Sorainen is representing consumer lender West Kredit before the Constitutional Court regarding a new corporate income tax surcharge. As of 1 January this year, a new Latvian law has obliged consumer lenders to pay a surcharge of 20% of the previous year’s profits on top of corporate income tax (CIT). The legislator argues that consumer lenders and banks have had windfall profits and that the surcharge channels those amounts towards public spending. West Kredit appealed the CIT surcharge before the Constitutional Court, claiming it violates the principle of equality: it treats consumer lenders and banks the same without there being an objective and reasonable basis for this. In particular, consumer lenders have not applied the substantially increased EURIBOR rate of recent years to their loans. Moreover, the obligation to pay the CIT surcharge also infringes the right to property, since the procedure for calculating and paying the CIT surcharge effectively applies a double tax to a company’s profits and increases the effective tax rate to 73%.
Litigation is ongoing.
Our team
The Sorainen team led by senior associate Katrīne Pļaviņa-Mika consists of partners Andris Tauriņš and Aija Lasmane, senior associate Edgars Hercenbergs, associate Katrīna Bičevska, and assistant lawyer Andīna Brīvule.
