Text consolidated by Valsts valodas centrs (State
Language Centre) with amending laws of:
2 February 2017 [shall come
into force on 2 March 2017];
13 May 2021 [shall come into force on 8 June 2021].
If a whole or part of a section has been amended, the
date of the amending law appears in square brackets at
the end of the section. If a whole section, paragraph or
clause has been deleted, the date of the deletion appears
in square brackets beside the deleted section, paragraph
or clause.
|
The Saeima 1 has adopted and
the President has proclaimed the following Law:
Law on Control of Aid for
Commercial Activity
Chapter I
General Provisions
Section 1. Terms Used in the Law
(1) The terms and concepts of this Law are used within the
meaning of Council Regulation (EU) 2015/1589 of 13 July 2015
laying down detailed rules for the application of Article 108 of
the Treaty on the Functioning of the European Union
(codification) (hereinafter - Council Regulation No
2015/1589).
(2) The following terms are also used in the Law:
1) ad-hoc aid - aid for commercial activity
which is granted outside an aid scheme;
2) date of granting of the aid - the day on which the
right to receive aid for commercial activity arises for the
beneficiary of the aid for commercial activity in accordance with
the provisions laid down in legal acts;
3) aid scheme - a legal act or acts on the basis of
which individual aid may be granted to commercial companies in
accordance with the conditions included therein;
4) grantor of aid - a State or local government
authority or an authorised legal person thereof which takes the
decision on the granting of aid for commercial activity or which
is responsible for the development of the aid scheme or the
application of the aid scheme or an individual aid project;
5) de minimis aid - aid for commercial activity
granted to a commercial company in a specific period of time
which does not exceed the amount specified in:
a) Commission Regulation (EU) No 1407/2013 of 18 December 2013
on the application of Articles 107 and 108 of the Treaty on the
Functioning of the European Union to de minimis aid
(hereinafter - Commission Regulation No 1407/2013);
b) Commission Regulation (EU) No 360/2012 of 25 April 2012 on
the application of Articles 107 and 108 of the Treaty on the
Functioning of the European Union to de minimis aid
granted to undertakings providing services of general economic
interest;
c) Commission Regulation (EU) No 717/2014 of 27 June 2014 on
the application of Articles 107 and 108 of the Treaty on the
Functioning of the European Union to de minimis aid in the
fishery and aquaculture sector (hereinafter - Commission
Regulation No 717/2014);
d) Commission Regulation (EU) No 1408/2013 of 18 December 2013
on the application of Articles 107 and 108 of the Treaty on the
Functioning of the European Union to de minimis aid in the
agriculture sector (hereinafter - Commission Regulation No
1408/2013);
6) exclusive rights - the rights which have been
granted by the State or local government authority by a legal act
or a contract or an authorised legal person thereof by a contract
to a commercial company, authorising the commercial company to
provide services or to perform activities in a specific
administrative territory;
7) individual aid - aid for commercial activity
which is granted in an aid scheme;
8) special rights - the rights which have been granted
by the State or local government authority by a legal act or a
contract or an authorised legal person thereof by a contract to
specific commercial companies and which in a specific
administrative territory, without conforming to the criteria of
objectivity, proportionality, and prohibition of discrimination,
in at least one of the following ways:
a) restricts the number of commercial companies to two or more
commercial companies which are permitted to provide specific
services or to perform activities;
b) selects several competing commercial companies which have
been permitted to provide any specific services or to perform
activities;
c) grants to one or several commercial companies advantages
which significantly affect the possibilities of another
commercial company to provide the same service or to perform the
same activity in the same administrative territory under equal
conditions;
9) commercial activity - economic activity which is
related to the offering of goods or services on the market. If
the activity has non-profit nature, it shall not exclude the
classification of such activity as commercial activity;
10) commercial company - a natural person, a legal
person, or an association of such persons which performs or is
preparing to perform commercial activity regardless of the type
of ownership and type of activity thereof;
11) unlawful aid for commercial activity - aid for
commercial activity which is granted without conforming to
Article 108(3) of the Treaty on the Functioning of the European
Union. Misused aid for commercial activity, i.e. such aid for
commercial activity which is used by the beneficiary thereof in
violation of the conditions of such legal act by which the
beneficiary of the aid for commercial activity, in accordance
with the provisions laid down in legal acts, was granted the
right to receive the aid for commercial activity, or in violation
of the conditions of such decision of the European Commission
which has been taken in accordance with Article 4(2) and (3) or
Article 9(2), (3), or (4) of Council Regulation No 2015/1589,
shall also be considered as unlawful aid for commercial
activity;
12) State or local government authority - an
institution of direct or indirect administration or a derived
public person;
13) capital company controlled by the State or local
government - a capital company in which the State or a local
government directly or indirectly, separately or together owns
more than 50 per cent of equity capital of the capital company,
has the majority of voting rights, or has the right to appoint or
revoke the majority of members of the executive authority or the
supervisory authority of the capital company.
[13 May 2021]
Section 2. Purpose of the Law
(1) The purpose of this Law is to ensure the rule of law in
the implementation of aid for commercial activity, to specify the
national control competence of Latvia and procedures in the field
of aid for commercial activity in order to reduce the negative
effect of aid on competition.
(2) The Law lays down financial accounting requirements for
State and local government authorities by granting financial aid
to commercial companies.
