The Verdict is More Expensive than Money: The Highest Legal Authority of Latvia is Most Often Puzzled by Economic Entities 0 10

The head of the government approved the report of the Satversme Court for 2025 – and now everyone can verify the predominantly economic factor of its cases. Out of 17 verdicts issued last year,

The Case of Criminally Acquired Property

In this process, the Satversme Court faced a conglomerate of legal entities – 1Dream OU, Rapiddeal Trade LTD, Beligand Trade Limited, Perfecta Middle East FZC, Croftland Business L.P., Glenson Commercial Inc., Mainfield Assets Corp., Wondermax Sales Inc., Hyroc Impex Ltd, as well as physical persons – Jin Lin, Volodymyr Stryy, and Elena Glazer.

They were litigating regarding Article 627 of the Criminal Procedure Law, which, according to the plaintiffs, hinders access to the materials of the court proceedings in cases of criminally acquired property.

"The disputed norms ensured that primarily the directing process person, when conducting an individual assessment, had the right to determine the extent to which the person associated with the property could familiarize themselves with the case materials. In turn, if the person associated with the property disagreed with the assessment of the directing process person, they had the right to appeal to the court, which exercised control over legality...".

In this regard, the Satversme Court ruled: the disputed norms "ensured a fair balance between the principle of equal opportunities for the parties and the protection of the secrecy of the investigation and found them to be compliant".

On the Rights of Foreign Merchants to a Fair Trial

A rather rare example of a ruling in favor of the plaintiff. Here, foreign entrepreneurs – KASPIANLAB LP and ASG Resolution Capital, complained about the inconsistency of Article 629 of the Criminal Procedure Law with two articles of our Satversme – namely Article 1 ("Latvia is an independent democratic republic") and Article 92 ("Everyone can defend their rights and legitimate interests in a fair court. Everyone is presumed innocent until proven guilty according to the law. In case of unjustified violation of rights, everyone has the right to appropriate compensation. Everyone has the right to legal assistance").

Here, the highest judicial authority of the Republic of Latvia decided that the old Article 629 was inconsistent with the Satversme, as a result of which the verdict of the district court in the case of the plaintiffs is "null and void from the moment of the violation of their fundamental rights".

The Case of Property Arrests and Confiscations

The same company KASPIANLAB LP, along with a dozen and a half foreign legal and physical persons, complained about three articles of the Criminal Procedure Law – Articles 124, 125, and 126.

"In Latvia, – it is stated in the report of the Satversme Court, – several separate criminal proceedings have been initiated regarding the possible legalization of income obtained through criminal means, in large amounts. In all the mentioned criminal proceedings, the directing process person arrested the property of the applicants, initiated a process to recognize the property as obtained through criminal means and transferred the case materials for a decision in court. By the final ruling of the court in all processes, the property of the applicants was recognized as obtained through criminal means and confiscated in favor of the state".

Moreover, the processes took place in the newest legal authority – the Economic Affairs Court.

The Satversme Court in its verdict stated: "The disputed regulation as part of the regulation of the process regarding property obtained through criminal means was introduced to ensure the confiscation of property obtained through criminal means even in cases where, for objective reasons, it is impossible to issue a guilty verdict in the main criminal process". The claim was dismissed.

The Case of Creditors

The claim of AS 4finance concerned the application of several provisions of Articles 4 and 17 of the Corporate Income Tax Law – in this case, a group of companies providing consumer credit services in Latvia and other EU countries. "From its subsidiaries, it receives dividends, from which in the country of residence of the subsidiary, corporate income tax has already been withheld and which the plaintiff further pays to the parent company. The disputed norm deprives the plaintiff of the right to chronologically reduce the base for the additional payment of corporate income tax on accumulated passing dividends".

The court concluded that these dividends "are not taxed again in Latvia – neither by an additional tax nor by corporate income tax". "In this regard, the disputed norms do not violate the applicant's property rights". Therefore, the case was ruled to be terminated.

The Case of EURIBOR

And again, lenders approached the court, notably well-known in the consumer credit market – SIA Finanza, AS DelfinGroup, SIA ViziaFinance, AS West Kredit, and VIA SMS.

They challenged the Corporate Income Tax Law – specifically the provisions of Articles 4, 17, 52, 91, and 105. Among other things, they provided for tax surcharges due to increased profits resulting from changes in EURIBOR rates. The plaintiffs objected, citing constitutional rights. Article 91 of the Satversme states: "All people in Latvia are equal before the law and the court. Human rights are exercised without any discrimination".

In 2017, the Saeima adopted a new system for calculating corporate income tax, which allowed for its deferral. "The purpose of the respective changes was to promote the development of the national economy".

However, our constitutional judges did not take into account the lenders' desire to earn extra money. "Comparing consumer credit service providers and credit institutions, the court recognized that both groups of persons are in different circumstances". Thus, the claim was dismissed!

Cases about Smoking and Vaping

SIA Alfor, which owns dozens of gaming halls across Latvia, complained about the inconsistency of constitutional norms with amendments to the Law on the Circulation of Tobacco Products. Entrepreneurs from January 1, 2025, would no longer have the opportunity to provide the right to smoke in gambling halls – even in special rooms that the business equipped at its own expense and legally.

"However, such a financial restriction is considered proportionate to the benefit that as a result of the disputed norm will be received by visitors, employees of gambling organizations, and society as a whole," – ruled the Satversme Court.

The same law (only different articles) was challenged by SIA Pro Vape and MASS Industry SIA. Flavored mixtures and tobacco-free nicotine pouches, in the understanding of the plaintiffs, should not be equated with cigarettes.

But the judges ruled that here "the legislator recognized the situation in Latvia and the attitude of society, available studies, expert opinions, and practices of other states". Therefore, everything was left as decided by the Saeima.