Criminal prosecution of director is permitted after fines have been imposed on a private limited compan | Deloitte Nederland


Criminal prosecution of director is permitted after fines have been imposed on a private limited company

Imposition of a default penalty on a bv does not rule out prosecution of the director/major shareholder for the offence as principal or de facto manager. The DMS and the bv are, in fact, different persons. Nor are the facts the same.

24 March 2022

Double penalty

Both criminal and administrative law provide safeguards to prevent individuals from being punished or prosecuted twice for the same offence/violation. For example, the General Administrative Law Act stipulates that an administrative authority will not impose an administrative fine if such fine has already been imposed on the offender for the same violation, a penalty decision has been issued, or criminal proceedings have been instituted and the hearing has begun. The Criminal Code and the Code of Criminal Procedure contain similar provisions. The Charter of Fundamental Rights of the European Union (hereinafter: the Charter) likewise indicates that no one can be tried or punished again for an offence for which they have already been finally convicted or acquitted within the Union.

Not the same person

Recently, the question arose whether the aforementioned safeguards prevent the director of a private limited company (bv) from being criminally prosecuted as principal or de facto manager of a prohibited act of that private limited company, for which fines had already been imposed on that company. The specific question was whether the director of a bv could be criminally prosecuted for deliberately failing to submit a VAT return for the first quarter of 2015, while the bv had already been subject to default penalties for that reason. The Court of Appeal of Den Bosch ruled that materially the same facts were involved, so that prosecuting the director/major shareholder would be contrary to the ne bis in idem principle. The prosecution should therefore be barred.

However, the Supreme Court did not agree. The case concerns a natural person (the director/major shareholder) who is prosecuted for actually directing or giving instructions for prohibited conduct, while the default penalties were imposed on a legal entity (the bv). So there is no question of double prosecution or punishment of the same natural person or legal entity. Prosecution is therefore not contrary to national law or the Charter. The fact that the director/major shareholder was director of the legal entity at the time of the prohibited conduct does not alter this. According to the Supreme Court, it does make sense to take this circumstance into account when determining the punishment.

Not the same facts

The Supreme Court also observed a major difference in terms of the nature and seriousness of, on the one hand, the facts that can give rise to criminal prosecution and, on the other hand, the facts that can lead to the imposition of a default penalty. In the former case, intent is required and filing of an incorrect tax return or failure to file a tax return must result in underpayment of tax. By contrast, imposition of a default penalty merely requires establishing that no tax return was filed or that no payment was made in error. In view of this, the Criminal Division of the Supreme Court argued that these cannot generally be said to be ‘the same facts’.

Source: HR 15 March 2022, 19/02761, ECLI:NL:2022:364

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