Today, June 10, the Constitutional Court made a decision on submitting questions to the European Court of Justice for a preliminary ruling in case no. 2025‑27‑0106 “On the compliance of the first part of Article 6 of the Solidarity Contribution Law with the first sentence of Article 91 of the Constitution of the Republic of Latvia and Article 107, Clause 1 of the Treaty on the Functioning of the European Union”.
In response to the fact that credit institutions made extraordinary profits as a result of the European Central Bank’s measures to curb inflation, they were required to solidarity contributions obligation. The purpose of the solidarity contribution is to protect public safety in conditions of increased national security risks, in order to obtain additional financial resources for ensuring the fiscal needs of the country’s national security. The contested norm stipulates that credit institutions must achieve certain lending growth indicators compared to the previous year in order to receive the mentioned discount.
The applicant is credit institutionwhich provides lending services and is the payer of the solidarity contribution. Before adopting the contested norm, the applicant has already significantly increased lending. Therefore, it was not possible to achieve the increase in lending, as determined in the contested norm, taking into account the forecast demand for loans. The applicant points out that the solidarity contribution discount mechanism provided for in the contested norm creates a selective advantage in practice for those credit institutions that have issued significantly fewer loans to Latvian residents before the contested norm came into force. Taking into account the above, the applicant believes that the discount mechanism created by the contested norm is considered state aid and constitutes a selective advantage within the meaning of Article 107, Paragraph 1 of the Treaty on the Functioning of the European Union. On the other hand, a state aid measure without the approval of the European Commission is illegal.
According to the Agreement on of the European Union 267 of the Act, the Court of Justice of the European Union has the competence to issue preliminary rulings on the interpretation of the Treaty on the Functioning of the European Union and other legal acts of the European Union. If the outcome of the case depends on the content of the legal norms of the European Union and the Constitutional Court has doubts about their interpretation, the Constitutional Court is obliged to turn to the Court of the European Union for a preliminary ruling.
Constitutional Court found that out of 13 solidarity contribution payers, four credit institutions made solidarity contribution advance payments in the 1st quarter of 2025, and three credit institutions in the 2nd, 3rd and 4th quarters. The solidarity contribution discount mechanism is based on a single percentage credit growth criterion. In addition, all solidarity contributors are subject to the same percentage threshold that must be met in order to receive the discount. However, even before the contested norm came into force, credit institutions have found themselves in a significantly different situation depending on the size of their initial credit portfolio and the selected lending policy.
Taking into account the above, the Constitutional Court has doubts as to whether the measure provided for in the contested norm can be considered state support In the sense of Article 107, Paragraph 1 of the Treaty on the Functioning of the European Union. Namely, whether the solidarity contribution discount established by the contested norm for those credit institutions whose lending indicators were lower before the adoption of the contested norm can be considered a selective advantage. Therefore, the Constitutional Court needs to find out whether the lending growth rate determined in the challenged norm, which is formally considered a neutral and objective criterion, does not in practice cause indirect discrimination against credit institutions.
The Constitutional Court decided to ask the European Court of Justice the following questions:
1. Or solidarity contributions discount is such a measure recognized as state aid within the meaning of Article 107, paragraph 1 of the Treaty on the Functioning of the European Union?
2. If the commercial activity policy or the financial market share implemented by the credit institution is considered a “characteristic feature of the company” and prima facie selective, can the relevant state aid measure be justified by the logic of the solidarity contribution system, taking into account that the purpose of the solidarity contribution discount is to stimulate certain economic activity (lending), which indirectly serves the underlying purpose of the solidarity contribution system – ensuring the fiscal needs of the country’s national security?
3. If the answer to the first question is in the affirmative, – should the principles of supremacy of European Union law and legal security be interpreted in such a way that the Constitutional Court can decide in its ruling on the moment at which the contested norm loses its force, if its loss of force with retroactive force could threaten the stability of Latvia’s financial system?
The Constitutional Court decided to suspend the proceedings in the case until the decision of the Court of the European Union enters into force.
