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September-October 2009
Estonia, Latvia, Lithuania, Finland, Sweden |
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RoschierRaidla News
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Inside this Issue:
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Estonia |
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Latvia |
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Lithuania |
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Estonia
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Value Added Tax Act and Act Regulating
Excise Duties Amended |
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On 18 June 2009, the Estonian Parliament (Riigikogu) passed
the Act Amending Acts Associated with the Second Supplementary
Budget Act. Changing economic conditions necessitated the adoption
of the act. The most significant amendment concerns the Value Added
Tax Act. Starting from 1 July 2009 the VAT rate is increased from
18% to 20%. Pursuant to the amendments alcohol with an ethanol
content exceeding 22% by volume contained in a sales packaging with
a volume of 0.05 liter or more is now subject to excise duty. The
excise duty on cigarettes and motor fuel is increased by 5% as well
and the amounts of cigarettes and tobacco allowed to be taken into
Estonia across the border are reduced. Amendments in the
Environmental Charges Act introduce new thresholds and ceilings for
the rates of extraction charges on mineral resources owned by the
state. The amendments mostly entered into force on 1 July 2009. The
changes regarding excise duties on alcohol and cigarettes are to
enter into force on 1 January 2010. The sale of alcohol without
revenue stamps released for consumption prior to 1 January 2010 is
allowed until 31 January 2010. The change of the VAT rates at such a
short notice caused problems to many entrepreneurs. The Legal
Chancellor concluded that the provisions prescribing the hasty entry
into force of the new VAT rate were in contradiction with the
Constitution and called upon the Riigikogu to eliminate the
contradiction and bring the amendment in line with the Constitution.
This led to the adoption of an implementation act by the
Riigikogu in September, which addressed the problem.
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Other Recent Legislative Developments |
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Act Adopted to Alleviate Impact of Rapid VAT Rate Increase
On 2 September 2009, the Riigikogu passed the Act
Implementing the Act of Amending Acts Associated with the Second
Supplementary Budget Act. The objective of this act is to help
alleviate the impact on businesses of increasing the VAT rate on
such a short notice and to eliminate the contradiction of the
amended Value Added Tax Act with the Constitution. To accomplish
this, the transition period for renewing price tags and filing VAT
returns is extended by one month. The implementing act also allows
businesses to charge a higher price than that indicated on price
tags until 30 September 2009 and submit the VAT return for July with
a delay. Those who submit their July return by September 30 2009
will not be subject to penalty payment and their actions will not be
deemed as obstructing the activities of the tax authority. The act
also provides for the possibility of compensating additional costs
incurred by businesses by reason of the hasty change of the VAT
rate. In addition, the implementing act includes provisions
regulating the change in prices agreed in contracts concluded for an
indefinite term. The act entered into force on 16 September 2009.
Most of the provisions apply retroactively, with the exception of
those concerning contracts for an indefinite term and compensation
of damage.
New Land Tax Act Provisions
On 10 June 2009, the Riigikogu passed the Land Tax Act
Amendment Act. Pursuant to the amendments local governments may
exempt persons from land tax on residential land in their use. The
land must be smaller than 0.3 hectares in cities and 1.0 hectares in
rural municipalities. The exemption requires that the dwelling
located on the land is registered in the population register as the
residence of the taxpayer and the applicant for the tax exemption
does not receive rent on the basis of the right of use of land.
Local governments also receive the right to establish different land
tax rates for the different types of intended uses of cadastral
units. The amendments entered into force on 2 July 2009.
Traffic Act Amendments Specify Drivers' Working Time
On 10 June 2009, the Riigikogu adopted the Traffic Act
Amendment Act. The amendments impose limits on drivers’ working
time. Pursuant to the amendments, if a driver works between midnight
and 6 a.m. the daily working time of the driver may not exceed ten
hours per each 24 hour period. In addition, the amendments introduce
the possibility of restricting the traffic on roads and of using
technical means (cameras) during examinations for drivers of
power-driven vehicles. The amendments entered into force on 2 July
2009.