Section 3. Scope of Application of
the Law
(1) This Law shall be applicable to grantors of aid which
provide and are planning to provide aid for commercial activity
to commercial companies and to beneficiaries of aid for
commercial activity.
(2) This Law shall be applied to aid for commercial activities
the compatibility of which with internal market is assessed in
accordance with Article 93, Article 106 (2) or Article 107 (2) or
(3) of the Treaty on the Functioning of the European Union.
(3) This Law shall be applied in conformity with the division
of competence specified in Section 9 of this Law among monitoring
institutions of aid for commercial activity.
(4) This Law does not guarantee the right to receive aid for
commercial activities.
[13 May 2021]
Section 4. Legal Framework of Aid
for Commercial Activity
This Law, the Treaty on the Functioning of the European Union,
European Union legislation, case law of the European Union and
other documents in the field of control of aid for commercial
activity which are applied by assessing compatibility of aid for
commercial activity with internal market (hereinafter - Acts of
the European Union), as well as other provisions of international
law binding to the Republic of Latvia shall be the legal
framework of aid for commercial activity.
Section 5. Features Characterising
Aid for Commercial Activity
In accordance with the provisions laid down in Article 107 (1)
of the Treaty on the Functioning of the European Union and other
Acts of the European Union, for the financial assistance for the
promotion of commercial activity to be considered as aid for
commercial activity for a commercial company it shall conform to
all of the following features:
1) financial assistance is directly or indirectly provided
from the State, local government, or European Union resources,
financial resources over which the State or local government
authorities or the authorised legal persons thereof have
controlling influence, or other public resources (hereinafter -
the State or local government resources), and the State or local
government authority or the authorised legal person thereof is
responsible for the determination of the financial
assistance;
2) upon receipt of financial assistance, a commercial company
acquires economic advantages which it could not acquire under the
market conditions or if the aid for commercial activity were not
provided;
3) financial assistance does not apply equally to all
commercial companies, but it is provided to commercial companies
depending on the size, type of activity or location thereof, as
well as other differentiating criteria or is also provided to a
particular commercial company;
4) financial assistance affects trade and distorts competition
in the internal market of the European Union.
[13 May 2021]
Section 6. Prohibition to Grant Aid
for Commercial Activity
Aid for commercial activity is prohibited, except for the
cases when an aid scheme or the ad-hoc aid project
complies with Acts of the European Union and the applicable
procedures laid down therein arising from Article 108 (3) and (4)
of the Treaty on the Functioning of the European Union, and also
other international legal norms.
[13 May 2021]
Section 7. Type of the Provision of
Aid for Commercial Activity
Aid for commercial activity may be granted in the form of
direct payments from State or local government budget (subsidies,
grants, endowment), measures taken in the field of taxes or
mandatory social insurance payments, State or local government
guarantee, subsidising of loan interest rates, complete or
partial forgoing of dividends by the State or local government,
State or local government investment in a capital company,
writing-off of debts, setting of preferential rates for the
services provided by State capital companies, sale or leasing of
immovable property at less than the market value or purchase or
leasing above the market value, and also other financial
assistance granted from the State or local government resources
over which the State or local government authorities have
controlling influence.
[13 May 2021]
Section 8. Repayment of Aid Prior to
Fulfilment of Subordinate Obligations
(1) If a commercial company which is facing financial
difficulties receives aid in accordance with the laws and
regulations governing aid for commercial activities, from the
moment of granting aid for commercial activities until the end of
the provision of aid, observing the provisions laid down in the
decision of the European Commission or a national laws and
regulations on granting aid and irrespective of the effective
legal obligations of a commercial company, the commercial company
is prohibited from fulfilling subordinate obligations (including
the prohibition to repay a loan, calculate, accumulate or pay out
an interest or other remuneration for such loan) irrespective of
the moment when the subordinate obligations were established.
(2) Within the meaning of this Law, subordinate obligations
shall mean the rights and obligations, including the obligation
of a loan interest pay-out, caused to a commercial company by a
loan (irrespective of the type of the concluded transaction) and
which, based on the transaction concluded with the commercial
company, entitles the lender to request pre-term repayment of the
loan only in the case of insolvency or liquidation of a
commercial company and after discharging the claims of creditors,
but prior to discharging the claims of stockholders or
shareholders.
[2 February 2017]
Chapter II
Monitoring Provisions for Aid for Commercial Activity
Section 8.1 Special
Conditions for Termination of Activities of Commercial Companies
Receiving Aid for Commercial Activity
(1) If a commercial company which is in financial difficulty
and receives aid in accordance with the laws and regulations
governing aid for commercial activity, not later than six months
prior to the term of liquidation of the commercial company
specified in the decision of the European Commission or in the
national laws and regulations regarding the granting of aid,
concludes that the aid for commercial activity has not been fully
repaid and will not be repaid until the end of the term of the
provision of the aid, the commercial company shall terminate the
activity and shall initiate the liquidation procedure of the
commercial company, taking into account the conditions provided
for in Paragraph two and three of this Section.
