European Court of Human Rights

THIRD SECTION

DECISION

Application no. 15606/07
by Claes ÅBERG
against Sweden

The European Court of Human Rights (Third Section), sitting on 12 May 2009 as a Chamber composed of:

Josep Casadevall, President,
Elisabet Fura-Sandström,
Corneliu Bîrsan,
Alvina Gyulumyan,
Egbert Myjer,
Ineta Ziemele,
Ann Power, judges,
and Santiago Quesada, Section Registrar,

Having regard to the above application lodged on 21 March 2007,

Having regard to the formal declarations accepting a friendly settlement of the case,

Having deliberated, decides as follows:

THE FACTS

The applicant, Mr Claes Åberg, is a Swedish national who was born in 1944 and lives in Goteborg. The Swedish Government (“the Government”) were represented by their Agent, Ms A. Erman, of the Ministry for Foreign Affairs.

The facts of the case, as submitted by the applicant, may be summarised as follows.

In the 1980s the applicant traded in capital market bonds (kapitalmarknadsreverser). Carrying no interest, they were bought at a lower price than their nominal value. After their expiry, they could be redeemed at the nominal value, and the difference between that value and the purchase price constituted a profit. Provided that the bonds had been held for five years, the profits were, at the time, not liable to tax.

While these transactions were normally quite profitable, the applicant allegedly made a substantial loss on bonds acquired in 1987. In the 1980s and early 1990s, such losses were not tax deductible. In 1992, however, the taxation rules were changed in that losses on capital market bonds became generally deductible. The applicant therefore realised the losses by selling the bonds in 1992-97 for a symbolic sum and claimed deductions in his tax returns.

Initially, the Tax Authority of the County of Gothenburg and Bohus approved the applicant’s deduction claims. However, on 7 and 8 September 1998, following additional assessments, it changed the taxation. It found that the evidence did not support the applicant’s claims concerning the bond transactions and the payments made therefor and that, thus, he had not shown that he had sustained a real loss. As a consequence, the applicant’s taxable income was raised by amounts corresponding to the deductions claimed by him for capital losses. Considering that he had submitted incorrect information by invoking documents and statements which did not reflect reality, the Tax Authority also imposed tax surcharges on him, amounting to 40% of the increased tax liability. For the five taxation years in question, the tax surcharges came to 40% of the tax payable on the total amount of SEK 3,233,939 (approximately 300,000 euros (EUR)).

Following the applicant’s appeals to the County Administrative Court (länsrätten) in Gothenburg, the Tax Authority reviewed the impugned decisions on 8 September 1998 but did not change them. However, some time in 1999, it granted the applicant a stay of payment of the taxes and surcharges concerned until the tax case had been determined by the County Administrative Court.

On 2 January 2002 the County Administrative Court rejected the applicant’s appeals. The court considered that it had been sufficiently shown that the documents aiming to verify the applicant’s purchase and sale of capital market bonds did not correspond to any real underlying credit relationship. Thus, the applicant had not made any capital loss and was not entitled to tax deductions. As, in his tax returns, he had claimed deductions for non-existing capital losses, he had submitted incorrect information which had given cause for the imposition of tax surcharges. No reason for remitting the surcharges had been shown.

Following the applicant’s further appeals, on 23 September 2003 the Administrative Court of Appeal (kammarrätten) in Gothenburg upheld the County Administrative Court’s judgment.

By a decision of 26 October 2006, the Supreme Administrative Court (Regeringsrätten) refused the applicant leave to appeal.

COMPLAINTS

THE LAW

On 19 December 2008 the Court received the following declaration from the Government, signed by the Agent of the Government on 26 November 2008 and by the applicant on 29 November 2008:

“The Government and the applicant have now reached the following friendly settlement on the basis of respect for human rights, as defined in the [Convention], in order to terminate the proceedings before the Court.

a)  The Government will pay, ex gratia, the sum of SEK 75,000 (seventy-five thousand) [approximately EUR 7,000] to the applicant. Execution of payment will take place when the Government has received the Court’s decision striking the case out of its list of cases.

b)  The applicant declares that he has no further claims on the Swedish State based on the facts of the [present] application.

This settlement is dependent upon the formal approval of the Government at a Cabinet meeting.”

By a decision of 18 December 2008, the Government approved the settlement reached.

The Court takes note of the friendly settlement reached between the parties. It is satisfied that the settlement is based on respect for human rights as defined in the Convention and its Protocols and finds no public policy reasons to justify a continued examination of the application (Article 37 § 1 in fine of the Convention). Accordingly, the case should be struck out of the list.

For these reasons, the Court unanimously

Decides to strike the application out of its list of cases.

Santiago Quesada Josep Casadevall
Registrar President