The Constitutional Court found No 303 / 2019 Coll.
The Constitutional Court found of 1 October 2019 sp. zn.
Valid
The Constitutional Tribunal found
Text versions:
20.11.2019
303
FIND
The Constitutional Court
On behalf of the Republic
The Constitutional Court decided on page 5 / 19 in plenary of the court of Pavel Rychetský and Judge Louis David, Jaroslav Fenyk, Josef Fiale, Jan Filip, Jaromír Jirsy (Judge of the Rapporteur), Tomáš Licenčník, Radovan Suchánek, Kateřina Šimáčková, Vojtěho Šimíček, Miladka Tomková, David Uhlíř and Jiří Zemánek, on the motion of the group of senators, acting on the basis of the revenue, in the text of the Law No. 344 / 2019 Coll., on the abolition of § 18a paragraph 1 (f) of Act No. 586 / 1992 Coll.
as follows:
I. In Article 18a (1) (f) of Act No. 586 / 1992 Coll., on Income Taxes, as amended by the statutory measure of the Senate No. 344 / 2013 Coll. and Act No. 125 / 2019 Coll., the words "with the exception of financial compensation" are deleted from the date of the declaration of the finding in the Collection of Laws.
II. The proposal to repeal Act No. 125 / 2019 Coll., amending Act No. 428 / 2012 Coll., on Property Settlement with Churches and Religious Companies and on the Amendment to Certain Acts (Act on Property Settlement with Churches and Religious Companies) and Act No. 586 / 1992 Coll., on Income Tax, as amended, is rejected.
Reasons
Subject matter
1. On 24 May 2019, a motion from a group of 44 senators, under which Senator Ing. Petr Šilar (hereinafter referred to as "the author 'or" group of senators') was served on the Constitutional Court for the annulment of Paragraph 18a (1) (f) of Act No. 586 / 1992 Coll., on income taxes, as amended, (hereinafter referred to as "the Income Tax Act ') in the words" with the exception of financial compensation'. In the event that the Constitutional Court fails to comply with this proposal, the appellant seeks annulment of Act No. 125 / 2019 Coll., amending Act No. 428 / 2012 Coll., on Property Compensation with Churches and Religious Companies and on the Amendment to Certain Laws (Act on Property Compensation with Churches and Religious Companies) and Act No. 586 / 1992 Coll., on Income Tax, as amended, to take effect on 1 January 2020.
2. On 6 June 2019, a motion from a group of 62 Members, for which Mr Marek Benda, hereinafter referred to as "the Group of Members', was served on the Constitutional Court for the annulment of: 1 Act No. 125 / 2019 Coll.; 2 words" except for financial compensation 'in § 18a (1) (f) of the Income Tax Act. The proposal was assigned a file mark Pl. ÚS 9 / 19.
3. On 12 June 2019, the Constitutional Court received an application from a further group of 19 senators, under which Senator Zdeněk Hraba (hereinafter referred to as "the second group of senators') to abolish the same legal provisions as set out in points 1 and 2. The proposal was assigned a file mark Pl. ÚS 10 / 19.
4. In view of the fact that the above-mentioned proposal by the Group of Senators of 24.5.2019 was initiated by the proceedings for the annulment of the above-mentioned provisions, which were also brought by the Group of Members at the previous point, the latter group of Senators (hereinafter "the other draftsmen '), the Constitutional Court later put forward by resolutions sp. v. Pl.
Affected legislation
5. The contested Act No. 125 / 2019 Coll. (Article I) repeals Article 15 (6) of Act No. 428 / 2012 Coll., on Property Compensation with Churches and Religious Companies and on the Amendment of Certain Laws (Act on Property Compensation with Churches and Religious Companies), hereinafter referred to as "the Property Compensation Act," the following text:
Financial compensation
...
(6) The financial compensation is not subject to a tax, a fee or other similar cash supply.
In parallel with Act No. 125 / 2019 Coll. (Article II), the contested words "with the exception of financial compensation 'are inserted in Paragraph 18a (1) (f) of the Income Tax Act. The provision referred to in that Act, with effect from 1 January 2020, reads as follows:
Specific provisions on the subject of public utility tax
(1) Not subject to tax for a public utility taxpayer
...
(f) revenue from the acquisition of the case free of charge, with the exception of the financial compensation provided for in the Act on property compensation with churches and religious societies.
Finally, Act No. 125 / 2019 Coll. (Article III) provides for its effectiveness on 1 January 2020; other provisions do not include.
6. The consequence of the amendment has been the annual instalments of the financial compensation that have been paid since 2013 to the churches and religious societies concerned, on the basis of Article 15 and 16 of the Act on property settlement and subsequently concluded settlement agreements published in the Communication of the Ministry of Culture No. 55 / 2013 Coll., on the conclusion of settlement agreements between the Czech Republic and the Apostolic Church, the Church of the Adventists of the Seventh Day, the Church of the Brotherhood, the Church of the Czech Republic, the Church of the Czechoslovak Hussite, the Church of the Greek Church of the Catholic Church of the Czech Republic, the Evangelical Church of the Evangelical Church of the Evangelical Church of the Czech Republic, the Evangelical Church of the Czech Republic, the Evangelical Church of the Methodist, the Federation of the Jewish Communities in the Czech Republic, the Holy Church of the Czech Republic, the Czech Republic, the Jewish Church of the Czech Republic, the Jewish Church of the Czech Republic, the Czech Republic, the Czech Republic.
Active procedural legitimacy and management conditions
7. Pursuant to Article 64 (1) (b) of the Constitutional Court Act, a group of at least 41 Members or at least 17 Senators have the right to file an application for annulment of the law or its individual provisions.
8. The first motion was made by a group of 44 senators; In accordance with Article 64 (5) of Act No. 182 / 1993 Coll., on the Constitutional Court, as amended by Act No. 320 / 2002 Coll., it also attached to it a signature document to which each of them individually confirmed that it was attached to the proposal. The applicant therefore fulfils the condition of active legitimacy. Since other appellants (groups of 62 Members and 19 Senators, confirming their participation on the signing list) also fulfil the conditions of active legitimacy, they are entitled to participate in the proceedings of the present Senate Group in the capacity of interveners and their submissions are included in the subject matter before the Constitutional Court.
9. All three applications submitted to the Constitutional Court in the case under title contain all the legal requirements required, are admissible within the meaning of the provisions of Section 66 of Act No. 182 / 1993 Coll., on the Constitutional Court, as amended by Act No. 48 / 2002 Coll., and at the same time there are no grounds for terminating the procedure under Section 67 of the Law. The Constitutional Court has therefore discussed all three proposals together in a meritorical manner.
Proceedings before the Constitutional Court
Arguments of the appellant
10. Also as a result of the case law of the Constitutional Court [cf. sp. zn. Pl. ÚS 9 / 07 of 1 July 2010 (N 132 / 58 CollU 3; 242 / 2010 Coll.)], after more than 20 years of complex negotiations in the framework of the restitution legislature, a law on property compensation was adopted, which, according to the explanatory memorandum, was aimed, first, at the partial correction of certain property wrongs committed by the Communist regime in churches and religious societies, secondly, at the creation of conditions for the economic separation of the Church from the State. Part of the Act was to fulfil the State's obligation to protect the fundamental rights and freedoms arising from Article 15 (1) of the Charter of Fundamental Rights and Freedoms ("the Charter '), guaranteeing the right to express religion freely and Article 16 (2) of the Charter, according to which churches and religious societies manage their affairs, in particular establish their bodies, establish their clergy and establish religious and other church institutions, independently of the state institutions. The quoted law combines, within the limits of the possibilities of the State, the principle of minimising the impact on third parties when correcting the injustices of natural restitution as well as financial compensation, and complements the financing of" personal benefits of the spiritual "and other material costs associated with the exercise of services and other religious acts, as well as with the church administration. According to Article 15 of the Act, a total of CZK 59 billion is to be paid to registered churches and religious societies over the course of 30 years, starting in 2013 (80% Roman Catholic Church, 20% other churches and religious society).
11. The Property Compensation Act as a whole was subject to a review of the Constitutional Court [finding sp. zn. Pl. ÚS 10 / 13 of 29.5.2013 (N 96 / 69 SbNU 465; 177 / 2013 Coll.)]; according to the appellant, the Constitutional Court in the quoted finding settled a wide range of objections and contentious claims in an exhaustive manner. The same objections reappeared in the House debate in support of the adoption of the contested Act No. 125 / 2019 Coll., although the legal and factual situation has not been recognised since the last decision of the Constitutional Court on any relevant changes for which doubts should arise as to the validity of the Constitutional Court conclusions and the constitutionality of the Law on Property Compensation.
