16
Tue, Apr
43 New Articles

What’s the Cost of Unlawfulness – Part 1

What’s the Cost of Unlawfulness – Part 1

Serbia
Tools
Typography
  • Smaller Small Medium Big Bigger
  • Default Helvetica Segoe Georgia Times

According to the definition contained in the Law on Misdemeanors (Official Gazette of RS no. 65/2013, 13/2016, 98/2016 – decision of CC, 91/2019, 91/2019 – other law and 112/2022 – decision of CC) (“the Law“), misdemeanor is an unlawful act established as misdemeanor by law or other regulation of a competent authority and which is subject to misdemeanor sanctions.

In accordance with the above and according to its nature, misdemeanor is unlawful action which, considering its gravity, i.e., consequences, does not represent criminal act (or economic offence). Under the Law, misdemeanors may be prescribed by law or regulation and/or decision of the assembly of autonomous province, municipal assembly and city assembly (including assembly of the city of Belgrade).

According to the Report on Work of the Misdemeanor Appellate Court for 2021  (the last published annual report at the time of drafting this article), the annual inflow of cases to this highest-instance misdemeanor court that decides on appeals against decisions of misdemeanor courts is around 30 thousand. Out of that number, misdemeanors in the field of finance and customs make for 8.03%, misdemeanors in the field of economy 6.46%, misdemeanors in the field of labor, employment relations and protection at work make for only 1.78%, while largest number of cases are in the field of transport safety – 57.31%. Similar trends can be observed in the report for 2020, while reports for 2019 and 2017 indicate somewhat higher percentage (except for transport safety).

The above therefore shows a decreasing tendency for the number of cases in the economy-relevant fields, which naturally brings about the question as to the reasons that brought to that. Among other, whether the prescribed misdemeanor sanctions contributed to that and to what extent, or the awareness of economic entities about them?

Since, as it was already noted, misdemeanors represent offences, misdemeanor sanctions resemble penal sanctions, wherefore the Law stipulates that the following may be pronounced or imposed for misdemeanors:

  • penalties;
  • penalty points;
  • reprimand;
  • protective measures;
  • educative measures.

As regards penalties, misdemeanor may be subject to imprisonment, fine and community service.

Fines

In relation to fines, the Law recognizes several modes of pronouncing. Namely,

  • by law or regulation, misdemeanor fine may be imposed:
  • within appropriate range (namely from RSD 5,000 to 150,000 for a natural person or responsible person, from RSD 50,000 to 2,000,000 for a legal entity, and from RSD 10,000 to 500,000 for entrepreneurs);
  • in fixed amount (so-called mandate penalty, for a natural person and responsible person from RSD 1,000 to 50,000, for entrepreneur from RSD 5,000 to 150,000, and for legal entity from RSD 10,000 to 300,000); while
  • by decisions of assembly of autonomous province, municipal assembly, city assembly or assembly of the city of Belgrade, fines can only be imposed in fixed amount, from minimum to one half of the highest amount under the Law.

Exceptionally, for misdemeanors in the field of public revenues, public information, customs, foreign trade and foreign exchange operations, environment, trade in goods and services and trade in securities, the law may prescribe fines that correspond to the amount of damages or unrealized obligation, value of goods or other object that is subject of misdemeanor (but not exceeding the twenty-times the amount of such values, and not exceeding five-times the amount of maximum fines that may be pronounced under the Law).

Previously noted mandate fines (prescribed in fixed amount) shall be pronounced by supervising authorities instead of misdemeanor courts, while the latter nevertheless have the competence to pronounce the fines prescribed in a relevant range, given that it is necessary to measure the fine, i.e., determine its amount within the prescribed range on basis of presented evidence and assessing all circumstances of the case.

Examples

The Law on Protection of Personal Data contains penalty provisions under which fines in a prescribed range (from RSD 50,000 to 2,000,000) will be imposed on controller and/or processor with legal person capacity in case it commits a misdemeanor prescribed by Article 95, para. 1 of this law (e.g., processing of personal data contrary to the principles of processing from Article 5, para. 1 of the law), as well as provisions under which fines in fixed amount (RSD 100,000) will be imposed on controller and/or processor with legal person capacity in case it commits a misdemeanor prescribed by Article 95, para. 2 of the law (e.g., it fails to inform the recipient about special terms for personal data processing prescribed by law and its obligation to meet such terms).

On the other hand, the Customs Law stipulates that fine from one to five times the value of goods subject to misdemeanor will be imposed on a legal entity, entrepreneur or natural person, and fine of RSD 20,000 to 150,000 on a responsible person in a legal entity, if some of misdemeanors from Article 265, para. 1 of this law are committed (e.g., failure to properly report the goods imported to or exported from the customs territory of the Republic of Serbia).

Similarly, the Law on Tax Procedure and Tax Administration stipulates that taxpayer – legal entity or entrepreneur failing to submit tax application, calculate and pay taxes, shall be fined for misdemeanor with 30% to 100% of owed tax amount established during tax control, and no less than RSD 500,000 for legal entity and RSD 100,000 for entrepreneur.

In relation thereto, as we have already mentioned in one of our previous texts (available here), the recently adopted Strategy for Personal Data Protection for the period 2023 – 2030 announced stricter penal policy for infringement of obligations in the field of personal data protection, and underlined that that the model used by the Commission for the Protection of Competition should be applied for this purpose and that fine should be pronounced in the amount depending on the company income.

Namely, for the sake of comparison, the possibility prescribed by GDPR for infringement of obligations in the field of personal data protection is fine up to EUR 10,000,000 or 2% of the total annual turnover of the company in the world for the previous financial year (whichever amount is higher), and up to EUR 20,000,000 or 4% of the total annual turnover of the company in the world for the previous financial year (whichever amount is higher) – therefore, in the amounts exceeding by far the ones prescribed by the Law on Personal Data Protection.

Finally, it was noted in practice that the acting courts usually, and particularly in case of first misdemeanor, do not pronounce maximum fines. However, it can also be noted that penal policy tends to be stricter recently, however it remains to be seen whether the announced fines are enough to achieve the effect of general prevention, i.e., committing so-called dissuasive influence on potential perpetrators of misdemeanor as offence.

This article is to be considered as exclusively informative, with no intention to provide legal advice. If you should need additional information, please contact us directly.

By Lara Maksimovic, Senior Associate, and Andrea Arsic, Associate, PR Legal

Our Latest Issue