Regulation for Transferring
State Assets Adopted
On 10 September 2009, the Government of the Republic adopted
Regulation No 53, amending the procedure for transferring state
assets. The purpose of the amendments is to accelerate and
facilitate the process of transferring state assets and eliminate
ambiguities from the process. The most important changes concern the
exercise of pre-emption, the sale of aggregate state assets and the
simplification of the transfer of state assets provided by the State
Assets Act. Pursuant to the amendments any person who may have an
interest in the transfer or acquisition of state assets has the
right to make a transfer proposal. In the case of selling an
immovable owned by the state to which the right of pre-emption
applies, the winner of the auction must pay the sales price and
present guarantees of performance of the contract after concluding
the real right contract (contract for transfer of property rights).
The amendments also prescribe the principles of the right of
discretion to be exercised by the administrator of state assets and
specify the conditions that allow an auction to be declared to have
failed. In addition, the amendments define the meaning of
transferring aggregate assets, and establish the criteria of their
sale and the principles of price formation. The amendment entered
into force on 18 September 2009.
Amendment to the Aliens Act
On 20 July 2009, the Government of the Republic adopted Regulation
No 126, amending the provisions of a prior regulation concerning the
procedure for applying for visas. An amendment to the Aliens Act
abolished the requirement to submit a visa invitation while applying
for a visa. The amendment here repeals the relevant provisions from
the implementing regulation as well. However, an obligation is
introduced for persons being visited by an alien to issue a
confirmation in the event that the alien is not in a position to
present documents certifying the ability to cover the costs of
staying in Estonia as proof of the objective and reason of the
visit. The amendments entered into force on 30 July 2009.
Amendments to the Building
Act
On 27 August 2009, the Government of the Republic adopted Regulation
No 146, amending a prior regulation concerning the minimum
requirements for energy efficiency. The amendments are introduced on
the basis of the Building Act. According to the amendments in the
case of buildings with different applications, individual energy
efficiency rates corresponding to the relevant applications shall be
assigned to the parts of the building whose heated area exceeds 10%
of the total heated area of the building. The amendments entered
into force on 12 September 2009.
Liability of the Management Board Member
In its 24 September 2009 judgment, the Supreme Court analyzed
potential bases for imposing liability upon a company management
board member. According to the judgment the legal relationship
between a management board member and a company is by nature a
relationship under the law of obligations, similar to an
authorization agreement. Based on the above, failure to perform the
contractual obligations of the company with respect to third parties
can be deemed as a breach of the duties of the management board
member. The Supreme Court offers the following example: the
management board member fails, without good reason, to perform a
contractual obligation of the company, which results in the company
having to pay a contractual penalty. The obligations of the
management board member may in this case arise from law, the
statutes of the company or from the contract between the management
board member and the company. In addition, the court established that
tax arrears resulting from the violation of the obligation to report
taxes by the management board member cannot solely be deemed as
damage caused to the state. This is because the state can demand
payment of the tax arrears from the company (violation of the
obligation to report taxes have no impact on the existence or size
of the tax claim of the state). However, violation of the obligation
to report taxes can result in the state not having any knowledge of
its tax claim, and thus the state can not collect the tax arrears in
time, or the company’s solvency may deteriorate as time passes, the
company may be liquidated or the tax arrears may expire. In any of
these cases, the state would be in a worse position as regards to
the establishment of its tax claim than in a case where the
management board member had duly reported the company’s tax
liability and its size – thus the question of the management
board member’s liability may arise.
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| For further information please contact
Raino Paron
(CV),
Partner at Raidla Lejins &
Norcous in Tallinn. |
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Latvia
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Law on State and
Municipal Shares and Capital Companies Amended |
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On 20 August 2009, the Latvian Parliament (Saeima) approved extensive
amendments to the Law on State and Municipal Shares and Capital Companies,
effective as of 1 September 2009. The amendments have been called to improve the
legal framework for operation and management of the companies with state or
municipal capital which during the period of economic downturn has demonstrated
material deficiencies.
The amendments, inter alia, aim to specify the procedures for the
handling of state/municipal shares and management in companies with private
capital investment, as well as to establish a unified management structure for
the companies which are fully owned by the state and/or municipalities. A new
chapter has been added to specifically regulate state and municipal companies
operating as credit institutions or investment management companies.