(2) Within the framework of the liquidation procedure
initiated in accordance with Paragraph one of this Section, the
subordinate liabilities shall be fulfilled only when the aid for
commercial activity received has been fully repaid. Until the aid
for commercial activity is repaid:
1) the inability to repay the aid for commercial activity and
the non-fulfilment of the subordinate liabilities shall not
constitute a basis for initiating insolvency proceedings;
2) the claim of the creditor of the subordinate liabilities
shall not be secured, and also the creditor of the subordinate
liabilities shall not be entitled to request depositing their
claim amounts or the fulfilment of any other liabilities;
3) it shall be prohibited to pay liquidation quotas to members
of the commercial company (shareholders, members, owners).
(3) The Enterprise Register shall exclude a commercial company
from the public register even if, within the liquidation carried
out in accordance with the conditions specified in this Section,
the aid for commercial activity has not been repaid or the
subordinate liabilities have not been fulfilled.
(4) If a part of the aid for commercial activity is not
recovered, following the liquidation of the commercial company,
this part shall be cancelled in the amount specified in the Law
on the State Budget for the current year.
[2 February 2017]
Section 9. Monitoring Institutions
of Aid for Commercial Activity
(1) The Ministry of Finance shall:
1) perform the initial assessment of the planned aid schemes
or ad-hoc aid projects, or the planned amendments thereto,
except for:
a) the initial assessment of the planned aid schemes or
ad-hoc aid projects within the scope of which it is
planned to provide aid for commercial activity in the sectors
specified in Paragraph two of this Section;
b) the initial assessment of such ad-hoc aid projects
within the scope of which it is planned to provide de
minimis aid in accordance with Commission Regulation No
1407/2013 if the conditions of Section 10, Paragraph three of
this Law are conformed to;
c) the initial assessment of such ad-hoc aid projects
within the scope of which it is planned to provide aid for
commercial activity as a payment of reimbursement (compensation)
in any form for the provision of a service of general economic
interest if the conditions of Section 10, Paragraph four of this
Law are conformed to;
2) with the intermediation of the Latvia's Representation to
the European Union, send to the European Commission information
related to the aid scheme or ad-hoc aid project
notifications, except for the case when it is planned to provide
aid for commercial activity in the sectors specified in Paragraph
two of this Section;
3) prepare an annual report on aid provided for commercial
activity, except for aid for commercial activity in the sectors
specified in Paragraph two of this Section;
4) provide advisory assistance in the field of control of aid
for commercial activity, except for aid for commercial activity
in the sectors specified in Paragraph two of this Section;
5) ensure administration of the system for accounting of de
minimis aid;
6) using the cooperation platform of the European Commission
for Member States, organise circulation of information with the
European Commission on the issues of aid for commercial
activity.
(2) The Ministry of Agriculture shall perform the initial
assessment of the planned aid schemes or the ad-hoc aid
projects, or the amendments planned thereto in the sectors of
fishery, aquaculture, agriculture, and forestry, except for the
initial assessment of such ad-hoc aid projects within the
scope of which it is planned to provide de minimis aid in
accordance with Commission Regulation No 1408/2013 or Commission
Regulation No 717/2014 if the conditions of Section 10, Paragraph
three of this Law are conformed to.
(3) The grantor of aid shall monitor aid schemes, individual
aid projects, and ad-hoc aid projects during the
implementation thereof and after implementation of aid schemes,
individual aid projects, and ad-hoc aid projects, ensuring
conformity with the conditions for aid for commercial
activity.
[13 May 2021]
Section 10. Initial Assessment of
Planned Aid for Commercial Activity
(1) In accordance with Section 9, Paragraph one, Clause 1 of
this Law, the grantor of aid shall submit every planned aid
scheme or ad-hoc aid project and also every planned
amendment to existing aid schemes or ad-hoc aid projects,
prior to commencing the implementation thereof, for the initial
assessment to the Ministry of Finance, except for amendments of
formal or administrative nature which cannot influence the
assessment of compatibility of aid for commercial activity with
the internal market of the European Union.
(2) Paragraph one of this Section shall be applied also to
such aid for commercial activity which, in accordance with the
provisions laid down in directly applicable legal acts of the
European Union, has been exempted from prior notification or
submission of summary information to the European Commission.
(3) An ad-hoc aid project within the scope of which it
is planned to provide de minimis aid in accordance with
Commission Regulation No 1407/2013, Commission Regulation No
717/2014, or Commission Regulation No 1408/2013 does not have to
be submitted for the initial assessment to the Ministry of
Finance or the Ministry of Agriculture if the grantor of aid has
included the following conditions or their assessment
therein:
1) de minimis aid is provided to the sectors and
activities to be aided;
2) if a commercial company to which de minimis aid is
applied is concurrently operating in both sectors to be aided and
sectors not to be aided, the commercial company ensures the
distinction of activities or costs of such sectors from such
activities to which de minimis aid has been granted,
ensuring that activities in the abovementioned sectors are not
benefiting from the aid granted;
3) the amount of de minimis aid to a commercial company
at the level of a single undertaking together with the amount of
de minimis aid granted in the relevant fiscal (calendar)
year and the previous two fiscal (calendar) years does not exceed
the maximum permissible amount of de minimis aids
specified in Commission Regulation No 1407/2013, and the amount
of de minimis aid in the sectors of fishery, aquaculture,
and agriculture to a commercial company at the level of a single
undertaking and at the national level together with the amount of
de minimis aid granted in the relevant fiscal (calendar)
year and the previous two fiscal (calendar) years does not exceed
the maximum permissible amount of de minimis aids
specified in Commission Regulation No 717/2014 or Commission
Regulation No 1408/2013;
4) the date of granting of the aid has been indicated;
5) if it is planned to provide de minimis aid in the
form of loans or guarantees, the conditions for granting de
minimis aid are conformed to;
6) information is provided that cumulation of de
minimis aid is not permitted or the conditions for the
cumulation of de minimis aid and their control are
referred to if cumulation of aid is permitted;
7) the grantor of aid and the commercial company maintain data
regarding de minimis aid granted for 10 fiscal (calendar)
years from the date of granting of the aid;
8) de minimis aid is granted in conformity with the
laws and regulations regarding the procedures for the accounting
and granting of such aid;
9) the ad-hoc aid granting act specifies the obligation
to recover unlawful aid for commercial activity in accordance
with the provisions laid down in Chapter V of this Law.
