The Supreme Court Explained Who Must Prove Non-Payment of Fines and Penalties in Cases of Tax Evasion
To enable the court to determine whether an individual, facing criminal proceedings under Article 212 of the Criminal Code, has genuinely compensated the state for damages incurred due to the belated payment of taxes, fees, or mandatory payments (specifically, by settling financial sanctions and/or penalties), the prosecution must promptly furnish the court with relevant documentation if it alleges non-payment. Neither the court nor the accused, charged with a criminal offence under Article 212 of the Criminal Code, is obligated to independently seek information regarding unpaid fines or penalties. This conclusion was reached by the Criminal Cassation Court of the Supreme Court in case No. 521/3296/25.
Circumstances of the Case
The director of an enterprise was accused of failing to declare tax liabilities for value-added tax totalling UAH 44,389,968 during the reporting (tax) period of the company’s financial and economic activity, which included value-added tax amounting to UAH 7,398,328.
Positions of the Courts of First and Appellate Instances
The lower courts, citing part 4 of Article 212 of the Criminal Code, exempted the individual from criminal liability because the damage caused to the state by the untimely payment of taxes had been compensated. Consequently, they closed the criminal proceedings related to a criminal offence under part 3 of Article 212 of the Criminal Code.
In the cassation appeal, the prosecutor noted that while the accused had paid the value-added tax of UAH 7,398,328 before being notified of suspicion, they had not compensated for the damage caused to the state by its untimely payment (i.e., financial sanctions and penalties).
Position of the Criminal Cassation Court of the Supreme Court
The decisions of the lower courts were upheld.
The panel of judges of the Criminal Cassation Court stated that, according to part 4 of Article 212 of the Criminal Code, a person who has committed acts outlined in parts 1 or 2 of this article, or acts outlined in part 3 (if these led to the actual non-receipt of funds by budgets or state-targeted funds in especially large amounts) of this article, is exempted from criminal liability if, before being held criminally liable, taxes, fees (mandatory payments) were paid, and the damage caused to the state by their untimely payment (financial sanctions, penalties) was compensated.
The provisions of part 4 of Article 212 of the Criminal Code apply when both the tax and the corresponding fines imposed by the competent controlling authority have been paid. Furthermore, the indictment charges the individual with the non-payment of a specific tax or fee; other charges related to its untimely payment fall outside the scope of the indictment.
If the prosecution alleges the non-payment of certain fines or penalties by the accused, it is the prosecution’s responsibility to provide the court with relevant documents confirming the imposition of such a fine or penalty. Neither the court nor the person accused of committing a criminal offence under Article 212 of the Criminal Code should independently search for information about unpaid fines or penalties.
When evaluating the prosecutor’s arguments disagreeing with the local court’s ruling, the appellate court specifically emphasised that no evidence confirming the existence of other amounts of tax liabilities or financial sanctions was presented by the prosecutor during the appellate review.
Conversely, as indicated by the tax service’s response in this case, based on the results of the forensic economic examination, no penalties or fines were imposed. In fact, the tax service stated that the determination of such financial sanctions is only possible through tax control procedures, which were not carried out.
The appellate court, considering the evidence available in the case materials, correctly noted that as of the date of the individual’s exemption from criminal liability, and at the time of the appellate review, the court had not been provided with any information regarding the amounts of fines or penalties that should have been paid and imposed.
According to the prosecution, the fine should have been imposed in the future, and this issue was raised with the expert in this criminal proceeding, to which the prosecution received no answer.
The Supreme Court stressed that the calculation of financial sanctions or penalties falls within the competence of the relevant controlling authority, which cannot be delegated to a court expert. Therefore, the prosecutor’s arguments in this regard are deemed unsubstantiated.
For the court to determine whether an individual, against whom criminal proceedings under Article 212 of the Criminal Code exist, has compensated the damage caused to the state by untimely payment (i.e., paid financial sanctions and/or penalties), the prosecution must promptly provide the court with the relevant documents if it refers to the non-payment of such payments. A formal appeal of the court decision in the appellate procedure without documentary confirmation of the facts referred to by the prosecutor is considered baseless.
Appealing the appellate court’s decision for the same reasons and submitting evidence of the existence of fines or penalties at the cassation stage, given that cassation is a court of law and all evidence must be provided by the parties at earlier stages of the proceedings, raises questions about the prosecutor’s procedural conduct in this case.
The resolution of the panel of judges of the First Judicial Chamber of the Criminal Cassation Court of the Supreme Court dated 23.06.2026 in case No. 521/3296/25 (proceeding No. 51-405km26) can be found at this link.
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