European Union has set itself a target of 20% of the Community’s summary end consumption of energy to be produced from renewable sources by the year 2020. Estonia has set its bar higher than that – 25%. Certain measures are planned in order to achieve that target, inter alia granting support for producers using renewable energy sources for electricity production or producing electricity in an efficient cogeneration process.

But in addition to achieving 20% share of renewable energy, the support also has the goal of ensuring further reduction of renewable energy production costs and a stable investment environment; this is inter alia important for developing new technologies, as Günther Oettinger, the Energy Commissioner of European Commission has remarked. That goal is also expressed by the European Union directive of renewable energy, pursuant to which the main goal of compulsory national targets is to ensure a sense of security for investors and to encourage them to continue developing new technologies for producing energy from all types of renewable sources.

The government and the renewable energy producers came to an agreement

The obligation to pay renewable energy support was established in Estonia with the amendments to the Electricity Market Act that entered into force in the year 2007; those amendments state that support can be paid for 12 years from starting the support payments. The currently valid renewable energy support scheme entered into force in February 2010.

As the share of energy produced from renewable sources in Estonia started to grow with unexpected speed (it was 1.5% in 2007, but as much as 14.9% already in 2012), this unavoidably caused an increase of renewable energy charges via renewable energy support payments; some producers achieved higher profitability as well. Due to this, the government decided to change the currently valid support scheme for both new and existing renewable energy producers.

The existing renewable energy producers were justifiably dissatisfied with the situation, as they had planned their activities for a long period and had made the relevant investments as well, relying on the principle of legal certainty, incl. legitimate expectation. The planned amendments also affected new producers who had plans to invest into green energy production but who now lost their certainty about the future.

In order to transcend the opinion differences, the Ministry of Economic Affairs and Communications and the Estonian Renewable Energy Association entered into a memorandum of understanding in summer 2012; that memorandum was to be used as a basis for preparing draft legislation for amending the renewable energy support scheme. This agreement amended the support scheme for both existing and new renewable energy production plants, incl. cancelling the upper limit of wind energy production volume, but it also limited the growth of new production capacities financed at consumers’ expense.

Draft legislation conflicting with the agreement

Alas, the draft Act to amend the Electricity Market Act initiated by the Government of the Republic in November 2012 has by now deviated from several clauses agreed in the memorandum of understanding, e.g. retaining the upper limit of support-eligible wind energy production volume at 600 GWh per calendar year.

After the draft Act was accepted into proceedings, several persons and organisations starting from renewable energy producers and Estonian Competition Board and ending with the Estonian Banking Association and the Grand Embassy of Sweden expressed their opinion about the planned amendments. The main points of reproach have been that the planned amendments violate the principle of legal certainty, incl. legitimate expectation, they harm competition, place under question the achieving of lower tax burden for consumers, and harm Estonian investment climate. Both European Commission and its Energy Commissioner Günther Oettinger have disapproved the idea of making retroactive cuts in renewable energy sector, as such amendments have negative effect on investors’ sense of trust.

Today, the second reading of the draft Act in the Estonian Parliament has been suspended in order to apply for state aid permission from European Commission.

Amending the renewable energy support scheme is an important matter that directly or indirectly affects widely different fields from environment protection to investment climate of the entire country. Therefore the government’s actions related to the renewable energy support scheme must account for various interests on the one hand, but on the other hand it must also ensure that investors’ sense of security when investing in Estonia will not decrease. Thus far, the government has not done a sufficiently good job there.

Использование холдинговой компании позволяет систематизировать владение активами, обеспечить защиту всей структуры от требований и взысканий со стороны кредиторов физического лица и, конечно, оптимизировать налоги.