(4) An ad-hoc aid project within the scope of which aid
for commercial activity is planned for a commercial company for
the provision of a service of general economic interest need not
be submitted to the Ministry of Finance for the performance of
initial assessment if the grantor of aid has included the
following conditions in the authorisation act or acts on the
basis of which the commercial company is authorised to provide
the abovementioned service:
1) the content of obligations and duration of the service of
general economic interest;
2) the territory of provision of the service;
3) the essence of the exclusive or special rights granted to
the provider of the service of general economic interest;
4) a description of the mechanism of payments of reimbursement
(compensation) and the calculation, control, and review
parameters;
5) the measures to be taken to prevent and recover any
excessive payments of reimbursement (compensation);
6) a reference to Commission Decision of 20 December 2011 on
the application of Article 106(2) of the Treaty on the
Functioning of the European Union to State aid in the form of
public service compensation granted to certain undertakings
entrusted with the operation of services of general economic
interest;
7) the time period for the maintaining of documents related to
granting aid for commercial activity;
8) the obligation specified in the document for the granting
of ad-hoc aid to recover unlawful aid for commercial
activity in accordance with the provisions laid down in Chapter V
of this Law.
(5) The Ministry of Finance shall perform an assessment and
prepare an opinion not later than within 20 working days after
receipt of the aid scheme or ad-hoc aid project.
(6) In submitting an aid scheme or ad-hoc aid project
for the initial assessment, if necessary, documents or copies
thereof shall be appended thereto, certifying the veracity of the
reflected information.
(7) If all the necessary information has not been included in
the aid scheme or ad-hoc aid project in accordance with
the provisions laid down in Acts of the European Union, the
Ministry of Finance shall indicate the determined inaccuracies
and the necessary additions in its opinion.
(8) For the assessment of particular aid schemes or
ad-hoc aid projects, the Ministry of Finance may invite
sectoral specialists or other experts.
[13 May 2021]
Section 11. Submission of
Notification of Aid for Commercial Activity or Summary
Information to the European Commission
The aid scheme or ad-hoc aid project notification and
also summary information on the aid scheme or ad-hoc aid
project which is implemented in accordance with Commission
Regulation (EU) No 651/2014 of 17 June 2014 declaring certain
categories of aid compatible with the internal market in
application of Articles 107 and 108 of the Treaty (Text with EEA
relevance) shall be submitted by the grantor of aid to the
European Commission electronically, using the electronic system
of aid for commercial activity notifications supervised by the
European Commission.
[2 February 2017; 13 May 2021]
Section 12. Competence of the
Cabinet in Ensuring Control of Aid for Commercial Activity
In order to ensure the rule of law of the implementation of
aid for commercial activities, the Cabinet shall determine:
1) the procedures by which the aid scheme or individual aid
project notifications, as well as the summary information shall
be submitted to the European Commission electronically, and by
which the rights to use the electronic system of aid for
commercial activities notifications shall be granted and
cancelled;
2) the procedures by which information on the provided aid for
commercial activities shall be published, annual reports on
expenses related to aid for commercial activities shall be
submitted to the European Commission electronically and by which
the rights to use the electronic system of aid for commercial
activities notifications shall be granted and cancelled;
3) territories of Latvia where regional aid for development
may be granted to commercial companies, as well as the maximum
permitted aid intensity;
4) the procedures by which the commercial company shall
declare its compliance with the status of a small (micro) and
medium-sized commercial company;
5) the procedures by which samples of the forms for accounting
de minimis aid are approved and accounting and granting of
de minimis aid are performed.
Section 13. Restrictions on the
Provision of Information
Employees of the Ministry of Finance and invited sectoral
specialists or experts are prohibited from disclosing
information, in public or some other way, which has been acquired
in the assessment of aid schemes, individual aid, or
ad-hoc aid projects, except for the cases provided for in
laws and regulations.
[13 May 2021]
Chapter III
Requirements for State or Local Government Authority Financial
Relations with Commercial Companies
Section 14. Record-keeping of
Financial Transactions
(1) A capital company under State or local government control
shall ensure such accounting record-keeping which reflects
information regarding transfers made from State or local
government authority resources which the State or local
government authority grants directly to a capital company under
State or local government control or through the intermediation
of capital companies under State or local government control or
financial institutions, and utilisation of such resources.
(2) Separate accounting record-keeping shall be ensured by
commercial companies to which special or exclusive rights have
been granted in accordance with Article 106 (1) of the Treaty on
the Functioning of the European Union or which have been
entrusted to provide some kind of service of general economic
interest in accordance with Article 106 (2) of the Treaty on the
Functioning of the European Union, and which receive any kind of
reimbursement payment (compensation) for the provision of such
services, and also perform activities other than services of
general economic interest.
