Pursuant to the provisions of the RL Law “On Taxes and Duties”, the personal liability of a member of the Board may be applied to those overdue tax payments of a legal entity which have arisen after January 1, 2015.
The State Revenue Service may initiate administrative proceedings for compensation of overdue tax payments from a member of the Board (for tax debts of legal entities) only in cases when all the following conditions are met simultaneously in a particular situation:
- the amount of overdue tax payments exceeds the total amount of 50 (fifty) minimum monthly wages (500 euros) specified in the Republic of Latvia (25,000 euros in 2022);
- the decision on recovery of overdue tax payments has been notified to the taxpayer – a company that is actually in debt to the State budget;
- it has been established that the company has disposed its assets to the interested party after the formation of the tax debt;
- a deed has been drawn up on the impossibility of recovering the tax debt from the company;
- the Board of the legal entity itself has not fulfilled the obligation specified in the Insolvency Law to submit an application for insolvency proceedings of the legal entity.
Having established all the aforementioned circumstances, the State Revenue Service within three months from the date of a deed on the impossibility of recovery, shall warn the legal entity and the member of the Board in writing that the procedure for reimbursement of overdue tax payments is initiated.
If a legal person has several members of the board, they are jointly and solidarely liable for the late payment of taxes by the legal entity.
The State Revenue Service may not initiate the recovery of a tax debt from a member of the Board if the member of the Board proves that justifying circumstances have existed for not submitting an application for insolvency proceedings or documents will be submitted according to which the member of the Board would not be held liable.