Нововведения с 2013 года полностью отменяют налогообложение зарегистрированных в Латвии компаний с:

• дивидендов, выплачиваемых и получаемых латвийскими предприятиями (юридическими лицами; однако при выплате дивидендов физическим лицам налог составляет 10% – один из самых низких в Европе);
• прибыли от продажи акций или долей дочерних предприятий;
• процентов (по займам, кредитам и т.п.), выплачиваемых нерезидентам [с 2014 года];
• роялти, выплачиваемые нерезидентам за использование интеллектуальной собственности (лицензий, патентов, торговых марок и т.п.) [c 2014 года].

Уникальность нового налогового режима Латвии на фоне остальных стран Европы заключается в том, что Латвия не предъявляет никаких специальных требований к компаниям, которые желают воспользоваться упомянутыми налоговыми послаблениями. Возможность воспользоваться льготным налоговым режимом предоставляется всем компаниям зарегистрированным в Латвии вне зависимости от:

• Правовой формы компании – общество с ограниченной ответственностью или акционерное общество.
• Вида предпринимательской деятельности. Никаких ограничений видов деятельности для холдинговых компаний не предусмотрено.
• Гражданства акционеров и директоров холдинговой компании.
• Процента участия в капитале и продолжительности владения акциями, долями дочерних компаний.

Единственное ограничение – упомянутые налоговые льготы не распространяются на сделки с офшорным юрисдикциями из т.н. «чёрного списка» Кабинета Министров Латвии.

Конкурентные преимущества латвийской экономики

Латвия – полноправная страна-участница Европейского союза. Подоходный налог с предприятий один из самых низких в Европе – 15%. Также заключены межгосударственные соглашения об избежании двойного налогообложения  более чем с 50 странами по всему миру. Банковская система Латвии стабильна и лояльна к нерезидентным клиентам. Частная собственность и иностранные инвестиции в Латвии защищаются государством. Бизнес в Латвии имеет прямой доступ к деньгам европейских фондов. Латвия – одна из самых русскоговорящих стран Европы, в бизнесе и сфере обслуживания русским языком владеет абсолютное большенство жителей. Начав бизнес или купив недвижимость в Латвии можно легко получить вид на жительство, позволяющий вместе с семьей пять лет свободно перемещатся по всей Европе без виз. Географическое расположение Латвии уникально – между Россией, Белорусией, Скандинавией и Европой; транспортное сообщение хорошо развито во всех направлениях.

Балтийское бюро присяжных адвокатов TRINITI (практикующие в Латвии, Литве и Эстонии)  предлагает полный набор юридических и налоговых консультаций и услуг иностранным клиентам, решившим открыть бизнес в Латвии. Более подробное описание преимуществ и возможностей использования нового налогового режима Латвии можно получить, обратившись в бюро присяжных адвокатов TRINITI.

After coming into force of the unitary patent system, the applicant will be able to submit an application in line with the ordinary European Patent organization process which has been in existence for a fairly long time. The novelty is that before a decision to issue a patent is made, the applicant will be able to extend the protection by applying for the unitary patent offering the protection in all the participating EU Member States. A decision concerning the protection will have to be made within a month from publication of a decision to issue a patent. A patent itself will be kept in the depository of the European Patent Organization rather than distributed to national patent offices of the Member States, as it is currently the case. Unitary patent will provide protection in 25 out of 27 EU Member States.

Furthermore, for the disputes arising due to unitary patent the Unified European Patent Court (UPC) will be established, which decisions will be obligatory and may be enforced in the 25 participating EU Member States.

Current situation

The current European patent system is complicated and rather fragmented. Firstly, all EU Member States have their national patent protection systems in force which allow acquiring patent protection in that particular state.

Furthermore, the system established by the European Patent Organization (EPOrg) and administered by the European Patent Office (EPO) operates in parallel, which makes patenting an invention in all 38 EPOrg member states easier.

It is noteworthy that neither the European Patent Organization nor the European Patent Office is related to any institutions of the European Union. The European Patent Organization was created by seven European countries which have signed the European Patent Convention back in 1973. Since then, more than thirty states have joined the European Patent Organization.

