In Estonia, if the tax authority issues a notice of assessment to a taxable entity it usually becomes enforceable 30 days after delivery. The submission of a challenge to the tax board, or a complaint in the administrative court, does not suspend enforcement. Compulsory execution of a notice of assessment is in general possible if 1) the due date for performance of the obligation has arrived and the claim is collectable, 2) it has been delivered to the taxable person and 3) there is no agreement to pay the debt in installments. In cases of bankruptcy, a tax debt is considered an unsecured debt and has no special privilege.
The Estonian Tax and Customs Board has the right to apply for a prohibition on the transfer of real estate to be entered in the land register; to apply for a prohibition on the transfer of a vehicle to be entered in the relevant register; to issue an order to freeze securities or a securities account; and to make a claim for payment against financial claims and proprietary rights.
In cases of intentional activities causing a tax debt, the tax authority tries to claim the respective sum from company management. It is good to know that tax evasion and intentional miscalculation are both penalized as a criminal offense in Estonia, and the result is imprisonment for up to 7 years or pecuniary penalty. Criminal law applies when the sum amounts to 23,000 euros. In the first quarter of 2007 some 50 files regarding managers were sent to the district prosecutor's office in Estonia.
In Latvia, if a challenge is submitted to the notice of assessment, enforcement proceedings are suspended. However, if tax authorities discover that the taxpayer has begun to hide, sell or otherwise dispose of assets, or reorganizes, liquidates or does anything to avoid payment, they can commence recovery without waiting for finalization of the challenge. In a court dispute, the penalty and the principal amount are usually suspended if such a request is submitted.
Board members can be subject to criminal prosecution for tax offences in Latvia. In addition, at least in theory, all creditors (including the state) are also entitled to bring a "company claim" for losses caused to the company against managers, which, as opposed to Estonia, does not happen in practice very often.
In Lithuania, the submission of a challenge or a complaint stops the enforcement procedure without any additional applications. In a bankruptcy procedure, the tax authority's claim is unsecured but is privileged among other unsecured claims. More often the practice is that managers are being sued for deliberate actions that cause insolvency.
Mart Angerjarv is an associate at Sorainen Law Offices in Tallinn