Background
Devekom DOO Niš imported goods from Bosnia and Herzegovina and Croatia in 2006 under a preferential customs regime. Following a post-clearance review in 2009, Serbian customs authorities determined that preferential treatment did not apply and required the company to pay customs duties immediately, despite its appeals. They collected RSD 7,381,148.
After repeated remittals, the authorities concluded in 2018 that the duties had not been owed and refunded the principal in 2019. They refused, however, to pay interest. The Administrative Court upheld that refusal, while the Constitutional Court found the customs proceedings excessively long and awarded non-pecuniary damages, but rejected the company’s property-rights complaint on procedural grounds.
The Court’s Holding
Unanimously, the Court held that the company had a “possession” under Article 1 of Protocol No. 1: it had a legitimate expectation of statutory interest, grounded in the Customs Act applicable when the customs proceedings began and supported by domestic case-law. It also rejected Serbia’s non-exhaustion objection, finding that the company had reasonably pursued available customs-law remedies and was not required to bring an additional civil claim.
The refusal to award any interest interfered with the company’s peaceful enjoyment of possessions. Although the measures pursued legitimate fiscal and economic aims, Serbia failed to strike a fair balance: the company was deprived of the money for almost ten years, while inflation eroded its value, and it received only the nominal sum. At a minimum, simple statutory interest was required to provide adequate and effective redress.
The Court found a violation of Article 1 of Protocol No. 1 and awarded EUR 95,284 in pecuniary damage, EUR 3,000 in non-pecuniary damage, and EUR 4,500 for costs and expenses, plus applicable tax.
Key Takeaways
- A claim to interest on wrongly collected customs duties can constitute a protected “possession” where it has a sufficient basis in domestic law.
- Refunding only the nominal amount after a prolonged delay may impose an individual and excessive burden on the taxpayer.
- States must provide, at minimum, simple statutory interest where necessary to offset prolonged loss of use and inflation.
Why It Matters
The judgment applies the Article 1 of Protocol No. 1 fair-balance test to delayed repayment of unlawfully collected customs duties. It confirms that tax and customs administration, despite the State’s broad margin of appreciation, cannot shift the economic consequences of official error and prolonged retention of funds entirely onto the affected business.
For practitioners, the decision highlights that a nominal refund may be insufficient redress when authorities retain money for years. The availability of interest, inflation, and the taxpayer’s inability to use the funds are central to the proportionality analysis.