In two decisions dated March 30, 2016, the French Supreme Court referred to the French Constitutional Court two “questions of constitutional priority” (or “QPC”).  They involved assessing whether, in terms of inheritance taxes, the wealth tax and the one-time wealth contribution, Articles 1729 and 1741 of the French Tax Code (“FTC”), which authorize cumulative proceedings and criminal and tax penalties against the same person and based on the same facts, infringe on the constitutional principle of the necessity of offences and sentences resulting from Article 8 of the Declaration of the Rights of Man and of the Citizen (“DRMC”).

As a reminder, to determine whether the QPC should be referred to the Constitutional Court, the Supreme Court had to verify whether the disputed provisions applied to the dispute, whether they had not already been declared constitutional and whether the issue was serious or new.

As regards the condition involving whether these provisions are constitutional, the Supreme Court noted that, even presuming the Constitutional Court had already ruled they were,[1] one could still consider that the EADS decision handed down on March 18, 2015,[2]which was again upheld at the beginning of this year, was a change in circumstances.

As regards whether the issue raised was serious, the Supreme Court had in its possession an initial analysis framework recently developed by the Constitutional Court in the aforementioned EADS decision.  Based on this, the Supreme Court performed a 4-step analysis.  First, it pointed out that one could not exclude the possibility that the provisions of Articles 1729 and 1741 of the FTC could penalize the same acts categorized in similar fashion, i.e., inadequate declarations with the intent to avoid a tax.  Second, the Supreme Court pointed out that the aim of the challenged tax penalties was notably to guarantee the collection of taxes, whereas criminal sentences penalize an infringement of the equality that must exist between citizens based on their ability to contribute to public charges.  Thirdly, the Court concluded that some uncertainty remained as to whether criminal and tax penalties must be seen as different in nature.  Lastly, and although they belong to the same court system, the Court concluded that a judicial tax court and a criminal court were different in nature, with separate jurisdiction.

Consequently, based on these elements, the Supreme Court inferred that these questions were serious and it referred them to the Constitutional Court.

We will have to carefully monitor the upcoming decisions on this subject—which should be handed down no later than by the end of June 2016—because in the event the Constitutional Court recognizes the principle of “non-accumulation”, this would require adapting the current criminal regime.