Supreme Court weighs in: can tax authority collect data before an audit begins

The case centers on a situation in which a person was not informed that an official tax audit had begun, yet the relevant state authority had already been quietly gathering information about their bank accounts and analyzing their social media posts.

The dispute arose over income earned from selling puppies. Although seemingly a minor individual case, it reached Latvia's Supreme Court, which was called upon to deliver a principled ruling on a much broader issue — where the line lies between the state's power to monitor citizens' income and an individual's right to privacy in the digital age.

Why it matters

Today, much of people's economic activity leaves traces online — on social networks, in online listings, through digital payments. This raises the question of how far state institutions may go in compiling such information before they have even launched a formal review process that the person concerned is aware of.

The Supreme Court's assessment in this case is described as one that will not sit well with tax inspectors, suggesting the court placed limits on the practice of collecting data about a person without their knowledge or before an official audit has been opened.

The outcome could carry broader significance beyond the specific dispute over income from puppy sales, touching on general principles regarding the conditions and the stage at which state institutions may intervene in citizens' private lives for the purpose of gathering information.