12. The inconstitutionality of Act No. 125 / 2019 Coll. is mainly brought by the appellant from the fact that neither its promoters nor the Government claim that it is a tax law (in the constitutional sense); On the contrary, they do not hide that the only objective of the contested law is the effective reduction of the restitution financial compensation, the amount of which according to the current governmental and some non-governmental parties is disproportionately high (see also the explanatory report on draft Act No. 125 / 2019 Coll.). Although the appellant is aware of the fact that the legislator's intention cannot in itself establish the inconstitutionality of the law, it is an important interpretative guide. In the past, the Constitutional Court has defined itself against the imposition of only a formal tax which actually served to unilaterally reduce the existing claim of a third party to the State [finding sp. zn. The mere political agreement of the government-responsible parties, according to the appellant, is not sufficient to heal that inconstitutionality - the right to financial compensation under the Law on the Compensation of Qualifying Entities is reduced retroactively, contrary to Article 1 (1) of the Constitution of the Czech Republic (hereinafter referred to as the Constitution) and Article 11 (1) of the Charter and Article 1 of the Additional Protocol to the Convention on the Protection of Human Rights and Fundamental Freedoms (hereinafter referred to as the Convention) and the principle of legal certainty.
13. Another fundamental lack of the contested taxation of the financial compensation in question is the apparent establishment of an inequality between the operators concerned and the beneficiaries under other restitution rules, whose compensation was not subject to any tax. By doing so, the legislator infringes Article 3 (1) of the Charter and Article 14 of the Convention and Article 1 of the Charter and Article 26 of the International Covenant on Civil and Political Rights ("the Covenant ') - see, for example, the finding of sp. zn. The discrimination is also due to the fact that it is subject to the criterion of religion. By Act No. 125 / 2019 Coll. the legislature introduces an unjustified inequality even between individual claims under the Property Compensation Act, namely between tax-free in kind bonds and financial compensation for assets which cannot be issued in kind for various reasons. The ratio between transactions varies between the churches concerned. While, for example, the Roman Catholic Church regains extensive property in its natural form, small churches are largely dependent on financial compensation. The tax model chosen is therefore disproportionate for no apparent reason.
14. The appellant is of the opinion that, in its view, the conclusions of the Constitutional Court as set out in the finds, sp. zn. Paragraph 15 (3) of the Act disintegrating the State's performance into 30 annual instalments does not alter this fact. The deferred maturity of the existing claim and the constitutionally protected legitimate expectation of its acquisition within the meaning of Article 11 (1) of the Charter and Article 1 of the Additional Protocol to the Convention does not alter the substance of the matter.
15. The appellant also refers to the Communication of the Ministry of Culture No. 55 / 2013 Coll. and highlights the principle of pacta sunt servanda as one of the attributes of the rule of law within the meaning of Article 1 (1) of the Constitution [finding sp. zn. I. ÚS 34 / 17 of 25.7.2017 (N 132 / 86 SbNU 247)], which also acts against the legislator in the form of an order to respect existing obligations and legal claims based on them in the standard activities. Authorised entities have taken on the risk of deferred instalments by consensus to meet the needs of the State and its budgetary burden. The conclusion of contracts was based on a legitimate expectation of trust in the law that the debtor could change in the future (page III of ÚS 3397 / 17, paragraph 37).
16. The amendment made by Act No. 125 / 2019 Coll. bears the characteristics of genuine retroactivity, which is fundamentally inadmissible; The appellant is of the opinion that the legislative and technical nature of Section 15 (1) and (2) of the Property Compensation Act (exceptionally justified by the individual nature of the statutory provision) excludes its direct or indirect amendment without violating the prohibition of retroactivity. In the case of Act No. 125 / 2019 Coll., there are no exceptional reasons for the constitutional acceptance of its retroactive effect (e.g. the economic crisis of the State, the context of the broader relief measures, not the selective intervention alone).
17. The fact that the entitlement to payment of financial compensation under the contracts concluded under Sections 15 and 16 of the Property Compensation Act was created as a whole in full before the Act No. 125 / 2019 Coll., can be safely demonstrated by tax and accounting practice. The claim for payment of financial compensation totalling CZK 59 billion is shown in the balance sheet of the Ministry of Culture as "other long-term commitment" to 2012, when the Property Compensation Act was approved. The Czech Statistical Office and the Supreme Audit Office also work with the commitment; the competent churches have also applied to them the full part of the financial compensation in their 2013 tax return in accordance with Paragraph 18a (1) (f) of the Income Tax Act, in the version in force at that time, as non-taxable income. From a tax point of view, Law No. 125 / 2019 Coll. affects an empty set of income, since the tax and accounting income of the financial compensation on the part of the churches will not arise; Paragraph 18a (1) (f) of the Income Tax Act will no longer give effect at the moment (before or after the amendment).
18. The tax in question imposed on financial compensation by Act No. 125 / 2019 Coll., according to the appellant, cannot be regarded as a tax from a material point of view (see sp. zn. This is not a constitutional and discussed interference with property law (Article 11 (5) of the Charter), but the legal certainty of the beneficiary of an already established individual legal claim; the distributed maturity of the financial compensation is not decisive. The originally determined amount of financial compensation was the result of consensual agreements, confirmed both in Section 15 of the Property Compensation Act and the subsequent conclusion of contracts under 16 of the same Act. It is precisely the moment of the conclusion of the contracts supported by the Law on property settlement to the legitimate churches that the State's expectations of the claim would not be changed or questioned subsequently.
19. The reduction in the level of financial compensation cannot be justified even in view of the purpose of paying them - they cannot be overlooked by their restitution character. Nor can it be questioned in relation to churches or religious societies in which the equalisation component prevailed over the restitution component, as it is a political agreement between the State and the churches concerned, which is active in relation to the wider segment of the company in the sense of the sp. zn. Pl. ÚS 9 / 07 (paragraph 101). If the State was an actor in the agreement prior to the adoption of the law on property compensation, according to which the financial compensation belonging originally to the Roman Catholic Church (for its consent) was redistributed to other churches, it cannot now argue that the financial compensation in its part or whole "would lose its restitution character."
20. In the next text of the proposal, the draftsman makes extensive comments on the adequacy of the level of financial compensation in terms of the context of the mitigation of property injustices, the current economic conditions and the extent of the original property of the churches, since it was their "inadequacy" that the legislator was motivated to adopt Act No. 125 / 2019 Coll. The explanatory memorandum to the draft law No. 125 / 2019 Coll. does not even contain the objectives of its own tax legislation; on the contrary, the law explicitly refers to "a step towards making the financial compensation in its final effect appropriate '. The same conclusion repeats the Government's position (House Press 38 / 1) by admitting that the intention is to reduce the financial compensation further by tax liability. The political actors concerned based their opinion on the inadequacy of financial compensation on the existence of economic analysis at the time of the discussion of Bill 125 / 2019 Coll.. In this context, in order to establish the facts, the appellant proposes, in accordance with Article 49 (1) of the Law on the Constitutional Court, a hearing in the application of those witnesses.
21. The appellant, referring to the case law of the Constitutional Court, according to which the amendment of the law does not have a separate legislative existence, refers as a primary petition to the proposal for the deletion of the words "with the exception of financial compensation" of Paragraph 18a of the Income Tax Act. However, since the Constitutional Court has in the past made an exception to this rule in relation to the derogatory part of the amendment [finding sp. zn. I. ÚS 1696 / 09 of 8.2.2011 (N 13 / 60 CollNU 127); the finding sp. zn. Pl. ÚS 2 / 02 of 9.3.2004 (N 35 / 32 SbNU 331; 278 / 2004 Coll.), proposes, alternatively, the repeal of Act No. 125 / 2019 Coll., which also abolishes Article 15 (6) of the Property Compensation Act; reversal of the effect that would mean opening up further attempts by the legislature to reduce the financial compensation granted to them in future cannot be achieved otherwise.
Arguments of other designers
22. A group of Members, in addition to the above, draws attention to the legislature's general approach to the taxation of restitution transactions and their exemption from income tax [Paragraph 4 (1) (g) of the Income Tax Act], since the taxation of compensation for the damage caused by property injustices would deny and undermine the purpose of restitution. On this principle, the legislator makes an unjustified exception to the contested scheme. The restitution of property is not income but an attempt to restore the original property; there is no reason to make a distinction between the natural and financial form of restitution.
23. In the contracts concluded, a group of Members see a private-law obligation relationship analogous to the conclusion of a settlement agreement under Paragraph 1903 et seq. of the Civil Code (see also Section 16 (1) of the Property Compensation Act, which provides for the subsidiary application of the Civil Code). In order to highlight the principle of pacta sunt servanda, the other appellant refers to Article 5.1 of the standard settlement agreement in which the State expressly committed itself not to thwart its purpose. As a tax legislator, the State's senior status is not independent of the impact of tax legislation on its obligation to meet the obligations arising from settlement agreements.
24. The proposal from the second group of Senators underlines that the risk of constitutional non-conformal legislation was often reduced at the time the contested provisions were discussed. The legislator was fully aware of the deficiency and nevertheless accepted the adjustment. The promoters of Act No. 125 / 2019 Coll. were even aware of the fact that the terms of the settlement agreements could not be unilaterally changed and therefore took advantage of the state's power position, which the other party did not have the option, thereby establishing an unjustified inequality.
25. According to the appellant, the contested regulation also sends a dangerous signal to the legal certainty of other public taxpayers (e.g. cultural, physical, firefighting associations) that they will be taxed in the future under Paragraph 18a (1) of the Income Tax Act.
Observations of participants and interveners
26. The Constitutional Court, pursuant to Article 69 of Act No. 182 / 1993 Coll., on the Constitutional Court, as amended, called on the Chamber of Deputies and the Senate (as parties), the Government and the Ombudsman to comment on the proposal; the public protection of rights has not entered the proceedings.