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Criminal Liability for Substantial Breach of
Personal Data Protection Rules Established |
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On 10 September 2009, Saeima amended the Criminal Law establishing
criminal liability for a substantial breach of personal data protection rules.
Prior to these amendments perpetrators were subject to less stringent -
administrative - liability regime only. The amendments have entered into force
on 14 October 2009.
Under the amendments unlawful processing of personal data, where it has resulted
in a substantial harm, shall be penalized by imprisonment for up to two years,
or a community service, or a fine in the amount of up to 18 000 LVL
(approximately 25 600 EUR). Where the illegal processing of personal data has
been carried out by the personal data system controller or operator acting e.g.
for covetous reasons the applicable sentence shall be imprisonment for up to
four years, or a community service, or a fine in the amount of up to 21 600 LVL
(approximately 30 734 EUR). The most severe punishment is provided for
exercising undue influence (e.g. by means of fraud or misuse of trust) over the
personal data system controller, operator or data subject with the purpose of
illegal processing of personal data - imprisonment for up to five years, or a
community service, or a fine in the amount of up to 36 000 LVL (approximately 51
200 EUR).
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Law on Corporate Income Tax Amended |
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On 24 September 2009, Saeima adopted amendments to the Law on Corporate
Income Tax providing for an income tax relief for up to 85% from the
amounts that have been donated to the public benefit organizations registered in
a member state of the European Union or the European Economic Area. The
amendments entered into force on 20 October 2009. The total of the tax relief,
however, may not exceed 20% from the total income tax payable.
Prior to these amendments tax relief could be claimed only with respect to the
donations made to the budget institutions, as well as to the public benefit
organizations registered in Latvia.
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Draft Amendments to the Criminal Law -
decriminalization of certain offences related to insolvency process
and violation of certain intellectual property rights |
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On 8 October 2009, a significant number of amendments to the Criminal Law have
been announced at the meeting of the State Secretaries. The draft amendments
have been prepared by the Ministry of Justice.
The draft amendments, inter alia, provide for decriminalization of
certain offences related to the breach of insolvency process rules. Currently
criminal liability is imposed for failure to submit an application for
insolvency when due under the law, as well as for certain other violations of
insolvency proceedings. The Ministry of Justice claims that recently the above
mentioned provisions have been extensively abused by the creditors who tend to
misuse the criminal proceedings to foster the fulfillment of debt commitments.
The Ministry of Justice believes that insolvency proceedings initiated on the
basis of the Insolvency Law are sufficient to tackle all the problems related to
the fulfillment of the debt commitments.
The draft amendments also provide for decriminalization of certain offences
related to violations of intellectual property rights. Currently certain
violations, e.g. infringement of the rights of the author to use work,
appropriation of authorship or copyright, acquisition for sale, storage or
concealment of counterfeited goods, etc., are subject to dual liability regimes
– both criminal and administrative. Moreover, in fact the provisions of the
Criminal Law are overlapping with the respective provisions of the
Administrative Violations Code which in practice means that administrative
liability may not be applied and currently even minor infringements of the
intellectual property rights may result in a criminal liability. The proposed
amendments aim to correct this deficiency by decriminalizing ‘minor’ violations
in the field of copyrights, trademarks and designs that will remain to be
subject to administrative liability only.
The Ministry of Justice hopes that decriminalization of certain criminal
offences will contribute to the overall efficiency of the judicial system in
Latvia.
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| For further information please contact
Dace Silava-Tomsone
(CV),
Partner at Raidla Lejins
& Norcous in Riga. |
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Lithuania
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New Definition of Dominant Position |
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As of 24 September 2009, the Parliament
of the Republic of Lithuania adopted the
Law Amending Article 3 of the Law on
Competition of the Republic of Lithuania
(the "Law on Competition"). Amendments will
come into force on 1 January 2010 and
will introduce the definition of a
dominant position. Pursuant to the Law
on Competition in force, an undertaking
with the market share of not less than
40% or each of a group of three or a
smaller number of undertakings with the
largest shares of the relevant market,
jointly holding 70% or more of the
relevant market, were considered to have
a dominant position in that market.
