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May 2018 – Italy
On 5 December 2017, the Grand Chamber issued a preliminary ruling on the applicability of national limitation periods in criminal proceedings concerning serious fraud in relation to VAT. For reference, the Court held in the Taricco judgment (Case C-105/14 of 8 September 2015) that, pursuant to Article 325 TFEU which requires Member States to combat fraud affecting the financial interests of the EU (including VAT) through “deterrent measures”, Member States should disapply national criminal law provisions which have an adverse impact on the fight against fraud, provided that such disapplication is compatible with defence rights. In “Tarrico II”, the Italian Constitutional Court made a preliminary reference to the Court in relation to the disapplication of limitation periods which time-barred VAT fraud prosecutions, expressing the concern that such disapplication would violate the constitutionally enshrined principle of legality according to which offences and penalties must be defined by law, rules of criminal law must be precisely determined and cannot be retroactive.
The Court noted that it is primarily for the national legislature to lay down rules on limitation that enable Member States to comply with their obligations under Article 325 TFEU. The Court also stressed the importance, both in the EU legal order and in national legal systems, of the principle that offences and penalties must be defined by law, and the tenets of foreseeability, precision and non-retroactivity of criminal law. The Court stated that it is up to the national court to ascertain whether the finding that the national limitation periods prevent the imposition of effective criminal penalties in cases of fraud gives rise to a situation of uncertainty as regards the applicability of the national limitation rules, which would be in breach of the principle of legality. In such a case, the national court is not obliged to disapply the national limitation periods.
The Taricco II judgment introduces an exception to the Taricco ruling, insofar as national courts are required to disapply national criminal rules which prevent the application of effective criminal penalties in fraud cases, unless such disapplication entails a breach of the principle of legality.