27. In its observations, the Chamber of Deputies limited itself to the course of the legislative process of adopting the contested law. The bill of lading to be inserted into Paragraph 18a (1) (f) of the Income Tax Act "with the exception of financial compensation 'and repealed by Paragraph 15 (6) of the Property Compensation Act, published under No 125 / 2019 Coll., was distributed to Members as print No 38 / 0 on 20 December 2017 and sent to the Government on the following day for comments which sent its favourable opinion on 12 January 2018. At first reading, the draft law was ordered to the Budget Committee (Guarantee Committee) and to the Constitutional Law Committee on 28 February 2018. The Committee on Budgets recommended the adoption of amendments by a resolution of 7 June 2018 (print 38 / 5) and the Constitutional Legal Committee recommended the adoption of amendments on 10 September 2018 (print 38 / 6). In the second reading, the draft law went through both a general and a detailed debate on 13 December 2018. On 10 January 2019, the opinion of the Guarantee Committee, which recommended to the Chamber of Deputies the adoption of the Bill (Press 38 / 8), was delivered to Members. In the third reading, by resolution No. 435 of the Chamber of Deputies on 23 January 2019, the draft law was passed in the text of the amendments adopted - 106 in favour of the 172 Members present, 56 opposed. The bill was then passed on to the Senate, which at the sixth meeting as Senate Press No. 35 discussed it and adopted Resolution No 111 rejecting it and at the same time adopted accompanying resolution No 112. The bill was delivered to the Chamber of Deputies in the text in which it was referred to the Senate, which, by vote on 23 April 2019, remained on the original bill. The President of the Republic signed the Act on 2 May 2019.
28. In its observations, the Senate stated that the draft law had been passed on to it on 29 January 2019 and the Senate Organising Committee ordered the draft law to be discussed by the Constitutional Legal Committee (Guarantee Committee) and the Committee on Economy, Agriculture and Transport. Both committees have recommended rejecting the bill. By order No 111 The Senate rejected the bill; of the 74 senators present, 64 voted to reject the bill, 3 against and 7 abstentions. The Senate also adopted the accompanying resolution No 112, which stated the contradiction of draft law No. 125 / 2019 Coll. with the fundamental principles of the rule of law. In its observations, the Senate provides an overview of the speeches of some of the 26 senators who expressed more detailed doubts about the constitutional conformity of the bill and called on Members not to vote over the Senate veto.
29. The Government has indicated that it is entering the proceedings as an intervener and has proposed the rejection of the proposals in question. In its observations, it stated that, in order to agree with the draft law, it had doubts as to the method used to calculate the amount of the financial compensation, which it considered to be well above the actual value of the assets, the non-disclosure of which is compensated by compensation. According to the Government, taxation of the financial compensation is a legitimate means of adjusting at least partially the resulting disproportion. The Government accents the political aspect of the tax legislation based on the established case-law of the Constitutional Court [cf. the aforementioned finding of sp. zn. Pl. ÚS 18 / 15, the finding of sp. zn. Pl. Pl. ÚS 9 / 15 of 8.8.2017 (N 138 / 86 SbNU 333; 338 / 2017 Coll.), the finding of sp. zl. ÚS 29 / 08 of 21.4.2009 (N 89 / 53 SbNU 125; 181 / 2009 Coll.)]. Furthermore, the Government believes that the tax may be (and in some cases it is) the compensation or non-property damage - a choice of legislator. According to the Government, the principle of equality is maintained as all entities falling under the personal scope of the Property Compensation Act, as amended, are treated in the same way. Given the amount of the tax burden (19% corporate tax) and the general principles for the calculation of income tax, neither the threat of the forbidden suffocating effect is taken into account [the find sp. zl. ÚS 3 / 02 of 13.8.2002 (N 105 / 27 SbNU 177; 405 / 2002 Coll.)]. Act No. 125 / 2019 Coll. is a manifestation of false retroactivity, which is in principle permissible and common in tax matters. Nor are the legitimate expectations of persons authorised under the Property Compensation Act, as amended, and their expectations were and are met.
Replication of the appellant and other appellants
30. The Constitutional Court sent all observations to the appellant and other appellants on the reply. The group of Members did not reply.
31. The group of Senators, in its reply of 11 July 2019, stated that, from the Government's observations (reflecting the will of the majority of the Chamber of Deputies), the symbolic importance of the contested legislation prevailing over the rational purpose of the actual legal consequences - such an approach to legal regulation is rejected by the appellant. It also accentuates the government's newly applied argument on the non-constitutionality of Section 15 (6) of the Property Compensation Act, which is in direct conflict with the finding of Sp. Pl. ÚS 10 / 13 (in particular paragraphs 220, 343), in which the Constitutional Court has subjected the entire property compensation law to constitutional review. Although the appellant is convinced that this is not a tax issue and the Constitutional Court, in its powers of review, is not limited by its own case-law relating to tax matters, the appellant's view would not have stood up to the contested regulation even on the basis of a review of the constitutional conformity of tax legislation. Even when it is adopted, the legislator is not bound by the obligation to respect the requirements of constitutional order (in addition to banning the suffocating effect, in particular, the prohibition of insolence and the preservation of the principle of equality). The contested regulation, which has the effect of taxing 16 taxpayers with negligible benefits to the state budget, in particular lacks a legitimate objective and rational justification (expressing unfounded doubts about the proportionality of the financial compensation not), bears the signs of pleasure and violates the principle of equality - the assessment by the Government of this aspect limiting to a number of persons authorised under the Property Compensation Act, as amended, is formalistic.
32. The second group of senators joined the argument of the appellant and the group of Members and took a position, in particular, on the Government's observations. Like the appellant, it submits that the government's doubt as to the proportionality of the financial compensation provided for above lacks objective grounds. During the legislative process, the impact of the draft contested law on the state budget, as is customary and desirable for tax legislation, has not been clarified at all; The Government even admits that, in the event of a reported loss of tax entities, the taxation of financial compensation will have no effect, thereby indirectly confirming the appellants' argument that the material reduction in financial compensation is not tax. As the appellant, the second group of Senators points out that the arguments of the appellants requesting the annulment of the contested legislation do not contradict the government (Blank) cited in the case-law of the Constitutional Court on tax matters, on the contrary it is consistent with and based on it.
Abandonment of oral proceedings
33. After the above recap of the proceedings, the Constitutional Court concluded that there was no need for oral hearing in the case, as it would not provide further clarification of the case than the written submissions by the appellant, the parties and the interveners. Having regard to the wording of Article 44 of Act No. 182 / 1993 Coll., on the Constitutional Court, as amended, the Constitutional Court decided without holding an oral hearing and rejected, as unfounded, the requests for questioning of witnesses by Andrei Babiš, Jaroslav Faltýnek, Jan Hamáček, Jan Chvojka and Alena Schiller. No new findings which could be relevant to the court's decision can be expected from the witnesses proposed.
Self-assessment of the Constitutional Court
34. The Constitutional Court discussed the proposals before the entry into force of Act No. 125 / 2019 Coll., thereby effectively complying with the appellants' request for a preliminary hearing. The possible annulment of the contested legislation by the Constitutional Court always constitutes an intervention in the legal certainty of its addressees. Therefore, if there is scope to decide on a proposal to repeal legislation before it becomes an effective part of the rule of law, the Constitutional Court should always do so in order to mitigate the effects of the finding.
35. According to Article 68 (2) of Act No. 182 / 1993 Coll., on the Constitutional Court, as amended by Act No. 48 / 2002 Coll., the assessment of the consistency of the law with the constitutional order consists of answering three questions: whether it was adopted and issued within the limits of the Constitution, whether it was adopted in a constitutionally prescribed manner and whether its content is in accordance with constitutional laws. In doing so, it concluded that the proposals were justified in the essential part of the constitutional review.
Legislative process
36. The review of the Constitutional Court shall, by default, include an assessment of whether the constitutional procedure for the legislative process in terms of the participation of individual constitutional bodies has been maintained and whether the required majority of Members or Senators have voted in favour of draft laws in each chamber. These are the facts for which a breach of the constitutional rules would without further doubt the very legitimacy of the law, so that they must be taken into account whenever compliance with the constitutional rules is assessed [see, for example, the find sp. zn.
37. The formal procedure for the legislative process laid down by the Constitution and the law has been followed in this case. The information provided by the Chamber of Deputies was also verified by the Constitutional Court from the shorthand reports of the Chamber of Deputies, the Senate and other publicly available documents relating to the legislative process. None of the draftsmen, after all, makes any complaints about the legislative process. In brief, reference can therefore be made to the description of the course of the legislative process contained in paragraphs 27-28 and to the fact that the contested law was adopted and issued within the limits of the Constitution laid down by powers and competences and by the constitutional procedure.
General basis for material review
38. The Constitutional Court further focused its attention on the content of the contested legislation with the constitutional order.