(3) Commercial companies to which the requirement for separate
accounting record-keeping applies shall establish a financial and
organisational structure which ensures the possibility to
identify costs and income associated with various activities (on
the one hand - products or services in relation to which the
commercial company has been granted special or exclusive rights
or entrusted services of public significance, on the other hand -
other products produced or services provided by the commercial
company), as well as the methods on the basis of which costs and
income are granted or divided for various activities.
(4) A commercial company shall keep the information referred
to in Paragraphs one and three of this Section for 10 years
following the last transfer of State or local government funds
has been made and shall submit to the Ministry of Finance upon
the request thereof. The Ministry of Finance shall send the
submitted information to the European Commission through the
intermediation of Latvia's Representation to the European
Union.
(5) The requirements specified in Paragraph one of this
Section shall apply to the following financial relation aspects
of State or local government authorities and capital companies
under State or local government control:
1) compensation of economic activity losses;
2) capital security;
3) non-repayable financial grants or loans with preferential
conditions;
4) granting of financial advantages for waiving of profit or
debt collection;
5) waiving of the usual fees for utilised State funds;
6) compensation for the financial burdens imposed by State or
local government authorities.
(6) In order to fulfil the requirement referred to in
Paragraph three of this Section regarding the establishment of
separate accounting record-keeping, in the commercial
company:
1) internal accounting shall be separated for various
activities;
2) all costs and income shall be correctly granted and
divided, based upon consistently observed and objectively
justified cost accounting principles;
3) cost accounting principles shall be clearly defined, in
accordance with which the separate accounting shall be
organised.
Section 15. Requirements for Capital
Companies of the Industrial Sector
(1) An industrial sector capital company is a capital company
the main area of activity of which is manufacturing which forms
at least 50 per cent of the annual turnover. The industrial
sector covers activities which are included in the statistical
classification of economic activities in the European Community
(NACE Rev. 2) Section C - Manufacturing.
(2) An industrial sector capital company controlled by the
State or local government the net turnover of which in the last
accounting year has exceeded 250 million euros shall each year
not later than by 15 August submit the following to the Ministry
of Finance:
1) annual accounts;
2) minutes of meetings of stockholders or shareholders;
3) information regarding allocated grants, subsidies,
advantages associated with investment equity capital, credits,
overdrafts and guarantees granted by State or local government
authorities, including the conditions for the allocation thereof
and indicating the interest rates, as well as guarantees, which
the recipient of credit offers to the lender;
4) information regarding granted equity capital or
quasi-capital funds which are comparable to own capital, by this
meaning State or local government investments in the equity
capital of capital companies under State or local government
control, as well as funds which are received or are granted
through the intermediation of a group of companies under State or
local government control or another capital company (also
financial institution) under State or local government control,
irrespective of whether it is the granting of internal funds in a
group of companies or granting from outside, indicating the type
of relations between the grantor and the recipient. The
information shall indicate the grant conditions (common stock,
preferential stock, stock with deferred payment of dividends or
convertible stock, interest rates, dividend or convertibility
rights granted together with stock);
5) information regarding paid out dividends and retained
earnings;
6) information regarding other State intervention types,
including release from the performance of payments specified in
legislation applied to capital companies controlled by the State
or local government, as well as the performance of credits,
grants, enterprise income tax and other similar payments.
(3) The Ministry of Finance each year by 31 March shall send
information on industrial sector capital companies controlled by
the State or local government the net turnover of which in the
last accounting year has exceeded 250 million euros to the
European Commission in electronic form through the intermediation
of the Representation of Latvia in the European Union.
(4) The Ministry of Finance each year by 1 September shall
send to the European Commission electronically, through the
intermediation of Latvia's Representation to the European Union,
the information referred to in Paragraph two of this Section.
(5) The information referred to in Paragraph two of this
Section shall be provided for each:
1) capital company controlled by the State or local government
separately including a capital company registered in another
Member State, indicating information regarding internal or mutual
transactions of capital companies controlled by the State or
local government, as well as direct transactions between capital
companies controlled by the State or local government and State
or local government authorities;
2) a group of companies controlled by the State or local
government which includes capital companies controlled by the
State or local government if the consolidated turnover of such
group of companies allows it to be classified as an industrial
sector capital company.
(6) A group of companies controlled by the State or local
government which unifies several legally independent capital
companies controlled by the State or local government shall
submit consolidated reports wherein information regarding
economic activities in the group of capital companies, which are
engaged in one and the same sector or closely associated sectors,
shall be indicated. Groups of companies controlled by the State
or local government which are financially associated, but are
engaged in different sectors, shall not submit the consolidated
report.
[13 May 2021]
Section 16. Exceptions for
Record-keeping of Financial Transactions
(1) The requirements specified in Section 14, Paragraph one of
this Law shall not apply to the financial relations of State or
local government authorities with:
1) a capital company controlled by the State or local
government if the average turnover of such capital company during
the previous two years prior to the year in which the funds
referred to in Section 14, Paragraph one of this Law have been
granted or used is less than 40 million euros;
2) a credit institution controlled by the State or local
government if the average balance sheet total of such credit
institution during the previous year prior to the year in which
the funds referred to in Section 14, Paragraph one of this Law
have been granted or used is less than 800 million euros;
3) a credit institution controlled by the State or local
government if a State or local government authority invests in it
State or local government funds with commercial conditions;
4) the Bank of Latvia.
