Belgian Clothier Takes Tax Fight to Grand Chamber of Rights Court

The full chamber of Europe’s human rights court heard arguments in a long-running tax dispute between a Belgian clothing company and the country’s tax authorities.

(CN) — The Grand Chamber of the European Court of Human Rights heard an appeal Wednesday brought by a Belgium clothing company challenging taxes and a hefty fine it was ordered to pay in a long-running court dispute.

Vegotex International, a fashion clothing line based in Antwerp, Belgium, charges that its right to a fair trial was violated during lengthy proceedings over contested back taxes from 1993. It argued that the Belgium parliament unfairly intervened in its trial by passing a law that came into effect in 2004 allowing tax authorities to retrieve back taxes.

In November 2020, a panel of judges at the Strasbourg-based rights court found that Vegotex failed to show that Belgium had violated its right to a fair trial. However, the panel did find that the judicial proceedings, which started in 1995 and ended in 2009 when Belgium’s high court threw out an appeal, took too long.

“It is true that the case, as emphasized by the Government, was of a certain complexity and that the financial interests at stake were considerable. It is likewise true that the case raised complex issues regarding limitation periods and that the applicant company submitted a third set of additional observations and a summary to the Court of Appeal,” the ruling states. “Nevertheless, the Court considers that these factors are insufficient to explain the duration of the proceedings which, taken overall, were unreasonably long.”

After the 2020 ruling, Vegotex appealed to the Grand Chamber of the Strasbourg court and it was granted a hearing. On Wednesday the 17-member full chamber heard arguments from both sides. The Grand Chamber took the case under advisement and will issue a final ruling.

Vegotex was ordered to pay 298,813 euros (about $352,000) in back taxes and a 10% surcharge, which in effect was a fine. Belgian tax authorities ordered Vegotex to pay the extra taxes in 1995, sparking the legal fight. Tax officials accused the clothier of not paying taxes it owed for 1993, charging that the company had improperly deducted expenses and investment costs related to a stock-exchange transaction.

The clothing company’s main argument is that it was unlawful for Belgium to retroactively apply a tax provision approved by the Belgium parliament that came into force in 2004 when its tax dispute was still winding its way through the courts.

Vegotex also argued that its back taxes could not be collected because they were time-barred. The company cited a 2002 ruling by Belgium’s high court, the Court of Cassation. But the Court of Cassation dismissed Vegotex’s appeal in 2009.

Courthouse News reporter Cain Burdeau is based in the European Union.

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