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On taxing paternity benefits

Case No. 35/2009

 THE CONSTITUTIONAL COURT OF THE REPUBLIC OF LITHUANIA

 RULING

ON THE COMPLIANCE OF ITEM 2 (WORDINGS OF 2 JULY 2002 AND 23 DECEMBER 2008) OF PARAGRAPH 1 OF ARTICLE 17 OF THE REPUBLIC OF LITHUANIA LAW ON PERSONAL INCOME TAX WITH THE CONSTITUTION OF THE REPUBLIC OF LITHUANIA

 14 December 2012

Vilnius

 

The Constitutional Court of the Republic of Lithuania, composed of the Justices of the Constitutional Court Egidijus Bieliūnas, Toma Birmontienė, Pranas Kuconis, Gediminas Mesonis, Ramutė Ruškytė, Egidijus Šileikis, Algirdas Taminskas, Romualdas Kęstutis Urbaitis, and Dainius Žalimas,

with the secretary—Daiva Pitrėnaitė,

in the presence of the representative of the Vilnius Regional Administrative Court, the petitioner, who was the judge Ernestas Spruogis,

pursuant to Articles 102, 105 of the Constitution of the Republic of Lithuania and Article 1 of the Law on the Constitutional Court of the Republic of Lithuania, on 12 December 2012, in the Court’s public hearing considered constitutional justice case No. 35/2009 subsequent to the petition (No. 1B-44/2009) of the Vilnius Regional Administrative Court, the petitioner, requesting investigation into whether the provision “Non-taxable income shall include the following: <...> 2) benefits paid from the state and municipal budgets and the budget of the State Social Insurance Fund, with the exception of sickness benefits, maternity and maternity (paternity) benefits” of Paragraph 1 of Article 17 (wordings of 2 July 2002 and 23 December 2008) of the Republic of Lithuania Law on Personal Income Tax insofar as, according to the petitioner, it does not establish that the paternity benefit is attributed to non-taxable income exemptions, was not in conflict with Paragraph 1 of Article 29 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law.

The Constitutional Court

has established:

I

The petition of the Vilnius Regional Administrative Court, the petitioner, is substantiated by the following arguments.

According to the petitioner, under the impugned provision of the Law on Personal Income Tax (hereinafter also referred to as the Law), sickness, maternity, maternity (paternity) benefits are taxable income, whereas the paternity income is not attributed to such income. All the said benefits—maternity, paternity, maternity (paternity) benefits—are paid from the budget of the State Social Insurance Fund. However, such similarity of theirs, as consolidated in the Republic of Lithuania Law on Sickness and Maternity Social Insurance, does not allow the construction of the impugned provision of the Law in the manner where the paternity benefit would also be regarded as taxable income; quite to the contrary, after it was not established expressis verbis that the paternity benefit is attributed to non-taxable income exemptions, the said benefit, under Item 2 of Paragraph 1 of Article 17 of the Law, is regarded as non-taxable income.

The legislator, by means of the said legal regulation, does not treat all the persons, whose situation is in substance similar (especially, if one compares persons receiving maternity or maternity (paternity) benefits with persons receiving paternity benefits), in the same manner: persons receiving maternity or maternity (paternity) benefits pay the personal income tax on those benefits, whereas persons receiving paternity benefits pay no such tax, i.e. they are groundlessly privileged.

In the opinion of the petitioner, the legal regulation providing in Item 2 of Paragraph 2 of Article 17 of the Law that the paternity benefit is also attributed to non-taxable income exemptions would be in compliance with Paragraph 1 of Article 29 of the Constitution. Therefore, the petitioner believes that the legal regulation consolidated in the impugned provision of the Law, insofar as it does not establish that the paternity benefit is attributed to non-taxable income exemptions, violates the principle of equality of persons consolidated in Paragraph 1 of Article 29 of the Constitution and the constitutional principle of a state under the rule of law.

II

In the course of the preparation of the case for the Constitutional Court hearing written explanations were received from the Member of the Seimas Rytas Kupčinskas, the representative of the Seimas, the party concerned, wherein it is maintained that the impugned legal regulation consolidated in Item 2 (wordings of 2 July 2002 and 23 December 2008) of Paragraph 1 of Article 17 of the Law, insofar as it did not establish that the paternity benefit is attributed to non-taxable income exemptions, was not in conflict with the Constitution. The position of the representative of the Seimas is substantiated by the following arguments.

