentence, and § 9 (4), first sentence, of the First Real Estate Tax Act, which the appellant also contests, explicitly exclude the tax exemption of such immovable property (see paragraph 26). In addition, the tax exemption for defined real estate used for business does not take place even if it is leased or smuggled into the municipality, county, state organisational body or contribution organisation [cf. § 4 (3), first sentence and § 9 (4), first sentence of the First Real Estate Tax Act in fine (in the words: "provided that they are not used for business'). Thus, the Constitutional Court was not able to attest to the appellant's objections alleging" a flat-rate exemption of the State as owner ', which should ultimately also be affected by the right to pursue an economic activity under Article 26 (1) of the Charter. If, following that, the appellant contends that "the definition of business is of considerable importance', it should be noted that the assessment of whether the property is used for business or not in the present case is a matter of interpretation and application of the law by the tax authorities of the Czech Republic in specific cases. The appellant's" definition of business' is the same for all entities, with the exclusion of tax exemptions for land, buildings and taxable units used for business working under the Real Estate Tax Act and against a number of other tax entities (cf. § 4 (3), second sentence and § 9 (4), second sentence). Nor is there anything special, let alone unacceptable, or even unconstitutional, in relation to the principle of accessorial equality, in that the State "liberated itself from the tax exception and then taxed after all the exception to a particular matter in its possession" (see paragraph 8), even more so if that exception makes it impossible for the tax exemption of property owned by the State used for business. This does not change the appellant's argument (see paragraph 6) that the State has imposed a tax advantage on its "overseers' position. It should be noted that all laws are adopted from the" supreme position of the state "- it is precisely because" it is the law of coercion "(Kelsen, H. The basis of general state theory. Brno: Barvich and Novotný, 1926, p. 23).
41. The appellant can be identified in the fact that the tax exemption of state-owned real estate also affects those which are used for the recreation of civil servants, since in the present case it is not a commercial use of real estate, their rental or a pacht (see paragraph 8). However, the tax exemption thus designed is not only for the benefit of the State, but also for some other tax entities. As a result of a relatively broad tax exemption, for example, "taxable buildings which are a building or taxable units owned by companies of general interest, associations, trade unions, employers' organisations, international trade unions and their subsidiary organisations' [§ 9 (1) (f) of the Real Estate Tax Act] are also exempt. In the overall context, the above-mentioned case of State-owned property tax exemption used for the purpose of employee recreation is rather a marginality which, even in view of the discretion of the Constitutional Court in the review of tax laws, cannot lead to a conclusion on the State's unconstitutional tax advantage towards other tax entities. In fact, both the form and the intensity of the alleged different treatment [finding of 28.6.2016 sp. zn.
42. The Constitutional Court also points out that the tax exemption also applies, for example, to land, buildings and units owned by the county which are located in its territorial district [§ 4 (1) (t) and § 9 (1) (t) of the Real Estate Tax Act], in principle under the same conditions as in the case of State-owned immovable property, i.e. excluding those used for business, are leased or smuggled (§ 4 (3) of the Second and § 9 (4) of the Second Law). The counties are higher local authorities, which have a constitutional right to self-administration similar to municipalities (Articles 8 and 100 (1) of the Constitution). Thus, if the tax exemption of land, buildings and units is applied not only to those owned by the State, but to a significantly wider range of tax entities, the argument on the "privileged 'status of the State vis-à-vis other entities is significantly weakened.
43. However, the appellant is right by the Constitutional Court in that the tax-exempt property heading is also somewhat unsystematic. For example, the tax exemption of real estate owned by the county only applies to those located in its territorial district, which may result in "anomalies' in the reply (see paragraph 17 in fine). Furthermore, the Constitutional Court failed to see that the land, buildings and units, for example, owned by professional chambers, were not tax-exempt, even though they, like the State, exercise public administration through their authorities. Similarly, the Constitutional Court is aware that according to part of the legal teaching, the tax exemption of the State is" not very appropriate '(see, for example, Řezníčková, K. Exclusive tax revenues of municipalities. Olomouc: Iuridicum Olomoucense, 2016, p. 173), as the revenue from this tax is the income of municipal budgets. Although de lehferenda can certainly be seen in a number of considerations as to the better construction of the tax exemption enshrined in the Real Estate Tax Act (including further narrowing of the State-owned property tax exemption), this fact cannot, in view of the above-mentioned general considerations (Part VII / 1), or a restrained approach by the Constitutional Court to the review of the tax laws, lead to the conclusion on the unconstitutionality of the contested legislation.
44. The Constitutional Court notes that it also carried out restrictive action in the review of § 11a (1) (b) of the Act of the Czech National Council No. 334 / 1992 Coll., on the protection of the agricultural land fund, as amended by Act No. 41 / 2015 Coll., which provides for an exemption from payment of the payment for permanent withdrawal of agricultural land from the agricultural land fund for the construction of infrastructure owned by the State, when the proposal for its cancellation was rejected by the Act of 15 March 2016 sp. sp. z. pl. ÚS 30 / 15 (N 42 / 80 CollNU 517; 239 / 2016 Coll.).
