A judgment in the case on taxing incomes gained from private pension funds has been adopted
The Constitutional Court has adopted a judgment in the case No. 2010-59-01 “On Compliance of Section 16.1 (3) of the Law “On Personal Income Tax” with Article 1 and 105 of the Satversme of the Republic of Latvia”.
The applicants Ms. Lilija Ābika and Mr. Jānis ābiks indicated that their income from a private pension fund received in 2010 was imposed the personal income tax. Before 1 January 2010, instalments performed by an employer in favour of employees were taxed only. Consequently, the principle of legitimate expectations that follows from Article 1 of the Satversme is breached, as well as the property right of the applicants protected by Article 105 of the Satversme is infringed.
The Constitutional Court concluded that, up to 2010, incomes from private pension funds (in case if instalments into the fund were made by a future beneficiary) were applied a more advantageous regulatory framework if compared to other kinds of incomes, namely, income from private pension funds was not taxed. However, in case if economic situation of the State changes, tax relief may also change.
Consequently, the Constitutional Court recognized the Contested Norms as compliant with Article 1 and Article 105 of the Satversme.
The Judgment of the Constitutional Court is final and not subject to appeal.
Linked case: 2010-59-01