According to the representative of the Seimas, by the impugned provision of the Law one was seeking to establish a different taxation regime for two categories of benefits paid from the state budget, the municipal budgets and the budget of the State Social Insurance Fund: 1) benefits that do not compensate for the lost (non-received) income from work (non-taxable income) of natural persons; 2) benefits that compensate for the lost (non-received) income from work of natural persons from the activity established in Paragraph 31 of Article 2 of the Law, i.e. the income received from the person’s activity related with labour relations or relations conforming to the substance of the latter (taxable income).

The paternity benefit provided for in the Law on Sickness and Maternity Social Insurance is, doubtless to say, attributable to the benefits compensating for the loss of income from work (taxable income), however, after the Seimas had adopted this law, the impugned legal regulation consolidated in Item 2 (wordings of 2 July 2002 and 23 December 2008) of Paragraph 1 of Article 17 of the Law was not corrected.

In the opinion of the representative of the party concerned, the impugned provision of the Law should be construed in a systemic manner in conjunction with the provisions of Chapters II and III of the Law on Sickness and Maternity Social Insurance regulating awarding sickness, maternity, maternity (paternity) and paternity benefits and one should not apply the tax exemption for paternity benefits, since, otherwise, one would apply different taxation that is objectively groundless.

Even though the conflicts and ambiguities of the Republic of Lithuania legal acts on taxes are interpreted for the benefit of taxpayers (in this situation—for the benefit of the persons receiving paternity benefits), the applier of the legal act may not violate the main principle of the legal regulation on taxation and of the application thereof, which is the equality of taxpayers, as well as the constitutional principles of equality of persons, justice and a state under the rule of law.

III

In the course of the preparation of the case for the Constitutional Court hearing written explanations were received from Ingrida Šimonytė, Minister of Finance of the Republic of Lithuania.

IV

At the Constitutional Court hearing, the judge E. Spruogis, the representative of the Vilnius Regional Administrative Court, the petitioner, virtually reiterated the arguments set forth in the petition and answered the questions of the justices of the Constitutional Court.

 

The Constitutional Court

holds that:

  1. The Vilnius Regional Administrative Court, the petitioner, requests investigation into whether the provision “Non-taxable income shall include the following: <...> 2) benefits paid from the state and municipal budgets and the budget of the State Social Insurance Fund, with the exception of sickness benefits, maternity and maternity (paternity) benefits” of Paragraph 1 of Article 17 (wordings of 2 July 2002 and 23 December 2008) of the Law on Personal Income Tax insofar as, according to the petitioner, it does not establish that the paternity benefit is attributed to non-taxable income exemptions, was not in conflict with Paragraph 1 of Article 29 of the Constitution and the constitutional principle of a state under the rule of law.

Thus, the petitioner in substance impugns the compliance of Item 2 (wordings of 2 July 2002 and 23 December 2008) of Paragraph 1 of Article 17 of the Law on Personal Income Tax, insofar as it does not establish that the paternity benefit is attributed to non-taxable income exemptions, with the Constitution.

It has been mentioned that the doubts of the petitioner regarding the compliance of the impugned provision of the Law with the Constitution are substantiated by the fact that, under this provision, sickness, maternity, maternity (paternity) benefits are taxable income, whereas the paternity benefit is not attributed to taxable income.

  1. On 2 July 2002, the Seimas adopted the Law on Personal Income Tax which came into force on 1 January 2003. The said law, as it consolidated in Paragraph 1 of Article 1 “Purpose of the Law” thereof, establishes the procedure for imposing income tax on the income of residents of Lithuania.

The impugned Item 2 (wording of 2 July 2002) of Paragraph 1 of Article 17 “Non-taxable Income” of the Law established that non-taxable income shall include benefits paid from the state and municipal budgets and the budget of the State Social Insurance Fund, with the exception of sickness benefits, maternity and maternity (paternity) benefits.

Thus, Item 2 (wording of 2 July 2002) of Paragraph 1 of Article 17 of the Law established a general rule that benefits paid from the state and municipal budgets and the budget of the State Social Insurance Fund are not subject to personal income tax save the exceptions specified in the same item, which were sickness benefits, maternity and maternity (paternity) benefits.

