A case initiated with respect to a norm that grants to the State Revenue Service the right to calculate and collect a fine in the amount of 100 per cent of the underpaid tax due to the budget


On 1 June 2020, the 3rd Panel of the Constitutional Court initiated the case “On Compliance of Section 34 (1) of the Law “On Taxes and Duties, insofar it Envisages Calculation and Collection from the Taxpayer a Fine in the Amount of 100 Per Cent of the Underpaid Tax Due to the Budget, with Article 105 of the Satversme of the Republic of Latvia”.

The Contested Norm

Section 34 (1) of the law “On Taxes and Duties”:

“If a natural or legal person who has registered as a performer of economic activity performs economic activity without registering as a payer of a particular tax or within 30 days after the term determined by the tax administration, does not submit the tax declarations provided for by tax laws, as well as business and accounting records requested by the tax administration without which the tax administration officer (employees) are unable to assess the amount of the tax liability, then the tax administration shall, on the basis of a tax review (audit), assess and enforce for the benefit of the budget from the taxpayer the tax which has been assessed for the taxation period from the date on which the person had an obligation to register as a taxpayer in the amount provided for in Section 29, Paragraph two of this Law, and also a fine at 100 per cent of the underpaid tax due into the budget.”

The Norm of Higher Legal Force

Article 105 of the Satversme of the Republic of Latvia (hereafter – 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 Facts

The case was initiated on the basis of an application by Jānis Pīlāts. The State Revenue Service had conducted the applicant’s tax audit, as the result of which additional tax payments had been calculated. On the basis of the contested norm, a fine linked to the tax payments also had been calculated, in the amount of 100 per cent. The applicant appealed against this decision to the administrative court; however, the decision in the part regarding the fine was left unamended.

The applicant notes that the contested norm does not provide to the party applying the law the possibility to choose the most appropriate amount of the fine on case-by-case basis. This restriction on rights is said to be disproportional. Hence, his right to property, included in Article 105 of the Satversme, had been infringed upon.

Legal Proceedings

The Constitutional Court has requested the institution, which issued the contested act, the Saeima of the Republic of Latvia, to provide a reply on the facts of the case and legal reasoning by 3 August 2020.

The term for preparing the case is 1 November 2020. The Court shall decide upon the procedure and the date for hearing the case after the case has been prepared.

Open in PDF: 2020-31-01_PR_par_ierosinasanu_ENG

Linked case: 2020-31-01