Sorainen has successfully represented Digmatix in obtaining a positive advance ruling from the Latvian tax authorities, confirming that the thin-capitalization exemption applies to interest payments made to an investment fund established in another EU member state.
According to Sorainen, the matter addressed a previously restrictive administrative stance and involved issues including the interplay between Latvia’s thin-cap regime and the financial supervision of externally managed funds, as well as the compatibility of prior practice with EU freedom to provide services and EU State aid rules. The ruling broadens financing options for Latvian businesses by placing loans from EU investment funds on equal tax footing with bank lending, thereby supporting the development of the local capital market as an alternative source of funding for startups and growth companies.
The Sorainen team included Partner Aija Lasmane and Of Counsel Martins Rudzitis.