The new amendments exclude undertakings
involved in retail business from the
abovementioned presumptions and also
introduce two new presumptions with
regard to undertakings involved in
retail business: (i) undertakings
involved in retail business are
considered to have a dominant position
in the relevant market if they have a
market share of not less than 30%; and
(ii) each of a group of three or a
smaller number of undertakings involved
in retail business, jointly holding 55%
or more of the relevant market, shall be
considered to have a dominant position
in that market.
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Parliament Introduced the Draft Law on
Services |
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A work group formed by the
Ministry of Economy of the
Republic of Lithuania
introduced the Draft Law on
Services of the Republic of
Lithuania (the "Draft Law on
Services") as of 1 October
2009. The main purpose of
the aforementioned draft law
is to transpose the European
Parliament and the Council
Directive 2006/123/EC
(the "Directive") of 12 December
2006 on Services in the
Internal Market to the
national law. The deadline
for the transposition of the
said directive is 28
December 2009. The Directive
establishes general
provisions facilitating the
exercise of the freedom of
establishment for service
providers and the free
movement of services while
maintaining high quality of
services.
Currently in Lithuania there
are over 70 laws with regard
to establishment, provision
of services and other
related matters. However, up
till now there are no
regulations that would: (i)
comprehensively and
systemically regulate the
establishment of service
providers in Lithuania and
temporal provision of
services in the Lithuanian
territory by providers
established in other
European Union member
states, as well as by
providers established in the
member states of the
European Economic Area; (ii)
establish administrational
simplification means and
provisions regarding
administrational cooperation
among competent institutions
of the Republic of
Lithuania, other member
states and the European
Commission; and (iii) ensure
an opportunity for the
service providers
established in Lithuania to
rely on more simple and more
transparent laws regarding
service provision.
Therefore, the Draft Law on
Services aims at: (i)
establishing the means and
principles that would ensure
an effective implementation
and application of the
freedom of establishment for
service providers
established in Lithuania and
the free movement of
services, and at the same
time ensuring high quality
of services; (ii) regulation
administrational cooperation
among competent institutions
of the member states and the
European Commission, which
would be exercised through
the European Union Internal
Market Information System
established by the European
Commission and designed to
ensure the supervision of
the facilitation of the
freedom of establishment and
the freedom to provide
services; and, finally,
(iii) establishing an
administrational scheme,
i.e. a contact centre, and
defining its main functions,
procedures and other
formalities regarding the
attainment of the right to
provide services or the
right to engage in service
provision activities and
etc.
The authors believe that the
adoption of the Law on
Services will ensure more
favourable conditions to
start or develop business
and to provide services.
Besides, the new regulation
would provide much more
possibilities for the
economical growth,
establishment of new jobs,
small and medium business
development to the markets
of the other member states
of the European Union. Since
the Law on Services would
inevitably enhance business
regulation in Lithuania, the
instant development of
business and investment
growth is also expected.
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Value Added Tax Rate Increased and Further
Amendments Proposed |
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During the period, the Parliament of the
Republic of Lithuania adopted amendments
to the Law on Value Added Tax of the
Republic of Lithuania. One of the major
changes were made in relation to the
standard rate of value added tax (VAT).
The existing 19% standard rate of VAT
was increased and since 1 September 2009
constitutes 21%.
Furthermore, the adoption of the Council
Directive 2008/8/EC of 12 February 2008
amending Directive 2006/112/EC as
regards the place of supply of services
partly amending the Council Directive
2006/112/EC of 28 November 2006 on the
common system of value added tax,
Council Directive 2008/9/EC of 12
February 2008 laying down detailed rules
for the refund of value added tax,
provided for in Directive 2006/112/EC,
to taxable persons not established in
the Member State of refund but
established in another Member State and
Council Directive 2008/117/EC of 16
December 2008 amending Directive
2006/112/EC on the common system of
value added tax to combat tax evasion
connected with intra-Community
transactions, lead to the preparation of
the Draft Law on the Amendment of Law on
VAT.
The main purpose of the draft law is to
transpose and implement the provisions
of the aforementioned European Council
and Parliament directives, as well as to
simplify and clarify certain aspects of
the current regulation regarding VAT, as
well as to eliminate some excess
provisions. The proposed amendments
cover the place of provision of
services, reimbursement of VAT paid in
other member states, registration of
collective investment subjects
(investment funds) as VAT payers, VAT
calculation from advance payments,
provision of goods in the customs,
return of VAT for non-EU citizens and
etc.
