The tax legislation establishes a proportional mutation right on the transfer of goods against payment. This tax is established on the price the parties agreed on in the deed of sale. In order to reduce the amount, some parties can be tempted to only mention a part of the price in the deed, the surplus being the object of a counter-letter or an immediate payment in cash (payment “in black”).
Article 203 of the Code of Registration duties, Mortgage duties and Court fees (hereafter referred to as “C.R.”) provides a special regime in case of concealment of the price and charges or of the conventional value. Is due “by each contracting party a fine equal to the evaded duty. This duty is indivisibly due by all parties”
In this case, two couples of owners sell a plot of a same estate to two purchasers who purchase together and where the sale is the object of one single notarial deed.
The two purchasers and one of the sellers are criminally convicted for concealing a part of the price (in this case 11.000.000 BEF had been paid “in black”). In accordance with this conviction the registration office has discerned a constraint for “concealment of the selling price” against the purchasers and the sellers and imposes a fine on all parties to the deed, this in application of aforementioned article.
The court of first instance of Mons quashes this fine, judging that “seen the criminal nature, it can’t be imposed on them without violating the principle that penalties are personal and the principle of presumption of innocence”, with none of the three dispossessed claiming parties having been convicted for concealing the selling price.
Seen the fact that it concerns evaded duties that are indivisibly due par all parties, in accordance to the legislation with regard to concealing the price, the court considers that these are aimed at “compensating the loss suffered by the Treasury as a result of the concealment of the price”. Even if this solidarity mechanism is not equal to a criminal sanction, “the issue of its constitutionality arises when there is no correlation between the criminal conviction and the compensation obligation”. That is why the court has submitted a preliminary question to the Constitutional Court to know if article 203, par.1 of the C.R., as it is applicable in the Walloon Region, violates the principle of equality and non-discrimination with regard to tax matters insofar that “the evaded duty is indivisibly due by all parties to the deed, including those for whom can only be established that they have participated to the concealment of a part of the price or still knew about it”. So the preliminary question only targets the solidarity mechanism provided for the payment of the evaded duty, excluding the fine.
The Court notes that article 203, in this case, “treats the two categories of different people identically”: on the one had, “the parties involved in the sale of a property who have intentionally concealed the selling price and who have been convicted criminally fort his” and on the other hand “those, as was presented to the judge a quo, who could have signed the deed of sale without having known about this concealment and who have not been pursued nor convicted by a judge on this count. The court states from this that there is no acceptable justification to treat the two categories of people who differ essentially in an identical way.
Therefore the Court decides that the solidarity mechanism for payment of evaded duties in case of concealment of the selling price, as provided in article 203 C.R., violates the articles 10, 11 en 172 of the Constitution “insofar it permits that the evaded duties are indivisibly due by the parties to the deed of sale who have not participated to the concealment of the selling price or knew about it”.