Protection of acquired rights, prohibition of retroactivity, legitimate expectations
39. First, the Constitutional Court considers it necessary to state that, in its decision-making activities, it consistently emphasises the principle of legal certainty, trust in law and its predictability, the prohibition of retroactivity and the protection of acquired rights as the core principles of a democratic society and the requirements arising from Article 1 (1) of the Constitution [cf. In this context, the Constitutional Court recalls its conclusions contained in the finding in sp. zn. The legislature's decision on how to deal with a time conflict between old and new legislation is, from a constitutional point of view, not random or arbitrary, but is a matter of considering a conflict of values. Proportionality can be characterised by the fact that a higher degree of public interest and the protection of fundamental rights and freedoms justify a higher degree of intervention in the principles of equality and the protection of the citizen's trust in law by new legal regulations. In assessing the legislative solution to that time conflict, not only the degree of difference between old and new legislation, but also other factors, such as the social urgency of the introduction of that legislation.
40. The legal theory distinguishes between two forms of retroactive effect of the rule of law, one of which is fundamentally inadmissible (right) and the other fundamentally permissible (false) - both of which can be exempted in justified cases (see, for further details, the sp. zn. As is the result of the finding of sp. zn. Pl. ÚS 21 / 96, generally permissible false retroactivity can be found inadmissible if it is the law... "affected by trust in the facts and the importance of legislative wishes to the public does not exceed or reach the individual's interest in the continued existence of existing law '(B. Pieroth, Rückwirkung und Übergangsrecht. Verfassungsrechtliche Maßstäbe für intertemporale Gesetzgebung, Berlin 1981, p. 380-381)'.
41. The Constitutional Court found that, in the light of the question of the admissibility of false retroactivity, the Constitutional Court in the sp. zn. Later that provision provides for the right of everyone to use their property peacefully. According to the settled case law of the European Court of Human Rights, the concept of property must be interpreted as having an autonomous scope which is not limited to the ownership of tangible assets and does not depend on the formal qualification of national law (Broniowski v Poland - judgment of 22 June 2004, Case No 31443 / 96, paragraph 129). It may include both existing assets and assets, including claims on the basis of which the complainant may claim that at least a legitimate expectation is to achieve a certain realisation of ownership. The Constitutional Court stated on this principle, in accordance with the case law of the European Court of Human Rights, that "the concept of the protection of legitimate expectations as a property claim which has already been individualised by a legal act or which is individualised directly on the basis of the legislation '[the finding of sp. zn. Infringement of Article 1 The Additional Protocol to the Convention may also be made by the legislature if the amendment of the law would prevent the acquisition of assets, to which certain entities have legitimate expectations (cf.
42. It follows from the above that the creation of a legal right creates legitimate expectations for individuals (for example, in the form of property increases). Once acquired legal entitlement can only be amended retrospectively if a new legal regulation monitors the public interest of a higher degree of intensity than the principles of Article 1 (1) of the Constitution. It is therefore the unconstitutional conduct of a legislator who does not respect those requirements and shows signs of libel or abuse of law.
Nature of the restitution legislation
43. According to the preamble and initial provisions of the restitution regulations adopted after 1989, their purpose is "to mitigate the consequences of certain property and other injustices" arising between 1948 and 1989 [first, see Section 1 of Act No. 403 / 1990 Coll., on the mitigation of the consequences of certain property injustices, for example, the Preamble or Section 1 of Act No. 87 / 1991 Coll., on extrajudicial rehabilitation, the preamble of Act No. 229 / 1991 Coll., on the regulation of property relations with the land and other agricultural property, (hereinafter referred to as "the Law on Land,") or the Preamble of the Law No 198 / 1993 Coll., when the regime was based on the communist ideology, which decided on the management of the state and fate of the citizens in Czechoslovakia..., criminal, illegitimate, illegitimate, illegitimate, illegitimate and final. "(§ 2 (§ 1 of Law No. 198 / 1993 Coll.).
44. At the time of infreedom, religious faith and its manifestations were often grounds for political persecution, as reflected in the property ratios of individual churches (see Act No. 218 / 1949 Coll., on Economic Security of Churches and Religious Companies by the State, in its original version). The legislature adopting the law on property compensation was aware of this, as is apparent from its preamble: "Parliament, the memory of the bitter experiences of the period when human rights and fundamental freedoms were suppressed, determined to guard and develop inherited cultural and spiritual wealth in the territory of the Czech Republic, led by an attempt to mitigate the consequences of some property and other injustices committed by the Communist regime during the period 1948 to 1989, to settle property relations between the state and churches and religious societies as a precondition for full religious freedom, thereby allowing the restoration of the property base of churches and religious societies free and independent status of churches and religious societies, whose existence and activities he considers necessary as an element of democratic society..."
45. Although there is no fundamental "right to restitution," if the legislature has decided to mitigate certain injustices in the form of restitution legislation in the period of infreedom, the courts under Article 90 of the Constitution are called upon to interpret the restitution laws in their decision-making activities in a manner which allows them to fulfil their purpose and to provide protection on the basis of their acquired rights [see page 4 of the ÚS 302 / 99 of 9 February 2000 (N 24 / 17 of the SbNU 177)]. Such a procedure shall correspond to the individual's subjective right to the judicial protection of his or her rights under Article 36 (1) of the Charter and Article 6 (1) of the Convention.
Constitutional tax review and principle of equality
46. Article 11 (1) of the Charter guarantees an individual (both natural and legal person) a constitutionally protected right to own property. It follows from the case law of the Constitutional Court that "[from] an extension to the guarantee of ownership as a fundamental right is only possible through an imperative legal regulation to which requirements are imposed corresponding to those of the proportionality test. Such legislation must also be in line with the requirements of the rule of law, so that it must be clear and accessible, its consequences must be predictable, it must restrict the executive discretion and it must be given the possibility to assess the discretion of the executive on the ownership of the property by independent and impartial courts' (see sp. zl. ÚS 29 / 08, paragraph 37).
47. The imposition of taxes and charges, which is only possible under the law (Article 11 (5) of the Charter), constitutes one of the legitimate, constitutionally acceptable reasons for limiting the right of ownership of property (Article 11 (1) of the Charter), as it pursues a public interest in the collection of funds for the provision of public goods (provision of revenue / implementation of the State budget). In order to be a good tool in the service of man, the State must have sufficient resources for its activities, the substantial part of which receives tax due thanks to the institutionalisation of compulsory public service obligations (paragraph 38). In the case of taxes, the Charter provides for restrictions on property rights, if the legislator is to tax constitutional powers, with a wide margin for decision-making on the subject, extent and extent of taxes.
48. The taxes and tax system perform three basic functions - allocation, distribution and stabilisation, the setting of which falls within the competence of the democratically elected legislator. If the Constitutional Court wanted to assess their unconstitutionality, it would enter into a field of individual policies whose rationality cannot be well assessed from the point of view of constitutionality. Therefore, in the above-mentioned finding, Pl. ÚS 29 / 08 (paragraph 58) stated that the effectiveness of taxes is generally not under review, subject to cases where the ineffectiveness of a tax would create a clear inequality in the tax burden on individual domestic individuals. It is for the Constitutional Court to examine whether the tax measures do not interfere with the constitutionally guaranteed property substrate of the owner, whether they cannot be regarded as unjustifiably contradictory to the principle of equality, i.e. as arbitrary.
49. In the latter case, the Constitutional Court also clearly summarized the methodology of access to constitutional review of tax and tax legislation. In examining the constitutionality of the legislation imposed on taxpayers, the Constitutional Court bases itself essentially on a modified version of the principle of proportionality and examines the possible infringement of the prohibition of extreme disproportionality in conjunction with compliance with the principle of equality: "The distinction resulting in a breach of the principle of equality is inadmissible in two respects: it may act, on the one hand, as an accessorial principle prohibiting discrimination against persons in the exercise of their fundamental rights and, on the other, as a non-acesorical principle enshrined in Article 1 of the Charter, which consists of the exclusion of the legislature's libenders when discriminating the rights of certain groups of entities. In other words, in the latter case it is the principle of equality before the law, which is part of the Czech constitutional order through Article 26 [The Pact]..." (see again the find sp. zn. Pl. ÚS 29 / 08, paragraph 56).
50. It follows from the constant case law of the Constitutional Court that it is for the State to decide that it will confer less advantages on one group than on others, but it must not proceed arbitrarily and its decision must imply that it is doing so in the public interest and in the name of public values [see already the finding of the sp. zn.
51. Furthermore, in the context of the principle of equality and non-discrimination, the Constitutional Court, in its judgment in Sp. v. Pl. ÚS 18 / 15, stated that the intensity of the constitutional review in tax matters is not primarily dependent on the fact that unequal treatment takes place in relation to another constitutionally guaranteed law (see Article 3 (1) of the Charter, Article 14 of the Convention) or not (non-accesoric, see Article 1 of the Charter or Article 26 of the Pact). In particular, the reason for the different treatment, i.e. the established distinctive character (e.g. race, sex, nationality, origin, age, religion, property), and, at the same time, the specific right or property to which it is treated differently (e.g. guarantees of political rights or the obligation to pay taxes) is crucial; The Court of Justice of the European Union, acting in accordance with the procedure laid down in Article 108 (3) of the Treaty on the Functioning of the European Union, shall have jurisdiction over the application of Article 108 (3) TFEU.
