CEE Legal Matters: The Buzz: October - December

CEE Legal Matters published a short summary of the major and relevant topics of interest in Central and Eastern Europe, provided by those best positioned to know: law firm partners and legal journalists and commentators on the ground in each CEE country.

According to Eva Berlaus, office managing partner of SORAINEN Latvia, tax is the buzzing topic in Latvia. “Our government is adopting the budget for next year and it is coming up with creative solutions to increase tax revenue,” Eva commented, while explaining that the regulators have set themselves an interesting challenge within the ongoing tax overhaul: “Try to be the most competitive jurisdiction in terms of taxes in the EU, while raising more funds.”

One aspect of the tax overhaul is the tax on micro-companies in Latvia, which will increase in 2016. Furthermore, there are plans to make companies from a number of industries ineligible for the micro-company tax regime. At the same time, a solidarity tax will be introduced. Eva explained that for the last few years, salaries over EUR 4,000 per month were exempted from additional social security payments (for any part above EUR 4,000). The rationale behind the approach was that the social security services that the state can provide are finite and, past the value of the taxes due on a salary of that level, there are no services that the state can provide to match the value. Subject to considerable discussions, that concept will be replaced, not by taxing above the threshold as a social security tax, but as a solidarity tax.

Eva also mentioned that “the government might be falling,” but clarified that it is really just a matter of tensions within the governing coalition at this stage and it is not clear how things will work out. The whole CEE Legal Matters December issue can be accessed in electronic format here.

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