The adoption of the proposed amendments
regarding taxes on services would
entrench the principle of the place of
consumption. However, administrational
burden for business will become harder,
i.e. if according to the new principle
of the place of consumption undertakings
provide services in other member states,
they will have to declare information
regarding the services provided abroad.
Yet, the procedures for reimbursement of
VAT paid in other member states are
significantly simplified. Some other
aspects of VAT calculation will also be
simplified, for instance there will be a
possibility for Lithuania based
collective investment subjects that have
the status of an investment fund (for
example, real estate investment funds),
but do not have the status of a legal
person in Lithuania to be registered as
VAT payers and therefore to benefit from
this; undertakings will also be enabled
to calculate VAT on received advanced
payments; the customs procedures with
respect to double taxation of imported
goods are more straightforward and etc.
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Amendments to the Law on Markets in
Financial Instruments and the Law on Securities Introduced |
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As of 2 September 2009, a work group
composed of several Parliament members
proposed the Draft Law on the Amendment
and Addition of Article 961, of the Law
on Markets in Financial Instruments. The
purpose of the said draft law is to
establish one harmonized control scheme
of liability for infringement of laws
regulating markets in financial
instruments.
In pursuit of the aforementioned goal,
the authors of the draft law proposed to
scrutinize the existing liability
scheme. For instance, Article 95 of the
current version of the Law on Markets in
Financial Instruments imposes fines for
infringement of provisions of the Law on
Markets in Financial Instruments.
However, up till now these fines are not
adequately differentiated, thus the
authors of the amendments suggest to
establish a more differentiated fine
scheme with regard to the nature of
infringements and other important
factors. Besides, pursuant to the
current regulation, the Securities
Commission (the institution for
regulation and supervision of markets in
financial instruments in Lithuania) may
not exempt a legal person suspected of
infringement from liability if such
infringement may be objectively
justified. Thus, the Draft Amendments of
the Law on Markets in Financial
Instruments suggest that in case a
suspected legal person may prove that it
took all actions necessary to avoid the
infringement and that the infringement
is insignificant the Securities
Commission would have a possibility to
exempt such legal person from liability.
The draft law also aims at strengthening
the powers of the Security Commission by
increasing the scope of sanctions it may
invoke. For instance, it suggests
establishing a new sanction – an
obligation to replace the manager of a
company in cases the manager fails to
maintain irreproachable character, lacks
experience or there are other reasons to
believe that the manager is incapable to
properly run the company.
Furthermore, according to the example of
the other European states, the draft law
suggests to change Part 6 of Article 47
of the Law on Markets in Financial
Instruments and to establish that the
Securities Commission shall have the
power to determine the requirements for
the capital of regulated market
operators. It is also suggested to
empower the Securities Commission to
oblige to discontinue an alleged
infringement while investigation of the
infringement is in progress.
The Draft Amendments of the Law on
Markets in Financial Instruments propose
even more amendments regarding the
subjects of markets in financial
instruments: it pursues to establish a
possibility for account keepers
registered in Lithuania to open general
client accounts on behalf of clients but
under the name of account keepers; and
it also proposes to establish the so
called “undesirable trade period”, which
means a period from the end of the
reporting period until the public
announcement of results, during which
the manager of the issuer and other
closely related persons are not allowed
to conduct any transactions regarding
the securities of the issuer they are
managing.
Moreover, very similar amendments were
suggested with regard to the Law on
Securities. The work group that proposed
the Draft Law on the Amendment the Law
on Markets in Financial Instruments,
submitted the Draft Law on the Amendment
of the Law on Securities. This draft law
also aims at establishing a proper fine
scheme for infringement of provisions of
Law on Securities by differentiating the
size of fines according to the nature of
an infringement and other circumstances,
as well as widening the list of
sanctions for infringements. The draft
law also aims at enhancing the powers of
the Securities Commission with regard to
liability and supervision of the
securities market. The authors of these
amendments expect that the adoption of
the draft law will ensure a transparent
and clear scheme and application of
sanctions, thus will strengthen
prevention of infringements and have
positive effects on the business
environment.
