Statement: the Prime Minister's Office is not telling the truth
Contrary to the Prime Minister's Office's announcement, the Constitutional Court's five-member council have not decided on the 5th of October 2015 whether the investigation of the Government Control Office (GCO) regarding the EEA/Norwegian NGO Programme was legal or not. The Court examined only the availability or absence of an effective legal remedy against the process and decision of the GCO.
As it is known, one year ago in the second half of September of 2014, on the motion of the GCO's president the National Tax an Customs Administration has suspended the tax numbers of all four foundation's which are responsible for the operation of the NGO Programme in Hungary. With this act the GCO wanted to sanction the four foundations for their alleged non-cooperation during the GCO's audit. The foundations have appealed against the decision and later they took the case to court.
The availability or absence of legal appeal against the GCO's process and decision was a central issue of the administrative lawsuits launched by the foundations. Based on the relevant legislations - the Public Finance Act, the Act on the Rules of Taxation and the Governmental decree on the GCO - if the president of the GCO requests the president of the tax authority to suspend the tax number of an audited organization that the GCO considers non-cooperative, the tax authority can not assess the case, it is obligated to order the suspension. The second level authority can only examine during the appeal whether the first level decision of the tax authority was made in a lawful process or not, but the underlying of the GCO can not be assessed. (All along the lawsuit the tax authority referred to its limited room of options.) On the other hand the audited organizations - the foundations - are not allowed to appeal directly against the decision of the GCO. The GCO is not even obliged to inform the audited organizations about it's decision. Present legislation provides no direct legal remedy against the GCO.
In their lawsuit the foundation's proposed that the judges should initiate the constitutional review of this issue. As the court hearings of the Eger-based Carpathian Foundation Hungary were ahead of the others, the trial judge of the Eger Administrative and Labour Court turned to the Constitutional Court first while the lawsuits of the other three foundations were suspended as well. (Important to add that the suspension of the tax numbers have not entered into force for the duration of the court cases, the foundations keep on performing their normal actitvities including the management of the NGO Programme with valid tax numbers).
The five-member council of the Consitutional Court ruled about the case in their decision dated October 5th. They rejected the initiative of the judge to annul the relevant paragraph (ensuring the right for the GCO to initiate tax number suspension) of the Public Finance Act. Contrary to the statement of the Pime Minister's Office, the Constitutional Court did not say that the procedure of the GCO was lawul but only that the legislative environment is compatible with the Basic Law. The council argued that the judge does have the opportunity to examine not only the process of the tax authority, but the lawfulness of the underlying GCO's decision, too. The Constitutional Court basically referred the case back to the administrative court.
The main problem, whether the GCO was entitled to investigate the EEA/Norwegian NGO Programme or not remains open as the decision of the Constitutional Court did not cover this question. The operator foundations therefore will use every further forum of legal remedies to prove and protect their position: the GCO has investigated the NGO Programme through a politically motivated and unlawful process which is why its findings are neither valid nor authentic.
The decision of the Consitutional Court - namely the lack of a substantial position - puts the judges acting in the tax number suspension cases in a difficult position; the letter of the law suggests something else than the justification of the court's decision. This is indicated by the dissenting opinion of Dr. Ágnes Czine constitutional court judge who points out that tax suspension is a very "tough" tool in the hand of the authority that should be applied - according to the legislator's original intention - only in special cases, essentially in the fight against fictitious taxpayers. Sanctioning non-cooperation with the GCO through this method is disproportionately heavy in the case of lawfully operating taxpayers as it fundamentally affects the audited organizations. In addition it not only affects the operators of the NGO Programme (Ökotárs and it's partners) - the absence or existence of effective legal remedies against the GCO's decision is important for all entities (who receive any kind of financing from the state budget) audited by the GCO. However in this matter we did not receive any guidance now.