The Chancellor of Justice ultimately found that Nordea´s application was justified and the legal norms analyzed did, in fact, breach the fundamental rights of Nordea, and a proposal was made to the Ministry of Finance to consider initiating legislative proceedings in The Parliament of Estonia (Riigikogu) in order to amend the legal act.
The Tax and Customs Board still ordered Nordea to pay additional income tax in the amount of EUR 7.6 million within three years without interest. Nordea challenged the notice of assessment in an administrative court.
Tallinn Administrative Court dismissed the appeal and upheld the notice of assessment on the grounds that the Tax and Customs Board had given a deadline for Nordea to pay the additional income tax without interest. However, the court agreed with Nordea that the amendment to the law had been unexpected and thus in violation of Nordea´s rights.
„Allowing taxpayers to pay tax during several years without interest is a positive precedent in Estonian tax law. However, it is not right to conclude that the tax authority can turn an unconstitutional legal provision adopted by the legislator into a lawful provision through its activities,“ said attorney at law Helmut Pikmets who represented Nordea in court.
Kerstin Pilt, head legal at Nordea emphasized that „Nordea supports the legislator´s right to change the tax environment but the rules should be changed prospectively, not retrospectively. “
Tallinn District Court continues to hear the dispute mainly as far as applying law retrospectively is concerned.
Nordea Bank Estonia is a branch of Nordea Bank Finland and part of the biggest financial group in the Nordic countries, Nordea Bank AB (publ).
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