52. For the possible use of the modified form of the proportionality test, it is first of all necessary to establish whether the tax is the subject of the contested legislation in the aforementioned sense. In the past, the Constitutional Court has come to the conclusion several times that by imposing a tax, the legislator has tried to conceal its true intention, different from the objective of optimally fulfilling the Treasury. For example, in the case of a retroactive reduction and taxation of State aid (building savings) to which the beneficiaries of the legislation have already been entitled, the Constitutional Court stated that "[u] c) taxation is, however, different from taxation of other revenue in this case, as it does not lead to a strengthening of the revenue part of the state budget. In essence, it is an indirect form of reducing or determining the amount of its expenditure, since it leaves part of the expenditure in the State budget or returns to it" (point (b) of Article 5 (1) of Regulation (EC) No 510 / 100). In other words, the Constitutional Court has pointed out that, if an individual entity has already acquired an individual right to specific transactions by the State, it cannot be arbitrarily interfered with whether the legislator does so directly or by imposing additional tax obligations which differ only from direct reductions by its designation; otherwise the legislator infringes the principle of legal certainty under Article 1 (1) of the Constitution (i.e. the prohibition of genuine retroactivity - see below) and the legitimate expectation under Article 11 (1) of the Charter and Article 1 of the Additional Protocol to the Convention.
53. Therefore, if it is appropriate to conclude that a certain "tax 'cannot be regarded as a tax in the context of a review of constitutionality but as a change of legal entitlement, this is necessarily reflected in the constitutional criteria for its assessment - if certain constitutional principles and fundamental rights to protect an individual from interference by public authorities, the level of protection cannot be lower in one of the two comparable cases simply because the legislature used a different designation for the same regulation (point (b) (ii) of the OJ 53 / 10, paragraph 181).
Princip pacta sunt servanda
54. The principle of pacta sunt servanda, that is to say that contracts are to be followed, is one of the key principles of the rule of law arising from Article 1 (1) of the Constitution, to which the Constitutional Court fully reports [pilot, e.g. the finding of 7.10.1996 sp. zn. IV. ÚS 201 / 96 (N 96 / 6 SbNU 197), the finding of sp. zn. II. ÚS 3292 / 09 of 8.7.2010 (N 140 / 58 SbNU 163) or the latest time of the finding of 17.10.2017 sp. I. ÚS 1653 / 17 (N 192 / 87 SbNU 175), of 4.6.2019 sp. ÚS 996 / 18 or of 17.7.2019 sp.
55. Just in the sp. zn. I. ÚS 1653 / 17 (paragraph 36) The Constitutional Court summarised that if the two parties which are not legally prohibited (Article 2 (3) of the Charter) agree, and if a contract is created, it is precisely the principle of pacta sunt servanda that guarantees that the contract and its legal consequences will be respected by the public authority and that it will be possible to obtain the rights and obligations arising therefrom.
56. The principle of pacta sunt servanda Constitutional Court directly in relation to contracts concluded between the State and the authorised churches and religious societies under the Law on Property Compensation has already been stressed in the judgment of page III of the ÚS 3397 / 17 (paragraph 37), according to which a flat-rate financial settlement under Section 15 of the Law on Property Compensation is part of the relief of property injustices (where the legislator did not decide on the possibility of the issue of property for various reasons). Its implementation in annual instalments was conditional on the approval of the church bodies concerned, as expressed in the settlement agreement under Article 16 of this Act - a legitimate expectation of trust in the law that the debtor could change in the future was thus established in the future. The constitutional interpretation of this legal institute must therefore be based on the assumption that it is not only a decision of the legislator, but also on the subsequent conclusion of the agreements in question (its occasio legis) establishing the legitimate expectation that the agreement reached will be respected as a result of the State's conduct with the church bodies concerned.
Constitutional review of the amending Act
57. It follows from the settled case-law of the Constitutional Court that the amendment to the Act does not have a separate existence as its content becomes part of the text of the amended Act (see, for example, Resolution sp. zl. ÚS 25 / 2000 of 15.8.2000 (U 27 / 19 SbNU 271)). Consequently, only an amended law can be challenged in the proceedings referred to in Article 87 (1) (a) of the Constitution. the exception is the case where the question of legislative competence, competence or procedure of adopting an amending law is raised with the content of the amended law.
58. Similarly, an exception must be made in relation to the derogatory provision of the amending law, since it is not possible to challenge the provision which has been deleted from the nature of the case in the amended regulation. Therefore, the alleged unconstitutional nature of the deregulation of the original provision cannot be healed otherwise than by abolishing the relevant derogatory passage of the amending Act. The question raised in the past in the case-law of the Constitutional Court is the difference between the effects of the decision of the Constitutional Court which derogates from the derogatory provision (the development is last recapitulated in the resolution of the First Court of First Instance of 5 August 2014). The case-law of the Constitutional Court has so far been based on the opinion that, by deleting the repeal clause in the amendment of the Act itself, there is no "revival" of the original legislation [page I of the ÚS 1696 / 09 of 8.2.2011 (N 13 / 60 of the SbNU 127); sp. zn. I. ÚS 1927 / 09 of 21.3.2011 (N 50 / 60 SbNU 593); the finding of sp. zn. I. ÚS 504 / 10 of 21.3.2011 (N 51 / 60 SbNU 609), since the Constitutional Court would thus exceed its statutory powers and withdraw from the role of so-called negative legislator.
59. Since Parliament must not resign from its duty to protect fundamental rights and freedoms, the Constitutional Court can "anticipate that the legislator will not comply with that obligation and therefore be open to consider whether, in order to fulfil its single task - to protect the constitutionality and fundamental rights and freedoms guaranteed by the constitutional order - it provides for further consequences of its decision. However, the nature of these consequences will always depend on the uniqueness of the facts in which the proceedings before the Constitutional Court took place, as well as the nature of the threatened (infringed) fundamental right or freedom [see page Pl. In the past, therefore, there have also been cases where the Constitutional Court has accepted the" revival 'of the repealed provisions and established that the effect of its deregation finding is to restore the state of play before the adoption of the amending Act, i.e. "rehabilitation' of the repealed provision [Found sp. zn. Pl. ÚS 5 / 94 of 30.11.1994 (N 59 / 2 SbNU 155; 8 / 1995 Coll.); sp. zn. Pl. ÚS 2 / 02].
60. It can be concluded that the majority view of the Constitutional Court (and contrario see different opinions on the resolution sp. zn. Pl. ÚS 26 / 13) is based on a thesis according to which one of the repealed provisions of the Constitutional Court's intervention does not essentially "revitalise ', unless the Constitutional Court finds that there are exceptional reasons for which this unique measure should be taken, since the remedy caused by the unconstitutional situation cannot be otherwise achieved and the legislator cannot be expected to remedy the adverse situation in the foreseeable future through its legislative competence. In this case, the decisive point is the moment at which the legislation which is challenged before the Constitutional Court for its unconstitutionality is taken into account:" In order to maintain legal certainty, any action by the Constitutional Court should be substantially related to the amended provision, in a situation where the unconstitutionality is seen in the very fact that the previous legislation has been repealed, it can be accepted that the relevant amendment of the law will also be subject to constitutional review. This will ensure that the amendment does not result in the repeal of the legislation or part thereof in a situation where the absence of legislation would result in an unconstitutional state.' [see sp. zn.
Application to the present case
61. In its case-law, the Constitutional Court frequently refers to the legislature's efforts to settle relations and injustices arising from the operation of the Communist regime [see first of all the findings of the sp. zl. ÚS 19 / 93 of 21.12.1993 (N 1 / 1 SbNU 1; 14 / 1994 Coll.)]. It is not in the power of the state or anyone else to correct all the injustices committed as a result of the existence of a totalitarian regime, including the injustices in churches and their members. Therefore, the legislature was also left with the discretion of the procedure to be followed and the restitution rules aimed at mitigating (i.e. not fully atoning) some (i.e. not all) property injustices were found legitimate. At the same time, if such legislation was adopted, the persons who met the conditions laid down by the restitution law were entitled to compensation and a legitimate expectation that compensation would be granted to them in the legal amount, form and period.
62. By adopting the Law on Property Compensation, the legislature removed a significant deficit in attaining the consequences of the Communist regime in relation to the churches and religious societies, the existence of which was repeatedly stated by the Constitutional Court [for the first time in the finding of sp. zn.
63. Therefore, it is necessary to base itself on the meaning and purpose of the Property Compensation Act, as amended, which is in particular to mitigate the consequences of certain property and other injustices committed by the Communist regime between 1948 and 1989 in churches (their members and representatives), which are in no way beyond the general sense described above and the purpose of the restitution legislation (see paragraphs 43-45); The interpretative guidance in this respect is provided primarily by the preamble and the introductory provisions of the Law. The restitution of the property cannot be seen as the income of the beneficiary (in terms of the extension of the property), but as an attempt to restore the original property - rectification of its previous illegal reduction.
