A case has been initiated with respect to cessation of the duty to pay additional immovable property tax rate for agricultural land that is not being farmed
On 30 January 2018, the 1st Panel of the Constitutional Court initiated case “On Compliance of Section 7 (3) of the Law “On Immoveable Property Tax”, insofar it does no Provide for Cessation of the Duty to Pay Additional Immovable Property Tax Rate for Agricultural Land that is not being Farmed, with Article 105 of the Satversme of the Republic of Latvia”.
The Contested Norm
Section 7 (3) of the law “On Immovable Property Tax” provides that the duty to pay immovable property tax ceases in the next taxation year following the termination of property rights or possession rights and also envisages exceptions to the aforementioned duty.
The Legal Norm of Higher Legal Force
Article 105 of the Satversme: “Everyone has the right to own property. Property shall not be used contrary to the interests of the public. Property rights may be restricted only in accordance with law. Expropriation of property for public purposes shall be allowed only in exceptional cases on the basis of a specific law and in return for fair compensation.”
The case was initiated with regard to an application submitted by the Department of Administrative Cases of the Supreme Court (hereinafter – the Supreme Court). A cassation complaint had been submitted to the Supreme Court by an applicant, for whom an additional tax rate for agricultural land that was not being farmed had been calculated, although the applicant had alienated this immovable property already at the beginning of the year. The applicant holds that she cannot be responsible for farming of agricultural land because, actually, it can be farmed only by the new owner of the immovable property.
The Supreme Court holds that Section 7 of the law “On Immovable Property” does not differentiate between the origination and cessation of the duty to pay the basic tax rate from the origination and cessation of the duty to pay the additional tax rate. I.e., the third part of this Section envisages cessation of the duty to pay additional tax rate for agricultural land that is not being farmed beginning with the next year following alienation of the immovable property, without assessing the period, when the immovable property had been alienated, or the fact, which of the owners is, actually, responsible for farming this land. Hence, the Supreme Court holds that the contested norm is incompatible with Article 105 of the Satversme.
The Constitutional Court has requested the Saeima to provide a reply on the facts of the case and legal substantiation by 30 March 2018.
The term for preparing the case is 30 June 2018. The Court shall decide upon the procedure and the date for hearing the case after the case has been prepared.
Linked case: 2018-04-01