(2) The requirements specified in Section 14, Paragraph three
of this Law shall not apply to:
1) a commercial company if the average turnover of such
commercial company during the previous two years commencing from
the year in which in accordance with Article 106 (1) of the
Treaty on the Functioning of the European Union it has been
granted special or exclusive rights or in accordance with Article
106 (2) of the Treaty on the Functioning of the European Union it
has been entrusted to provide some kind of service of general
economic interest, is less than 40 million euros;
2) a credit institution controlled by the State or local
government if the average turnover of such credit institution
during the previous two years commencing from the year in which
in accordance with Article 106 (1) of the Treaty on the
Functioning of the European Union it has been granted special or
exclusive rights or in accordance with Article 106 (2) of the
Treaty on the Functioning of the European Union it has been
entrusted to provide some kind of service of general economic
interest, is less than 800 million euros;
3) a commercial company which in accordance with Article 106
(2) of the Treaty on the Functioning of the European Union has
been entrusted to provide services of general economic interest,
if the aid for commercial activity which it has received in any
form is intended for a specified period and is granted taking
into account an open, transparent procedure without
discrimination.
Chapter IV
Recovery of Unlawful and Incompatible Aid for Commercial Activity
According to a Decision Taken by the European Commission
[13 May 2021]
Section 17. Obligation to Recover
Unlawful and Incompatible Aid for Commercial Activity
A grantor of aid has the obligation to ensure that such aid
for commercial activity is recovered from the beneficiary of aid
for commercial activity which, according to the decision taken by
the European Commission, has been recognised as unlawful and
incompatible with the internal market of the European Union.
[13 May 2021]
Section 18. Procedures for Recovery
of Unlawful and Incompatible Aid for Commercial Activity
(1) After the decision of the European Commission on the
recovery of unlawful and incompatible aid for commercial activity
has been received, the grantor of aid shall perform the
activities specified in the decision of the European Commission
for specifying the amount of unlawful and incompatible aid for
commercial activity in conformity with the conditions of the
decision of the European Commission, Article 16(2) of Council
Regulation No. 2015/1589, and Article 11 of Commission Regulation
(EC) No 794/2004 of 21 April 2004 implementing Council Regulation
(EU) 2015/1589 laying down detailed rules for the application of
Article 108 of the Treaty on the Functioning of the European
Union (hereinafter - Commission Regulation No 794/2004).
(2) Unlawful and incompatible aid for commercial activity
shall be recovered in accordance with civil procedures or
administrative procedures unless it has been laid down otherwise
in other laws and regulations.
(3) If unlawful and incompatible aid for commercial activity
has been received according to a civil legal contract, the
abovementioned aid (together with interest) shall be recovered
and other disputes related to such contract shall be solved in
accordance with the procedures laid down in the Civil Procedure
Law and other laws and regulations, conforming to that laid down
in this Law.
(4) If unlawful and incompatible aid for commercial activity
has been received according to a civil legal contract, the
grantor of aid shall prepare and send a notice to the beneficiary
of aid regarding recovery of unlawful and incompatible aid for
commercial activity. At least the beneficiary of aid for
commercial activity who has an obligation to repay unlawful and
incompatible aid for commercial activity, the amount of unlawful
and incompatible aid for commercial activity (together with
interest) to be repaid, the justification for the recovery of
unlawful and incompatible aid, the repayment details of unlawful
and incompatible aid, the time period for voluntary fulfilment of
the liabilities specified in the notice, and the consequences of
voluntary non-fulfilment shall be indicated in the notice. The
time period for voluntary fulfilment of the liabilities specified
in the notice shall be one month from the day of sending the
notice. If the beneficiary of aid does not voluntarily fulfil the
liabilities specified in the notice, the grantor of aid shall
submit a claim application and an application for securing a
claim to a court not later than within two months from the day of
sending the notice.
(5) If unlawful and incompatible aid for commercial activity
has been received on the basis of a law or regulation, an
administrative act, or another legal act in the field of public
law or it arises from a court ruling, the grantor of aid shall
pass an administrative act regarding recovery of unlawful and
incompatible aid for commercial activity and shall recover such
aid for commercial activity (together with interest) in
accordance with the procedures laid down in the Administrative
Procedure Law and other laws and regulations, conforming to that
laid down in this Law.
(6) Contesting or appeal of the administrative act regarding
recovery of unlawful and incompatible aid for commercial activity
shall not suspend its operation.
(7) The beneficiary of aid shall voluntarily fulfil the
administrative act regarding recovery of unlawful and
incompatible aid for commercial activity within one month from
the day of entering into effect of the administrative act. The
grantor of aid or the enforcement authority indicated in the
administrative act shall commence compulsory fulfilment of an
administrative act which has not been voluntarily fulfilled not
later than within one month from the end of the time period for
voluntarily fulfilment specified in the administrative act.
(8) The enforcement authority of the administrative act
regarding recovery of unlawful and incompatible aid for
commercial activity shall be the grantor of aid unless it has
been specified otherwise in the abovementioned administrative
act.