64. The restitution purpose of the Property Compensation Act, as amended, is a fundamental and crucial purpose (according to Article 18 (4) of the Law, when applied, it must be spared its purpose, which is to mitigate the property injustices caused by registered churches and religious societies during the relevant period), but not the only one. It is further supplemented by the intention of the legislator to "settle property relations between the state and churches and religious societies as a precondition for full religious freedom, thereby enabling the free and independent status of churches and religious societies, whose existence and activities [Parliament] considers a necessary element of democratic society '(see further section of the preamble to the cited law). The Act on Property Compensation therefore contains in its Section 17 an obligation for the State to pay to the churches and religious societies concerned for a transitional period of 17 years (gradually decreasing) a contribution to support their activities, which, according to the fifth paragraph of this provision, is excluded from the subject matter of tax, fee or other similar cash transactions.
65. However, the existence of the present intention to establish a transitional regime, which will consequently result in the economic separation of the Church from the State, does not change the fact that the restitution nature of the Property Compensation Act, as amended, is primary and initial, as the financial dependence of former church entities on the State was created at the very time of infreedom as a means of control that the totalitarian regime needed to obtain over the believers (see Act No. 218 / 1949 Coll., repealed by the Property Compensation Act). In other words, without the existence of four decades of totalitarian regime, there would not have been any property injustices that the Politoad democratic legislator had undertaken (at least in part) to atone, there would have been no financial dependence on the state by churches and no need for subsequent financial separation.
66. In the light of the purposes of the Property Compensation Act, as amended, the Constitutional Court took into account the constitutional conformity of the contested provisions - it states that it did not pay close attention to the appellant's or the Government's arguments on the proportionality of the financial compensation, since it had already been dealt with in detail in the sp. zl. It concluded, inter alia, that the Law on Property Compensation itself does not imply "that, in the case of a financial compensation under Paragraph 15 (1), (2), this should be the result of a specific economic or mathematical method which would be applied to a particular set of assets, in particular in view of the purpose of the financial compensation, which has a variable ratio of the substitute and compensatory component in relation to each of the churches. Therefore, it does not appear from the law that it envisages a specific identification of the assets replaced and their valuation by a specific economic method, the sum of the amounts being the total of the financial compensation '.
67. Furthermore, the Constitutional Court continued: "In view of the test of the constitutionality of the law with budgetary implications, it is crucial to what extent the amount of financial compensation has an elementary link to the available data and price relationships, i.e. whether the contested provisions of Paragraph 15 (1), (2) are not the result of the irrational behaviour of the legislator, random changes (errors) in the course of the legislative process, etc. '(see sp. zl. ÚS 10 / 13, paragraph 247). In this regard, the Constitutional Court did not find a constitutional relevant deficiency in Article 15 of the Property Compensation Act under review (cf. That conclusion applies in its entirety and in the present case, and there is no reason to derogate from it if the State and its economic condition do not face a natural disaster, a serious economic crisis, a state of war or any other emergency which would require austerity measures of a more comprehensive scale and would force the Constitutional Court to reconsider its earlier conclusion. Therefore, the question of the adequacy of the law and the contracts provided for by the financial compensation is not relevant for the examination of the proposal and it is not necessary to go back to it.
68. All three of the Constitutional Court's proposals submitted in agreement require, on the one hand, the annulment of Paragraph 18a (1) (f) of the Income Tax Act in the words "with the exception of financial compensation 'and, on the other hand (in eventum) of Act No. 125 / 2019 Coll. The Constitutional Court has given particular attention to the assessment of the rationality of each of those points of the petition.
Paragraph 18a (1) (f) of the Income Tax Act
69. By virtue of Paragraph 18a (1) (f) of the Income Tax Act, the obligation of churches and religious societies which have concluded settlement agreements with the State under Section 16 of the Property Compensation Act is to be introduced with effect from 1 January 2020 to tax the annual instalments of the agreed financial compensation collected in the future (more precisely: the original exemption from income tax is abolished). The Constitutional Court concluded that that provision cannot, for several reasons, be maintained from a constitutional point of view in the light of the recapitalised general principles.
70. First of all, according to the Constitutional Court, it is not a matter of tax (that is only formally), but of a de facto reduction in the financial compensation (mutatis mutandis cf. This "disguised" intention was not hidden by the legislators, by the government expressing its position of agreement or by other Members in support of the adoption of draft law No. 125 / 2019 Coll. in its deliberations in the Chamber of Deputies (e.g. the submission of the motion by the submitting Members Vladimir Koníček, Milan Ferance, Vice-President of the Chamber of Deputies Tomia Okamura and others - see the stenographic record of the first reading of draft law No. 125 / 2019 Coll. of the Seventh Meeting of the Chamber of Deputies, held on 28 February 2018). For example, Mr Feranec said the following about the draft law at that meeting: '... we will not vote on the restitution law itself. We will only decide whether to introduce a law by second reading, which will allow the tax of financial compensation for unissued property, because according to the petitioners, such financial compensation has been set at a disproportionate amount. "The Government expressed concerns about the threat of interference in the legitimate expectations of the beneficiaries in its opinion. subsequently, in its observations on the proposals under consideration, it acknowledged that the impact of the tax in question on the State budget may be minimal, or none, if any of the churches concerned find themselves in economic loss.
71. Although the material of the settlement of the state with the churches is unique and difficult to compare with any other state policies (except for other restitution laws), in some respects, the legislature's assessment of "taxation" of financial compensation in terms of its actual intention and time effect can now be compared to the case of state aid for building savings, the provision of which at some point resulted in a legal claim, together with its legitimate expectation of compliance, and therefore its amount could not be changed in a constitutionally acceptable manner without serious reason (reduced) - see the Opinion in point SP.Pl. The Constitutional Court does not dispute that the tax area is a "domain 'of a State that can impose tax obligations at its discretion (the will of the legislator) in a supremacy. Taxes must be collected and paid so that the State can function and manage its revenues effectively. Taxes even, in justified cases, do not have to pursue only fiscal purposes (e.g. fulfilling the public interest in the protection of health in the taxation of tobacco products or alcohol). In the case of the" taxation of church restitutions', it was clearly not from the State's very start primarily about an honest attempt to fulfil the State Treasury or any other legitimate objective, but about the de facto reduction of the agreed financial compensation intended to mitigate the property injustices and the unjustified sanction of churches and religious societies (see the stenographic record of the speeches of Mr Koníček, the promoter of the Bill No. 125 / 2019 Coll., at the beginning of the hearing at the 7th session of the Chamber of Deputies, held on 28 February 2018), which may ultimately jeopardise their activities and thus intervene in the religious freedoms guaranteed by Articles 15 (1) and 16 (1) of the Charter.
72. As the legislature did not pursue the legitimate objective of the contested regulation and did not base itself on any substantial socio-economic changes in the company, it would not be appropriate, on the contrary, to apply to the matter the conclusions of the finding of sp. zn. Pl. Pl. ÚS 17 / 11 of 15.5.2012 (N 102 / 65 SbNU 367; 220 / 2012 Sb.), in which the Constitutional Court stated that the principle of legal certainty cannot be identified with the requirement of absolute inconsistency of the legislation, since it is subject, inter alia, to social and economic changes. Therefore, the retention of the Constitutional Court is not appropriate as regards the review of the constitutionality of the contested regulation and the proportionality of the intervention, in particular with regard to guarantees under Article 11 (1) of the Charter and Article 1 of the Additional Protocol to the Convention.
73. The main reason for the inconstitutionality of the contested provision of the Income Tax Act, as amended by Act No. 125 / 2019 Coll., is, in particular, the infringement of the right to legitimate expectations of the churches and religious societies concerned, within the meaning of Article 1 (1) of the Constitution - that is to say, the general expectation that the promises of the State will be fulfilled, in particular, when it comes to restitution, and secondary expectations within the meaning of Article 11 (1) of the Charter and Article 1 of the Additional Protocol to the Convention - as a derivative of property law, namely a clearly financially quantifiable obligation arising from that expectation [see, paragraph 41 of the European Court of Human Rights in the Broniowski v Poland, as well as the finding of page Pl. The legitimate expectations in favour of churches and religious societies were created in two main steps - first in the form of a block clause of Paragraph 29 of the Soil Act, in its original version, in the early 1990s, and the subsequent case law of the Constitutional Court confirming that the Church and the religious societies are testifying and that the legislator must fulfil them. Following that legislature, it adopted, as a second step, a law on property compensation to which it had specifically fulfilled the general expectations by establishing specific amounts and payments. It is in the light of the values set out in points 61-65 above that this expectation is unbreakable and creates the right to the protection of the rights already acquired (cf. also the finding sp. zn. III. ÚS 3397 / 17, paragraphs 35-39).
74. If the legislature has not followed any other legitimate public interest which would, moreover, have to be of greater intensity than the principles currently described, protected by Article 1 (1) of the Constitution, Article 11 (1) of the Charter and Article 1 of the Additional Protocol to the Convention, in order to justify the intended intervention in the constitutionally protected legitimate expectations of the churches and religious societies concerned, it has acted arbitrarily in violation of the prohibition of retroactivity (see paragraphs 39-42).
