Court orders Latvia's tax authority to pay a company €5,000 over unlawful VAT audit
Latvia's Administrative Regional Court has found that a VAT audit lasting almost two years was unlawful. The State Revenue Service must pay the company €5,000 in compensation plus its legal costs.
The Administrative Regional Court in Latvia has ordered the State Revenue Service (VID), the authority that administers taxes, to pay a company €5,000 in compensation for non-material damage. The service must also cover the company's legal costs. The case concerns a value added tax (VAT) audit that significantly hampered the company's operations for almost two years and that the court ruled unlawful. The news was reported by Apollo.lv.
Violations identified by the court
In its judgment, the court pointed to a series of violations by VID. One of them was unjustified delay of the proceedings. The service was also found to have applied disproportionate security measures, meaning steps intended to safeguard the possible collection of taxes.
The court also noted that VID had failed to address risks linked to an information leak and a possible attempt to extort a bribe from the company.
What it means
The ruling shows a case in which a tax administration's inspection was assessed by a court as unlawful and caused harm to a business, for which the service must now pay compensation. The source does not name the company and does not say whether the judgment can be appealed.
