Foto: BB.LV / ЕС и налоги
The European Commission (EC) has decided to initiate infringement proceedings against Latvia due to insufficient sanctions applied for violations of administrative cooperation rules in the tax sphere, the EC representation in Latvia reported. The EC also decided to start infringement procedures against Germany, Estonia, Lithuania, and Hungary, sending official notification letters to these countries as well as Latvia. The European Commission emphasizes that the existing rules on sanctions in these countries do not comply with the requirements of the directive on administrative cooperation in the tax area. The EC notes that effective, proportionate, and dissuasive sanctions should be provided for violations of the directive's provisions. According to the EC, the levels of sanctions stipulated by the legislation of these five countries are too low to deter international corporate groups or individuals engaged in aggressive tax planning using cross-border tax schemes from non-compliance. The EC also points out that the existing sanction systems often do not adequately take into account the severity, scale, or repeated nature of violations of the directive's provisions, the economic capabilities of the violator, or the economic incentives of participating taxpayers related to non-compliance with established rules. The European Commission emphasizes that these shortcomings may negatively affect the quality, completeness, and reliability of the information obtained under the directive for mutual exchange between tax authorities. In the EC's opinion, ineffective sanction systems weaken administrative cooperation in the tax area within the European Union (EU). The actions of the European Commission followed calls from the European Court of Auditors, outlined in the report on tax information exchange in the EU and in the report on combating harmful tax regimes and corporate income tax avoidance. These documents highlighted the need for effective mechanisms to ensure compliance across all EU member states. Latvia and the other four countries have been given two months to respond and rectify the shortcomings identified by the European Commission. If a satisfactory response is not received, the EC may decide to issue a reasoned opinion. In turn, regarding consumer credit agreements, the EC has decided to send reasoned opinions to Latvia and 15 other EU member states, as they did not notify the European Commission of the full transposition of the consumer credit agreements directive into national legislation. The aim of the directive is to enhance consumer protection in the credit market by ensuring transparency and fairness in credit transactions across all EU member states. The directive was to be transposed into national legislation by November 20, 2025. In January 2026, the EC decided to initiate infringement procedures, sending official notification letters to 23 EU member states due to the lack of notifications regarding measures for the full transposition of the directive into national legislation. Of these states, 16, including Latvia, still have not notified the European Commission of the full transposition of the directive. These 16 states have been given two months to respond and take the necessary measures. If this is not done, the EC may decide to refer these cases to the Court of Justice of the European Union, requesting the imposition of financial sanctions.