75. The Constitutional Court agrees with the view of the appellant and other appellants, according to which the right to pay the full amount of the financial compensation and the associated legitimate expectations arose from each individual authorised church or religious society at a single moment, and thus the moment of the conclusion of the settlement agreement under Section 16 of the Property Compensation Act, published in the Communication of the Ministry of Culture No. 55 / 2013 Coll. (see paragraph 56). No other interpretation can be drawn from the law on property compensation, as amended, nor from contracts subsequently concluded; the setting of 30 annual instalments to pay the full amount of the financial compensation does not call that fact into question; the beneficiaries are entitled, at a single moment, to the said performance as a whole. The complex and long-term negotiations of the State with the churches and religious societies concerned did not aim to have the amount of the instalment discussed and reassessed later, which confirms the conclusion of the contracts in question. By concluding contracts, the churches and religious societies concerned were granted an individual legal right to pay the financial compensation and the State accepted in this respect an obligation to provide full financial compensation (even increased by the appropriate rate of inflation), which cannot cease to exist except by fulfilling [see Section 16 (2) (e) of the Property Compensation Act and subsequent relevant provisions of the closed settlement agreements, the texts of which are available in the Communication of the Ministry of Culture No. 55 / 2013 Coll.].
76. In the case of churches and religious societies, the legitimate expectations of the recipient for the acquisition have been further confirmed by the conclusion of settlement agreements under Article 16 of the Property Compensation Act. In this context, reference can be made to "the highest principle of legal or natural law from which all law is derived," i.e. the principle of pacta sunt servanda - let the contracts be respected (see page II of the TSI 3292 / 09, paragraph 37). The legislature in 2012, inter alia, as a result of the former case law of the Constitutional Court (see paragraph 62), adopted the Law on property compensation with a 20-year interval. The reason why the State negotiated with churches and religious societies on the form of compensation (unlike other "ordinary" restituents) is the public interest in their existence in democratic society (see also paragraph 84 below).
77. The fact that the financial compensation is paid to the churches not only on the basis of the law, but on the basis of the law combined with the contracts subsequently concluded, is not random and irrelevant, both in terms of the will of the churches concerned to accede to the conditions offered by the State and in terms of the intention of its own self-restraint of the then legislator for the time to come (see the explanatory note to Section 16 of the Property Compensation Act). Paragraph 15 of the Property Compensation Act declares the amount of financial compensation for individual churches and religious societies; without subsequent conclusion of settlement agreements, it would not in itself produce legal effects. As the Constitutional Court has already stated, "the [Property Compensation Act] must be regarded as a specific type of law (Maßnahmengesetz), which has been created to resolve a situation and is to be interpreted in relation to it [because] it pursues a certain objective and sets out certain means, rules and procedures (cf. Schneider, H. Gesetzgebung, for example) to achieve it. Heidelberg: C. F. Müller Verlag, 2002, p. 142-145)" (see sp. zn. III, ÚS 3397 / 17, paragraph 37). Such a law is limited by its aim and it becomes obsolent by achieving it. The Constitutional Conformation of the Special Nature of the Property Compensation Act has already been confirmed by the Constitutional Court's finding, sp. zn.
78. By concluding a settlement agreement, the churches and religious societies have explicitly agreed that all their claims against the State for the original property (except for the right to the actual restitution transactions under this law) are settled by the contract and by the payment of the financial compensation (see Section 16 (2) (a) of the Property Compensation Act, Article 2 of the Settlement Agreement). In addition, the contract concluded pursuant to § 16 (2) (g) of this Act (and subsequently under Article 5.2 of the Treaty) constitutes an arrangement that the purpose of the contract is governed by the law in force on the date of conclusion of the contract. Therefore, in Article 5.1 of each of the settlement agreements concluded, the church or religious society concerned also undertake to comply with the contract and not to thwart its purpose (as defined by the Law on property settlement itself - see paragraphs 63- 65). For the sake of clarity, the Constitutional Court states the wording of Article 5 of the standard settlement agreement concluded by the State with the churches and religious societies appointed in Section 15 of the Property Compensation Act:
Common provisions
1. The Czech Republic and [the church or religious society concerned] undertake to respect this Treaty and not to undermine its purpose.
2. The purpose of this Treaty shall be governed by the Act on property settlement with churches and religious societies, as effective at the date of conclusion of this Treaty.
3. This settlement agreement shall be subject to the provisions of the Civil Code, with the exception of the provisions on the nullity and irrevocability of legal acts, the provisions on the change in the person of the debtor or creditor, not of legal succession, and the provisions on the termination of the obligation without satisfaction of the creditor, in particular the provisions on withdrawal, the provisions on termination and the provisions on impossibility of performance. As regards the payment of the financial compensation, the Czech Republic has the status of debtor and [the church or religious society concerned] the status of creditor. No netting or enforcement shall be permitted against a claim for financial compensation or repayment of financial compensation.
79. Therefore, the State, through the power of legislative law, and subsequently in the conclusion of contracts and the power of executive, has undertaken to comply with the commitments made, in which it acted as one of the contracting parties. However, in a different role, as a public authority, the State tries to change the content of the contracts in question by law, which does not meet the requirements laid down in the constitutional order, that is to say, it violates the legitimate expectations of one of the parties and acts inappropriately retroactively (inadmissible false retroactivity). Once by law, even the amount of the financial compensation contractually granted, the legitimate expectations of creditors (the churches and religious societies concerned) that the debtor's (State) obligation would be respected in full and created a right to protect one acquired right (see paragraph 73). The right to payment of the financial compensation by law and by contracts of a fixed amount was established as a whole when the contracts were concluded; the fact that its maturity has been distributed into 30 annual instalments does not change that (see paragraphs 75-76). It is appropriate to reiterate at this point the finding of sp. zn. III. ÚS 3397 / 17, paragraph 37, which underlines that, in the constitutionally consistent interpretation of the flat-rate financial settlement between the State and the churches, it must be assumed that it is not only the legislator's decision, but also the subsequent conclusion of the agreements in question, which establish the legitimate expectation of both parties that the agreement reached will be respected by the State as a result of negotiations with the church bodies concerned.
80. In spite of the above-mentioned Constitutional Court, for the sake of completeness, it adds that, even if it had taken the view that it was an income tax (although neither the majority of the Chamber of Deputies nor the Government were trying to conceal the true meaning of the contested regulation), the contested provision would not have stood up to the optics of the test of the exclusion of extreme disproportionality, as it created unjustified inequality between the addressees of tax standards - in several aspects at the same time.
81. First, it cannot be overlooked that the churches and religious societies entitled to restitution by the State under the Property Compensation Act, as amended, whether in the form of natural or financial compensation, are the only ones whose established claim (which is not income but the restoration of the original property) is subject to tax - no other property restitution or compensation is subject to taxation. Taxation of compensation for the damage caused by property injustices committed at the time of non-freedom by the Communist regime denies the purpose of restitution - if the injustices are to be at least partially mitigated, they cannot be first mitigated, and then the "Danite" (actually reduced, or reduced once granted compensation). The Constitutional Court does not find any rational need for the adoption of the contested legislation in terms of tax collection and their importance to the State budget. The Government's reference to the inadequacy of the approved amount of financial compensation is not a relevant argument without the submission of sufficient evidence in the unaltered economic situation of the country (see paragraphs 66- 67). Indeed, already in the Chamber of Deputies, the debate on draft law No. 125 / 2019 Coll. raised doubts as to whether church restitution would stand up to other restitution rules as a whole as regards the extent of the restitution of assets in terms of equal access to all beneficiaries (both physical and legal) and respect for the fundamental principles of the democratic rule of law as set out in Article 1 (1) of the Constitution.
82. In this respect, the Government's argument that there is no inequality between the addressees of the rules of the Property Compensation Act, as amended, is not established, because the revenues under this Act are taxed equally to all. It must be borne in mind by the appellant that the Government has chosen an unduly narrow number of subjects for comparison. The decisive indicator is all the recipients of the restitution performance by the State, regardless of which restitution regulation they have been authorised under. Moreover, the contested provision creates an unjustified difference in the position of churches and religious societies in which the natural form of restitution prevailed, compared with others which were largely dependent on the form of financial compensation. This is related to another aspect of the unjustifiable inequality, which is a rationally unfounded difference in the "taxation 'of the different forms of restitution, i.e. in kind, recovery and financial compensation. The purpose of both is to recover the property which the State inadvertently confiscated at the time of its infreedom. The financial compensation comes only where it is not possible for various reasons to be recovered in its original form, but there is no reason to treat it differently.
83. The Constitutional Court still does not lose sight of the fact that part of the financial compensation intended to be paid serves to fulfil the purpose of the separation of the church from the state - a fact which, when Law No. 125 / 2019 Coll. was adopted, was accentuated to promote the legitimacy of "taxation 'of financial compensation. However, that aspect does not call into question the conclusion that one legal right to pay the entire financial compensation does not entitle the future legislator to reduce it unilaterally by any means, on the contrary. Firstly, it is not technically possible to establish the exact limit of the restitution (primary) and the compensatory components of the financial compensation for each individual church or religious society and to treat each of them individually and differently in terms of review. It should also be pointed out that the economic separation of the Church from the State is not a disadvantage for the State and its budget because, in addition to fulfilling the requirements of religious freedoms (Article 15 (1) and Article 16 (1) of the Charter), material expenditure of the State budget in the form of financing the salaries of spiritual and other expenses of registered churches and religious societies (see explanatory note to Article 17 of the Property Compensation Act).