45. In the same way as used by the Constitutional Court above, he also acceded to the application for annulment of Paragraph 4 (1) (d) in the words "which is the first owned by the Czech Republic," or "and the designation of the point by the order number" 2. "and § 9 (1) (d) in the words" which is the first owned by the Czech Republic, "and the designation by the order number" 2. "According to Section 4 (1) (d) (1) of the Real Estate Tax Act, the property owned by the Czech Republic is tax-exempt consisting of one functional unit with a taxable construction of a publicly accessible monument building declared a cultural monument. In addition, (point 2 of the same provision), land owned by persons other than a State consisting of one functional unit with a taxable construction of a publicly accessible monument declared a cultural monument, if it is" accessible for educational reasons under a written contract concluded between the Ministry of Culture and the owner ', is also tax-exempt. Similarly, the Real Estate Tax Act [Paragraph 9 (1) (d)] provides for the tax exemption of taxable buildings of a publicly accessible monument building declared a cultural monument.
46. The appellant is of the opinion that buildings owned by the State declared a cultural monument can be tax-exempt, but "according to general rules as for any owner - that is to say, the conclusion of an agreement with the Ministry of Culture, where the State as owner will act as the relevant contributory organisation or organisation of the State..." However, in the absence of a requirement of the Real Estate Tax Act for the State to conclude contracts with itself, in which it may also define the extent to which real estate is made available to the public, it cannot be seen that it is unconstitutional. It can also be ignored that a large number of objects declared a cultural monument are managed by the National Heritage Institute as a state contribution organisation, the status of which is issued by the Ministry of Culture [§ 26 (2) (j) of Act No. 20 / 1987 Coll., on State Monumental Care, as amended, (hereinafter referred to as the "Act on State Monument Care")], which is also entrusted by the National Heritage Institute to perform tasks in the State Monumental Care Section [§ 32 (2) (j) of the State Monument Care Act]. It would be a preposterous requirement that the National Heritage Institute, as a contributory organisation, have to conclude an agreement with the Ministry of Culture, as probably requested by the author. It is the National Monument Institute which implements and ensures the accessibility of cultural monuments by means of guided and similar professional services [Article VI (1) (a) of Annex 4 to the Statute of the National Monument Institute]. The Constitutional Court therefore considers that the contested provisions do not introduce unequal treatment between individual tax entities without objective and reasonable grounds (finding of 28.6.2016 sp. zn. Pl. ÚS 18 / 15) and that the intensity and form of such "different treatment ', consisting of the absence of a requirement for the State to conclude with itself the above-mentioned Treaty, do not give rise to grounds for their annulment, taking into account the above-mentioned grounds.
47. Furthermore, the appellant contests the provision of Section 4 (5) of the Real Estate Tax Act, according to which the tax exemption under Section 4 (1) also applies to part of the land. It states that this provision further implements the provisions of Paragraph 4 (1) (a) of the Real Estate Tax Act, the existence of which is legally meaningless. Nor could the Constitutional Court testify to this argument, since it is already clear from the grammatical interpretation that Section 4 (5) of the Real Estate Tax Act applies to all cases of tax exemptions under Section 4 (1) (a) to (x) of the same Act, not only to the tax exemptions of land owned by the Czech Republic, i.e. the provisions of Section 4 (1) (a) of the Real Estate Tax Act which the appellant has challenged. Therefore, it cannot be argued that, as a result of the annulment of § 4 (1) (a) of the Real Estate Tax Act (possibly other provisions under appeal), the existence of § 4 (5) of that Act becomes legally meaningless. In the light of the grounds set out in point 29, it is not for the Constitutional Court to further assess the function of that provision when it is not, by virtue of the nature of the case, competent to cause extreme discrimination in tax law or to distort equality between individual owners (Article 11 (1), second sentence of the Charter), since it does not distinguish between different groups of owners at all. In addition, if the State can generally establish tax exemptions for land as a whole, the argument and fortiori (and maiori ad minus) may also be accepted. Moreover, the annulment of the contested provision could, paradoxically, lead to a reduction in the tax revenue of the municipalities on real estate tax, as the Government pointed out in its observations (see paragraph 16). The appellant did not dispute this fact either in the reply.
Conclusion
48. For all the above reasons, the Constitutional Court ruled that the application for annulment of § 4 (1) (a), § 4 (1) (d) in the words "which is owned by the Czech Republic, or" and the designation of the point by the order number "2.," § 4 (3) in the first sentence, § 4 (5), § 9 (1) (a), § 9 (1) (d) in the words "which is owned by the Czech Republic," and the designation by the order number "2." and § 9 (4) in the first sentence by the law on real estate tax.
President of the Constitutional Court:
JUDr. Rychetský v. r.
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Regulation Information
| Citation | The Constitutional Court found No 241 / 2021 Coll., on the application for annulment of certain provisions of Act No. 338 / 1992 Coll., on Real Estate Tax, as amended |
|---|---|
| Regulation Type | - |
| Author | - |
| Collection | Code of Laws |
| Date of Promulgation | 23.06.2021 |
|---|---|
| Effective from | - |
| Effective until | - |
| Status | Valid |
The regulation text is for informational purposes only.
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