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further information please contact
Irmantas Norkus, (CV),
Managing Partner at Raidla Lejins & Norcous in Vilnius. |
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Finland
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Government Bills Implementing
the Payment Services Directive
Published in Finland |
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Government Bills for the Act on Payment Institutions and the Payment Services
Act implementing the Directive 2007/64/EC of the European Parliament and of the
Council on Payment Service in the Internal Market (the “Payment Services
Directive”) were published and handed to the Parliament on 2 October 2009. The
Act on Payment Institutions and the Payment Services Act are intended to enter
into force in November 2009 and in May 2010, respectively.
The
objective of the Payment Services Directive is to provide the legal framework
for the creation of an EU-wide single market for payments. The Directive aims at
establishing a comprehensive set of rules applicable to all payment services in
the European Union. The target of the Directive is further to make cross-border
payments as easy, efficient and secure as national payments within a Member
State and to enhance competition by opening up payment markets to new players,
thus leading to greater efficiency and cost-reduction.
The Credit Institutions Act and the Act on Credit Transfers have previously been
central in the regulation of payment transactions in Finland. Through the
implementation of the Payment Services Directive in Finland, the new Payment
Services Act and Act on Payment Institutions will regulate payment transactions
and e.g. the Act on Credit Transfers will be repealed. Payment transactions
regulated through the new Acts will include, inter alia, credit transfers,
execution of direct debits as well as execution of payment transactions through
a cash or credit card.
The implementation of the Payment Services Directive in Finland has been
prepared by two working groups. The Ministry of Justice working group has
prepared the implementation of Titles III and IV of the Payment Services
Directive through a Government Bill including a proposal for the Payment
Services Act. The new Act regulates, inter alia, the terms and conditions for
entering into agreements on payment services as well as the execution of payment
services. One significant amendment resulting from the entry into force of the
Payment Services Act is the shortened time period for executing credit
transfers. The Act on Payment Institutions which implements Titles I and II of
the Payment Services Directive has been prepared by the working group of the
Ministry of Finance. The Act on Payment Institutions regulates license and other
requirements for institutions providing payment services and the supervision of
such payment institutions.
Although the Payment Services Directive aims at a full harmonisation approach,
there are some optional provisions leaving discretion to the Member States in
the implementation of the Directive. The optional provisions in the Directive
include, inter alia, waivers for small players and so called “corporate opt-out”
provisions. The Government Bill for the Act on Payment Institutions proposes a
waiver for small players, i.e. a legal person or a natural person may offer
payment services without a license if the average of the preceding 12 months'
total amount of payment transactions executed does not exceed 3 million euro per
month or 50 000 euro per month, respectively. Further, the Government Bill for
the Payment Services Act proposes implementation of the corporate opt-out
articles in the Directive, according to which the parties may agree that certain
provisions regarding single payment transactions and framework contracts shall
not be applicable in whole or in part, only to the extent that the payment
service user is not a consumer. The proposal thus excludes the option of
non-application of certain provisions when the payment service user is not a
micro enterprise.
The entry into force of the Payment Services Act and the Act on Payment
Institutions is intended to facilitate quicker execution of payment transactions
within the EEA and to improve the position of consumers and other payment
services users. The new Acts are, however, also expected to give rise to
significant costs for credit institutions and credit card companies relating
e.g. to the updating of terms and conditions for payment transactions in order
to comply with the requirements of the new Acts.
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For further information please contact
Dimitrios Himonas
(CV),
Partner at Roschier in Helsinki. |
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Sweden
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Reduced Bonus
and Pension Benefits
due to Parental
Leave |
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The Swedish
Labour Court
(the “Court”)
has recently
concluded that
the employer may
under certain
conditions
reduce bonus and
pension benefits
for employees on
parental leave.
These benefits
were tried in
two separate
cases, the bonus
case
AD 2009 nr 13,
and the pension
case
AD 2009 nr 15.
Since 2006
employers in
Sweden are
prohibited to
disfavour an
employee in
terms of salary
or other
conditions of
employment for
reasons related
to parental
leave, according
to the Swedish
Parental Leave
Act (“the
Act”).