This system is more of technical or administrative nature. It enables an applicant to submit one application for the European Patent Office, indicating the Member States where the patent protection is sought; however, the inventions are being registered in individual states indicated by an applicant and the protection is granted under the national laws of the states in question. Thereby a national “patent package” is acquired by an applicant in such case. As a result, the patent-related issues, such as validity or infringement of a patent, are then determined by national law and the disputes are to be resolved separately in every state.

Pros and Cons of the new system

The present system could have continued to exist, yet it was undermined by considerable patent registration and maintenance costs that could be borne by a few inventors. The greatest share of the costs came from the translation of the patent applications into national languages of European states (currently 23 official languages of the European Union are used). Due to high costs a few applicants are able to patent their inventions in all European states; several largest markets are chosen instead. In order to solve this problem the idea of creating a Unitary Patent was raised, which is likely to come to life in 2014. Several pros and cons of the new system are provided below.

Firstly, it is expected that the price of patent protection would decrease significantly. At present the applicants have to be well aware of their financial abilities, as the patent protection in all 27 EU Member States might cost up to LTL 100 000 (including translation costs), and that price does not include the initial application fee. In contrast, the entire fee under the new Unitary Patent would be LTL 26 650 for protection in 24 out of 27 EU Member States.

Furthermore, generally equivalent disputes are quite often solved differently in different states. After the establishment of the Unified Patent Court (UPC) its decisions will be obligatory and subject to enforcement in all 25 states.

However, one of the biggest disadvantages of this system is that Italy and Spain, which are among the largest European markets, refused to join it.

Cross-border case is a case in which at least one of the parties is domiciled or habitually resident in a Member State other than the Member State of the court or tribunal with jurisdiction. When settling such disputes, it is useful to be aware of the Regulation on European order for payment procedure (1) and the Regulation on European Small Claims Procedure (2). These legal instruments simplify gross-border litigations.  The court does not apply these regulations itself, so it depends on the will of the claimant – i.e. the claimant has to file with the court an application in the form provided in the Annex of relevant regulation.

European order for payment procedure and European small claims procedure only apply to civil and commercial matters in cross-border cases (e.g. in case of monetary claim arising from sales contract or particular contract of services), it shall not extend to administrative matters. The scope of the regulation in different type of civil and commercial matters requires individual verification (3).

What is European order for payment procedure?

European order for payment procedure governs the expedite procedure of orders for payment in cross-border cases – i.e. procedure where the claimant can obtain the enforced judicial decision without actual review of the case, unless the debtor makes objections to the monetary claim. Where an objection is made, the proceedings will continue in accordance with the rules of ordinary court procedure, unless the claimant has explicitly requested that the proceedings be terminated in that event.

European order for payment procedure can be initiated for monetary claims of any size. If the debtor does not make an objection, the court will declare the European order for payment to be enforced immediately. An important advantage of the European order for payment procedure consists in the fact that European order for payment does not require separate recognition and declaration of enforceability in another Member State – i.e. in the State where the judicial decision is to be enforced. Based on a European order for payment, a creditor can address bailiff directly and initiate enforcement proceeding.

What is European small claims procedure?

In case of minor monetary claim (basic claim does not exceed 2000 euros) and in case for example the European order for payment procedure has failed, because the debtor has made an objection, it is possible to settle the dispute within the framework of European small claims procedure. This regulation provides an alternative to the procedures of minor claims existing under the laws of the country where the court is situated.

The advantage of European small claims procedure is that cross-border litigations are expected to be settled more quickly, at reduced cost, and creditor is given enforcement document, which allows immediate enforcement of judicial decision. This means that similar to the European order for payment, the judicial decision adopted in relevant proceedings can be immediately recognised and enforced in another Member State.

Firstly, as of 31 December 2012, mortgage creditors do not have rights to request postponing collection against real estates and its sale via an auction. Secondly, the Parliament plans to supplement the sequence of satisfaction of claims, stating that separate claims are of higher priority compared to mortgage creditors’ claims. The said changes will directly affect the rights of mortgage creditors, reducing the chances of full debt collection, unless certain protective measures are performed in due manner and time.