(9) The limitation period for recovery of unlawful and
incompatible aid for commercial activity shall be calculated in
conformity with the conditions or Article 17 of Council
Regulation No 2015/1589. In calculating the limitation period in
relation to aid schemes which provide for regular payments or
granting of other financial advantages to a commercial company,
aid for commercial activity shall be considered as granted to the
beneficiary of aid for commercial activity on the day when the
commercial company has actually received unlawful and
incompatible aid for commercial activity.
(10) A commercial company shall repay the amount of unlawful
and incompatible aid for commercial activity specified in
Paragraph one of this Section to the grantor of aid in conformity
with the conditions of the decision of the European Commission
and Article 16(3) of Council Regulation No 2015/1589.
(11) If the grantor of aid has commenced the recovery
procedure of unlawful and incompatible aid for commercial
activity referred to in Paragraph one of this Section and
insolvency proceedings have been declared for the relevant
commercial company, the grantor of aid shall submit a creditor's
claim to the administrator of insolvency proceedings in
accordance with the procedures laid down in the Insolvency
Law.
(12) Recovery of unlawful and incompatible aid for commercial
activity shall be terminated only if a commercial company which
is a legal person has been liquidated, it does not have any
assets to be recovered, and economic continuity, including taking
over of rights and liabilities, cannot be established. If the
commercial company is a natural person, recovery of unlawful and
incompatible aid for commercial activity shall be terminated only
in case if it does not have any assets related to commercial
activity and to be recovered, except for a dwelling which has
been kept in the ownership of the natural person in accordance
with the provisions laid down in Section 148 of the Insolvency
Law and when economic continuity, including taking over of rights
and liabilities, cannot be established.
[13 May 2021]
Chapter V
Recovery of Unlawful Aid for Commercial Activity if the Decision
of the European Commission on Recovery of Unlawful and
Incompatible Aid for Commercial Activity has not Been Taken
[13 May 2021]
Section 19. Obligation to Recover
Unlawful Aid for Commercial Activity
(1) If the decision of the European Commission on recovery of
unlawful and incompatible aid for commercial activity has not
been taken, the grantor of aid has the obligation to ensure
recovery of such unlawful aid for commercial activity for which
the grantor of aid has not ensured the conformity of the aid
scheme, individual aid, or ad-hoc aid project with the
conditions regarding compatibility of aid for commercial activity
with the internal market of the European Union, in accordance
with the conditions and procedures of this Chapter, insofar as it
has not been specified otherwise in the relevant aid scheme or
the conditions for the granting of ad-hoc aid.
(2) The commercial company which has received the unlawful aid
for commercial activity referred to in Paragraph one of this
Section has the obligation to repay such aid together with
interest which is published by the European Commission in
accordance with Article 10 of Commission Regulation No 794/2004,
adding 100 base points thereto, from the day when unlawful aid
for commercial activity was transferred at the disposal of the
beneficiary of aid for commercial activity until the day of the
recovery thereof, in conformity with the method for the
application of the interest rate specified in Article 11 of
Commission Regulation No 794/2004.
(3) If the decision to provide aid for commercial activity is
taken by the Saeima or the Cabinet or it arises from a
court ruling and if the authority which, if necessary, would
recover unlawful aid for commercial activity has not been
indicated in the legal act by which aid for commercial activity
is granted, it shall be ensured by the ministry within the field
of responsibility of which the relevant decision has been
taken.
[13 May 2021]
Section 20. Procedures on Recovery
of Unlawful Aid for Commercial Activity
(1) In taking the decision on recovery of unlawful aid for
commercial activity, the grantor of aid shall determine the
amount of unlawful aid for commercial activity to be recovered
together with interest which has been calculated in accordance
with the provisions laid down in Section 19, Paragraph two of
this Law.
(2) Unlawful aid for commercial activity shall be recovered in
accordance with civil procedures or administrative procedures
unless it has been laid down otherwise in other laws and
regulations.
(3) If unlawful aid for commercial activity has been received
according to a civil legal contract, the abovementioned aid
(together with interest) shall be recovered and other disputes
related to such contract shall be solved in accordance with the
procedures laid down in the Civil Procedure Law and other laws
and regulations, conforming to that laid down in this Law.
(4) If unlawful aid for commercial activity has been received
according to a civil legal contract, the grantor of aid shall
prepare and send a notice to the beneficiary of aid regarding
recovery of unlawful aid for commercial activity. At least the
beneficiary of aid for commercial activity who has the obligation
to repay unlawful aid for commercial activity, the amount of
unlawful aid for commercial activity (together with interest) to
be repaid, the justification for the recovery of incompatible
aid, the repayment details of unlawful aid, the time period for
voluntary fulfilment of the liabilities specified in the notice,
and the consequences of voluntary non-fulfilment shall be
indicated in the notice. The time period for voluntary fulfilment
of the liabilities specified in the notice shall be one month
from the day of sending the notice. If the beneficiary of aid
does not voluntarily fulfil the liabilities specified in the
notice, a claim application and an application for securing a
claim shall be submitted to a court not later than within two
months from the day of sending the notice.
(5) If unlawful aid for commercial activity has been received
on the basis of a law or regulation, an administrative act, or
another legal act in the field of public law or it arises from a
court ruling, the grantor of aid shall pass an administrative act
regarding recovery of unlawful aid for commercial activity and
shall recover such aid for commercial activity (together with
interest) in accordance with the procedures laid down in the
Administrative Procedure Law and other laws and regulations,
conforming to that laid down in this Law.