However, the
employer may
apply different
terms and
conditions or
different
treatment in
relation to
employees on
parental leave,
if the different
treatment is a
necessary
consequence of
the parental
leave. Prior to
the above two
cases this
prohibition has
not been tried
by the Court and
it has been
unclear to what
extent an
employer may
reduce bonus and
pension benefits
for employees on
parental leave,
without risking
that the
reduction is
considered
discriminatory
against
employees on
parental leave.
Non-observance
of these rules
may, if
challenged in
court, end up
with employer
liability for
damages.
The Equal
Opportunities
Ombudsman (Sw.
Diskrimineringsombudsmannen),
who represented
the employees in
both cases
above, held that
(i) the reduced
bonus and the
unpaid pension
premiums had
caused the
employees
economic loss,
and as a result
thereof, they
were subject to
disfavourable
treatment, and
(ii) the
disfavourable
treatment was
not a necessary
consequence of
the parental
leave, and was
thus in
violation with
the Act.
It was obvious
that the
employees had
suffered
financial loss
and, as a
consequence,
were treated
disfavourably in
comparison with
other employees
who had been on
actual service
the entire year.
Instead, the key
issue for the
Court to
consider was
whether the
disfavourable
treatment was a
necessary
consequence of
the parental
leave.
As regards the
bonus, the
employer had
offered a
one-off bonus
payment
calculated pro
rata in respect
of actual worked
hours during the
bonus plan year.
As a
consequence,
employees on
leave of absence
(for whatever
reason,
including
parental leave)
received a
reduced (pro
rated) bonus
amount. Since,
the one-off
bonus payment
was similar to
retroactive
compensation for
worked hours
(like salary),
and the bonus
would not have
any impact or
connection to
future salary
levels, the
Court concluded
that the
reduction of the
bonus amount as
a result of
parental leave
was a necessary
consequence of
the parental
leave. Thus, the
one-off bonus
payment in this
case was treated
as salary, and
it is clear that
there is no
entitlement to
salary during
parental leave
under Swedish
law (such
entitlement may,
however, exist
under collective
bargaining
agreements).
It is important
to note that the
one-off bonus
payment was
based on actual
worked hours,
and all
employees on
leave of absence
(regardless of
the reason) were
treated equally.
It is unclear if
a reduction of
the bonus amount
due to parental
leave would have
been accepted by
the Court in
case of a bonus
plan based on
other factors.
The Court
follows the same
line of
reasoning in
relation to
pension
benefits. In
this case the
employer had
undertaken to
pay monthly
pension
premiums. During
periods of leave
of absence
(including
parental leave)
the employer
stopped to pay
the premiums.
The Court
concluded that
since the
entitlement to
pension premiums
is similar to
deferred salary,
it is a
necessary
consequence of
absence from
work that the
employee does
not only loose
the base salary
but also certain
salary related
benefits, such
as pension
premiums.
Further, the
Court noted that
pension premiums
are calculated
on the
employee’s
salary and since
no salary is
paid to the
employee during
the parental
leave there is
no actual basis
for calculating
the pension
premiums. Thus,
the Court found
that the
disfavourable
treatment was a
necessary
consequence of
the parental
leave and
reduced pension
benefits were,
thus, accepted.
These two cases
clarify the
discrimination
issue to some
degree, and the
ruling may give
employers some
guidance on how
to plan and
structure future
bonus and
pension schemes.
As mentioned
above, it is
however, unclear
if the outcome
would have been
the same if the
bonus plan was
based on other
factors than
only actual
worked hours,
such as company
results.
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| For further information please contact
Axel Calissendorff
(CV),
Partner at Roschier
in Stockholm. |
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| This Newsletter is a
periodic publication of RoschierRaidla and
should not be construed as legal advice or legal opinion on any specific
facts or circumstances. We have used reasonable efforts in collecting,
preparing and providing the information in this newsletter, but we do
not warrant or guarantee the accuracy, completeness, adequacy or
currency of the information contained herein. The contents are for
general informational purposes only, and you are urged to consult a
lawyer concerning your situation and any specific legal questions you
might have. |
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