The rights of the mortgage creditors till 31 December 2012 to postpone collection against real estates were initially prescribed as the transitional period for the protection of creditors’ rights. The purpose was to prevent selling real estates via auction when their value was the lowest. In practice, it meant that the mortgage creditor could prohibit auctioning of the real estate, if the collection against the property was initiated by another party.

Currently several proposals have been expressed to extend the said term. Furthermore, it is offered to state a retroactive effect thereto, namely, preventing the legal “gap” since 31 December 2012. Nevertheless, having considered the discussions expressed in the Parliament in respect to this issue, it is quite unlikely that the said term could be extended. In other words, creditors should already now take into account that the collection on the part of the third parties could be implemented against the pledged real estate at any moment, and the pace of the auction cannot be suspended.

Besides, there are amendments planned to the laws and regulations in respect of the sequence of the satisfaction of claims, stating that separate claims are of higher priority, compared to mortgage creditors’ claims. In practice, it means that mortgage creditors in the case of an auction will receive the sum of money with the prior deduction of the sum of priority claims thereof.

The most topical discussions in this respect regard the claims for the collection of the management fee of residential house and public utility payments. Having considered the arguments, it can now be stated with high probability that the managers’ claims would soon gain priority over the mortgage creditors’ claims. Therewith, the creditors should take into account the possible consequences of this regulation, and take the necessary measures to minimise the risks of impossibility of collection.

Analysing the discussions expressed during the period of development of the draft law, it can be concluded that, most likely, there would be such regulation adopted according to which the manager would be able to implement priority collection, if:

1)      there is an effective court ruling on the claim;

2)      the manager’s claims do not exceed 10 per cent of the money, received for the sold pledged real estate;

3)      the value of the real estate will be lower than the value of the pledge.

At the same time, attention should be paid to the fact that there are also other proposals, providing for more considerable restrictions of the rights of mortgage creditors, for example, directing collection even without a court ruling, where the bailiff pays sums of money to the property manager merely on the basis of the notice regarding the amount of debt; establishment of real charge on the basis of the notice of the manager, which would automatically have priority over the claim of the mortgage creditor.

It is worth noting that the legislator also plans to introduce amendments to other laws and regulations, with the purpose to facilitate and make the implementation of managers’ claims more efficient. In this respect it is expected that the property managers:

1)      will not be able to procrastinate bringing claims to court;

2)      will be able to request the immediate securing of claims, corroborating the pledge right notes with the land register;

3)      will be partially released from the payment of litigation and collection expenses;

4)      will be able to implement the more rapid adjudication of collection matters in the court.

Also pursuant to the latest case law, the public utility providers reserve direct claim rights against real estate owners, if property managers have not settled payments with the respective public utility provider. Both the referred to amendments and the case law in the near future will increase the number of collection matters, and speed up their review. Therewith, mortgage creditors have to take into account the more frequent selling of the pledged properties via auction initiated by third parties.

In order to minimise the risks related to uncontrolled auctioning of pledged real estate and hence limited collection and losses, law firm TRINITI advises the mortgage creditors to:

1)      make sure that the existing and future value of the real estate exceeds the value of the pledge (of course, in some cases it is easier said than done). An important suggestion here – in case several properties are used to secure one loan, it is advisable to divide the loan into parts corresponding to the values of the pledged properties;

2)      ammend the loan agreements so that the creditor has the right to request early repayment of the loan, as soon as any priority collection features are detected, as well as to state the obligation of the debtor to systematically confirm the fulfilment of liabilities towards the priority creditors;

3)      assess the options to change the procedure for granting loans, already initially stating the reservation of a certain amount of loan for possible property managers’ claims;

4)      receive the authorisation of the debtor to review the data in the debtors’ register.