A review of the penalty system would be desirable in light of the European principles on the proportionality of penalties for offences related to temporary admission and related smuggling of yachts
by Federico Santini*
In the past, we have analyzed the temporary admission regime of non-EU pleasure yachts in Italy, underlining the extreme importance for owners to strictly comply with the discharge deadline of 18 months of permanence in EU waters. We have clarified that, if within the discharge period, the pleasure yacht is not transferred outside the customs territory or the means of transport is not bound to another customs regime, the owner will be responsible for smuggling and punished as a crime by Article 292 of Presidential Decree 43/1972 as amended by Legislative Decree 75/2020 (Consolidated Customs Law or TULD) when the border duties evaded are greater than € 10,000. Therefore, anyone liable for this violation will be subject to criminal proceedings for smuggling and, if found guilty, will be sentenced to a fine ranging from a minimum of 2 to a maximum of 10 times the VAT evaded, to which the penalty of imprisonment up to 3 years is added if the VAT evaded exceeds € 100,000. The mandatory confiscation of the yacht, which is an auxiliary penalty resulting in the loss of ownership of the yacht, which is acquired as state property to be resold at auction, is added to these penalties, which are already very severe.
If within the discharge period, the pleasure yacht is not transferred outside the customs territory or the means of transport is not bound to another customs regime, the owner will be liable for smuggling if the customs duties evaded exceed 10,000 euro.
With regards to smuggling, Article 301, paragraph 1, of the TULD provides that “the items that were used or intended to be used to commit the offence and the items that represent the product or benefit of the offence will always be confiscated”. In the opinion of the writer, confiscation appears to be completely disproportionate to the severity of the violation. As an auxiliary penalty in addition to the above-mentioned fine and, in the most serious cases, to imprisonment in prison, we doubt that the confiscation of the yacht can, on the whole, be included in the lists of the proportionality of penalties principle, which is expressly established both at domestic and EU level. First and foremost, reference should be made to Article 49 ECHR (European Convention on Human Rights) which states that “the penalties imposed shall not be disproportionate to the offence”.
photo by Nicolas Claris.
THE COMPULSORY CONFISCATION OF THE YACHT IN ADDITION TO THE MAIN PENALTY FOR THE OFFENCE IS LARGELY DISPROPORTIONATE FOR A VIOLATION COMMITTED MOSTLY WITHOUT MALICE AND, IN ANY CASE, NEVER WITH VIOLENCE.
It is now known that, from a guaranteed point of view, both the ECHR (European Court of Human Rights) and the European Court of Justice have adopted a broad notion of a criminal offence, stating that the criminal nature of the proceedings and penalties must be assessed according to three criteria, such as the legal classification of the offence in national law, the nature of the offence and, finally, the degree of severity of the penalty (see case C-537/2016, of March 20, 2018, Garlsson Real summer and a). Therefore, the penalty to be imposed cannot exceed the extent necessary to achieve the objectives set (on this point, see also C. Cost., October 23, 2019, No. 222 in which it is stated that “to be legitimate, the overall result of the combined administrative fine and penalty must not be excessively severe for the offender in proportion to the severity of the offence”) and, to assess the conformity of the penalties with the principle of proportionality “it is necessary to bear in mind, in particular, of the nature and gravity of the infringement which that penalty aims to penalize, as well as the methods for determining the amount of the penalty” (case C-384/201, October 04 2018, Link Logistik N&N).
Still, always at the supranational level, Article 42, paragraph 1 of the ECHR expressly establishes that the penalties “must be effective, proportionate and dissuasive”, while, domestically, Article 7 of Legislative Decree 472/1997 provides that “in determining the penalty, consideration shall be given to the seriousness of the violation”, as similarly provided by Article 11 of law 689/1981. Given these regulatory guidelines, the system of compulsory confiscation of the yacht in addition to the main penalty for the crime (fine from 2 to 10 times the VAT evaded as well as, if the event that the VAT evaded exceeds € 100,000, imprisonment up to 3 years) appears largely disproportionate in terms of excessive severity of the overall penalty imposed, in the face of a violation committed most often without malice and, in any case, without violence. If the confiscation was justified historically and is still justified today concerning intentional cases of smuggling of goods that are per se illegal and/or unlawfully brought into the national territory, it is excessively and unreasonably severe concerning a yacht that remains in EU waters beyond the 18-month term. Therefore, reconsidering the penalty system in light of the European principles of proportionality of penalties would be desirable.
(Non commensurate penalties – Barchemagazine.com – August 2023)