(6) The beneficiary of aid shall voluntarily fulfil the
administrative act regarding recovery of unlawful aid for
commercial activity within one month from the day of entering
into effect of the administrative act. The grantor of aid or the
enforcement authority indicated in the administrative act shall
commence compulsory fulfilment of an administrative act which has
not been voluntarily fulfilled not later than within one month
from the end of the time period for voluntarily fulfilment
specified in the administrative act.
(7) The enforcement authority of the administrative act
regarding recovery of unlawful aid for commercial activity shall
be the grantor of aid unless it has been specified otherwise in
the abovementioned administrative act.
(8) Contesting or appeal of the administrative act regarding
recovery of unlawful aid for commercial activity shall not
suspend its operation.
(9) The limitation period for recovery of unlawful aid for
commercial activity shall be 10 years from the date of granting
of the aid for commercial activity. In calculating the limitation
period in relation to aid schemes which provide for regular
payments or regular granting of other financial advantages to a
commercial company, aid for commercial activity shall be
considered as granted to the beneficiary of aid for commercial
activity on the day when the commercial company has actually
received unlawful aid for commercial activity. Any activities
which are performed by the grantor of aid in relation to recovery
of unlawful aid for commercial activity shall discontinue the
limitation period and the limitation period shall re-commence
after each interruption.
(10) If the grantor of aid has information at its disposal
that there are justified suspicions regarding lawfulness of aid
for commercial activity granted to a commercial company, it has
commenced the procedure for recovery of unlawful aid for
commercial activity referred to in Section 19, Paragraph one of
this Law, and insolvency proceedings have been declared for the
relevant commercial company in accordance with the procedures
laid down in laws and regulations, the grantor of aid shall
submit a creditor's claim to the administrator of insolvency
proceedings in accordance with the procedures laid down in the
Insolvency Law.
(11) Recovery of unlawful aid for commercial activity shall be
terminated only if a commercial company which is a legal person
has been liquidated, it does not have any assets to be recovered,
and economic continuity, including taking over of rights and
liabilities, cannot be established. If the commercial company is
a natural person, recovery of unlawful aid for commercial
activity shall be terminated only in case if it does not have any
assets related to commercial activity and to be recovered, except
for a dwelling which has been kept in the ownership of the
natural person in accordance with the provisions laid down in
Section 148 of the Insolvency Law and when economic succession,
including taking over of rights and liabilities, cannot be
established.
[13 May 2021]
Section 21. Obligation to Provide
Evidence
If the grantor of aid, the monitoring authorities, or other
competent authorities detect that potentially unlawful aid for
commercial activity has been granted to a commercial company or
the procedure referred to in Section 20, Paragraph two of this
Law has been commenced, or the beneficiary of aid for commercial
activity contests the administrative act referred to in Section
20, Paragraph five of this Law, the beneficiary of aid for
commercial activity has the obligation to provide information and
to prove that it has received aid for commercial activity in
conformity with the requirements of legal acts for receipt of aid
for commercial activity in order to ensure the conformity of such
aid for commercial activity with the conditions regarding
compatibility of aid for commercial activity with the internal
market of the European Union.
[13 May 2021]
Transitional Provisions
1. With the coming into force of this Law, the Law On Control
of Aid for Commercial Activity (Latvijas Republikas Saeimas un
Ministru Kabineta Ziņotājs, 2003, No. 2; 2004, No. 9; 2006,
No. 24; 2007, No. 23; 2008, No. 15; 2009, No. 10; Latvijas
Vēstnesis, 2013, No. 193), is repealed.
2. By 31 December 2014 the Cabinet shall issue the regulations
referred to in Section 12 of this Law.
3. Until the issuing of a new Cabinet Regulation, but not
later than until 31 December 2014, the following Cabinet
Regulations shall be applied:
1) Cabinet Regulation No. 100 of 6 February 2007, Procedures
by which Aid Scheme and Individual Aid Project Notifications
shall be Submitted to the European Commission Electronically, and
by which the Rights to Use the Electronic System of Aid
Notifications shall be Granted and Cancelled, insofar as they are
not in contradiction with this Law;
2) Cabinet Regulation No. 964 of 25 November 2008, Regulations
Regarding Declaration Procedure of Commercial Companies in
Conformity with Small (Micro) or Medium-sized Commercial Company,
insofar as they are not in contradiction with this Law;
3) Cabinet Regulation No. 850 of 4 August 2009, Regulations
Regarding Regional Development Aid in the Republic of Latvia,
insofar as they are not in contradiction with this Law;
4) Cabinet Regulation No. 313 of 17 June 2014, Procedures for
Accounting and Granting of de minimis Aid and
Samples of de minimis Aid Accounting Forms, insofar as
they are not in contradiction with this Law.
Informative Reference to European
Union Directives
The Law contains legal norms arising from Commission Directive
2006/111/EC of 16 November 2006 on the transparency of financial
relations between Member States and public undertakings as well
as on financial transparency within certain undertakings (Text
with EEA relevance).
The Law shall come into force on 1 July 2014.
The Law has been adopted by the Saeima on 19 June
2014.
President A. Bērziņš
Rīga, 27 June 2014
1 The Parliament of the Republic of
Latvia
Translation © 2022 Valsts valodas centrs (State
Language Centre)