84. If the process of separation of the Church from the State is to be successfully completed in the future, it is for smaller churches that it is necessary to create adequate conditions for them to prepare for the new situation if they do not have their own assets for historical reasons capable of producing the necessary income. The Constitutional Court concluded that, without this action, in the case of small churches, the fulfilment of the second of the purposes of the Property Compensation Act, as amended, i.e. their separation from the State, would not be realistic, since without adequate performance, the State would have ceased to exist without the denial of contributions. The above explanatory memorandum to Section 17 of the Property Compensation Act states: "The purpose of the established temporary financing institute is to enable the churches and religious societies concerned to adapt - after more than 60 years of residence depending on the state - to a new economic situation where the State no longer directly finances their clerics or contributes to their additional costs." The pluralism of religious entities is a public interest (churches and religious societies are a social contribution both to their believers and to the wider public by their activities in the fields of social services, charity, health, culture or education) and at the same time a prerequisite for fulfilling the basic religious freedoms referred to in Article 15 (1) and Article 16 (1) of the Charter [the Find sp. zn. Pl. ÚS 6 / 02 of 27.11.2002 (N 146 / 28 SbNU 295; 4 / 2003 Coll.); the find sp.
85. In other words, the State has an interest in both the separation of the Church from the State, with which, after the transitional period under the Law on Property Compensation, as amended, the financial independence of registered churches and religious societies (i.e. by cutting them off from regular revenues from the state budget), as well as in maintaining their existence and pluralism, is linked, as they fulfil an irreplaceable social role and serve the public interest not only in relation to their members and sympathizers. The appellant attaches itself to the fact that the State was the party to the agreement according to which the restitution financial compensation originally granted to the Roman Catholic Church was redistributed to the other churches (see the general part of the explanatory memorandum of the draft law on property compensation, p. 37, or the finding of the sp. zn.
86. The Constitutional Court concluded, in the light of the above, that Paragraph 18a (1) (f) of the Income Tax Act, as amended by the Senate Law Act No. 344 / 2013 Coll. and Act No. 125 / 2019 Coll., is unconstitutional and its deficits cannot be bridged by a constitutional interpretation as such does not exist. Therefore, part of that provision was annulled in the scope of the contested words.
Act No. 125 / 2019 Coll.
87. An eventual petition was challenged by amending Act No. 125 / 2019 Coll. as a whole containing three parts. Part 1 (Article I) repeals, with effect from 1 January 2020, Article 15 (6) of the Property Compensation Act, according to which the financial compensation in question is not subject to tax, fee or other similar cash benefits. The second part (Article II) shall be inserted in Paragraph 18a (1) (f) of the Income Tax Act "Except for financial compensation '. Part Three (Article III) provides for the effectiveness of Act No. 125 / 2019 Coll. on 1 January 2020. The arguments put forward by the appellants justifying the amendment of Amendment 125 / 2019 Coll. are directed against only part of the first (Article I) - the removal of Paragraph 15 (6) of the Law on Property Compensation from the legal order is considered to be a dangerous way of removing the policy against further (however obscured) attempts at artificially reducing the financial compensation granted in the future.
88. The Constitutional Court dealt with the proposal only in part of the first contested law, because part of the second [amendment of Paragraph 18a (1) (f) of the Income Tax Act] was consumed by the challenge of the amendment itself (the amendment of the Act does not have a separate existence, since its content becomes part of the text of the amended law - see paragraphs 57- 58 above) and part three only contains provisions on the effectiveness of the contested amendment, which in itself is not eligible for an anti-constitutional effect.
89. In relation to the part of the First Act No. 125 / 2019 Coll., which repeals Article 15 (6) of the Property Compensation Act, the Constitutional Court did not find, in the light of its established decision-making practice, proposals justified.
90. By abolishing Article 15 (6) of the Property Compensation Act itself, the taxation of financial compensation does not directly take place, which cannot be said to be without meaning. Its important importance lies in the declaration of the state's readiness to fulfil its obligations at a contractual level to which Parliament's future composition will not affect, together with other safeguards contained by the Property Compensation Act, as amended. However, only the psychological effect of Paragraph 15 (6) of the Property Compensation Act is not sufficient for the Constitutional Court to establish an unconstitutional state due to the absence of Paragraph 15 (6) of the Property Compensation Act in the legal order and to take such an extraordinary step as the abolition of the amendment (see paragraphs 59-60).
91. In the scope of Sections 15 and 16, the Property Compensation Act was, moreover, exceptional (and constitutionally consistent), see the finding of the Pol. Therefore, any legislative amendment to the existing version of Sections 15 and 16 of the Property Compensation Act cannot change the legal consequences already raised. The position and established claims of churches and religious societies do not change to a given extent the rejection of the proposal - their once acquired rights enjoy protection and are prohibited from arbitrary interference.
92. The Constitutional Court therefore rejected in its entirety the proposals for the annulment of Amendment Act No. 125 / 2019 Coll. for the apparent unfounded [Paragraph 43 (2) (a) of Act No. 182 / 1993 Coll., on the Constitutional Court, as amended by Act No. 77 / 1998 Coll.].
Conclusion
93. Restitution serves to atone for certain property injustices committed between 1948 and 1989, at a time when "the regime was based on communist ideology, which ruled on the administration of the state and the fate of citizens in Czechoslovakia..., criminal, illegitimate and reprehensible" (§ 2 (1) of Act No. 198 / 1993 Coll., on the illegality of the Communist regime and on its resistance). The restitution regulations of the 1990's have already foreseen that in the future the state's property ratios in relation to churches and religious societies will also be adjusted; However, there was a long period in which no political consensus was found on the form of compensation.
94. The Property Compensation Act completed a decade-long legislative gap consisting of the absence of the State's property settlement with churches and religious societies, which was declared unconstitutional by the Constitutional Court in 2010 (the finding of Pol. The State has undertaken by this law to be a serious contractual partner to the legitimate churches and religious societies and to pay them, under the conditions laid down, financial compensation for totalitarian regime confiscated property which can no longer be issued in kind. In addition to the main restitution purpose, financial compensation has the function of preparing churches and religious societies for a future economic separation from the state for which the church performs a number of tasks, particularly in the field of health and social services. For each individual church and religious society, for historical and economic reasons, the ratio of these purposes is individually variable.
95. The legislature has declared the conditions under which it is willing to conclude settlement agreements with individual churches and religious societies, by adopting Sections 15 and 16 of the Property Compensation Act. The churches and religious societies concerned [except for one - see Section 15 (2) (b) of that Act in conjunction with the Communication of the Ministry of Culture No. 55 / 2013 Coll.] accepted the draft contract and the government concluded settlement agreements with them. On the basis of the contracts, it was agreed that the financial compensation in both the law and the contract set out in the (ad valorem) amount would be paid in thirty annual instalments.
96. By the contested legislation, the legislature did not make an inadmissible retroactive decision (inadmissible false retroactivity) on taxation, but on a de facto reduction of the financial compensation, to which legal entitlement and legitimate expectations arose to churches and religious societies at the time of the conclusion of settlement agreements. An additional reduction in the financial compensation for the injustices caused by the criminal communist regime is directed against the fundamental principles of the democratic rule of law. By doing so, the legislature infringed the principles of legal certainty, trust in law and its predictability and the protection of acquired rights as the core principles of a democratic society (Article 1 (1) of the Constitution) and the right of the parties concerned to hold assets pursuant to Article 11 (1) of the Charter and Article 1 of the Additional Protocol to the Convention in order to protect the legitimate expectation of its extension.
97. For all these reasons, the Constitutional Court ruled that the provisions of Paragraph 18a (1) (f) of the Income Tax Act, as amended by the Law of the Senate No. 344 / 2013 Coll. and Act No. 125 / 2019 Coll., in the words "with the exception of financial compensation ', were contrary to the constitutional order and therefore the contested words pursuant to § 70 (1) of the Law No. 182 / 1993 Coll., on the Constitutional Court, as amended by Act No. 48 / 2002 Coll., annulled with effect the date of the publication of the Decision. In the remainder of the Constitutional Court rejected the application pursuant to § 43 (2) (a) of Act No. 182 / 1993 Coll., on the Constitutional Court, as amended by Act No. 77 / 1998 Coll.
President of the Constitutional Court:
JUDr. Rychetský v. r.
Different opinions under Section 14 of Act No. 182 / 1993 Coll., on the Constitutional Court, as amended, were taken by the Judges Josef Fiala and Radovan Sukánek to decide.
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Regulation Information
| Citation | Findings of the Constitutional Court No. 303 / 2019 Coll., on the application for annulment of Paragraph 18a (1) (f) of Act No. 586 / 1992 Coll., on Income Tax, as amended, in the words "with the exception of financial compensation ', possibly on the repeal of Act No. 125 / 2019 Coll., amending Act No. 428 / 2012 Coll., on Major Compensation with Churches and Religious Companies) and Act No. 586 / 1992 Coll., on Income Tax, as amended |
|---|---|
| Regulation Type | The Constitutional Tribunal found |
| Author | - |
| Collection | Code of Laws |
| Date of Promulgation | 20.11.2019 |
|---|---|
| Effective from | - |
| Effective until | - |
| Status | Valid |
The regulation text is for informational purposes only.
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