  1. In this context it needs to be mentioned that, under the Republic of Lithuania Law on State Social Insurance (wording of 4 November 2004) (Paragraph 12 of Article 2 “Definitions”, Article 11 “Social Insurance Payments” thereof), from the budget of the State Social Insurance Fund inter alia state social sickness and maternity insurance is funded and payments of such insurance provided for in the Law on Sickness and Maternity Social Insurance are paid.
  2. It needs to be noted that, on 21 December 2000, the Seimas adopted the Law on Sickness and Maternity Social Insurance, which came into force on 1 January 2001. Article 1 “Purpose of the Law” of the said law indicates the persons insured by sickness and maternity social insurance, establishes the entitlement to benefits payable under this insurance scheme, conditions for the granting, calculation and payment of the benefits.

4.1. Article 2 “Sickness and Maternity Social Insurance” (wording of 19 May 2005) of the same law entrenched the purpose of sickness and maternity social insurance—to compensate the insured for a part of the lost income from work inter alia due to maternity, maternity (paternity).

4.2. Under Paragraph 2 (wording of 19 May 2005) of Article 3 “Definitions” of the same law, all income of a person on which compulsory state social insurance contributions for sickness and maternity social insurance were paid or had to be paid, inter alia maternity, maternity (paternity) benefits established by this law and computed for the insured, were attributed to insured income of the insured person.

  1. While summarising the aforesaid legal regulation, it needs to be noted that the persons insured by sickness and maternity social insurance were entitled to receive inter alia maternity, maternity (paternity) benefits paid from the budget of the State Social Insurance Fund, which were subject to personal income tax.

Thus, the legislator opted for such a model for financial support of parents raising and bringing up children in the family, where maternity, maternity (paternity) benefits are paid from the budget of the State Social Insurance Fund and are subject to personal income tax.

  1. On 8 June 2006, the Seimas adopted the Republic of Lithuania Law on Amending and Supplementing Articles 2, 3, 5, 6, 7, 8, 10, 16, 17, 19, 20, 21, 22 of the Law on Sickness and Maternity Social Insurance, Amending the Title of the Third Chapter and Supplementing the Law with Articles 181, 182, 183, which came into force on 1 July 2006 (save the exceptions provided for in the law). After this law had inter alia amended some articles of the Law on Sickness and Maternity Social Insurance (wording of 21 December 2000 with subsequent amendments and supplements), as well as after this law had been supplemented with new articles, the legal regulation was consolidated whereby also paternity benefits were awarded (paid) as a new type of social benefits.

6.1. Article 2 (wording of 8 June 2006) of the Law on Sickness and Maternity Social Insurance provides that sickness and maternity social insurance shall compensate the insured in the cases prescribed by law for a part of the lost income from work under this insurance scheme not only inter alia due to maternity, maternity (paternity), but also due to paternity.

Under this legal regulation, a paternity benefit, like maternity, maternity (paternity) benefits, is awarded in order to compensate persons for a part of the lost income from work correspondingly due to paternity, maternity, maternity (paternity).

6.2. Paragraph 2 (wording of 8 June 2006) of Article 3 of the Law on Sickness and Maternity Social Insurance provides that inter alia maternity, maternity (paternity) benefits, as well as paternity benefits established by this law and computed for the insured, were attributed to insured income of the insured person on which compulsory state social insurance contributions for sickness and maternity social insurance are paid.

6.3. Under Item 2 (wording of 8 June 2006) of Paragraph 3 of Article 5 of the Law on Sickness and Maternity Social Insurance, paternity benefits shall be granted to the insured person during his paternity leave to take care of the child under 1 month.

6.4. It has been mentioned that inter alia state social sickness and maternity insurance payments provided for in the Law on State Social Insurance are paid from the budget of the State Social Insurance Fund.

6.5. To summarise the said legal regulation, under which also paternity benefits are awarded (paid), whose purpose is compensation for a part of the lost income from work due to paternity, it needs to be noted that these benefits, as well as maternity and maternity (paternity) benefits, are paid from the budget of the State Social Insurance Fund.

  1. It needs to be mentioned that, on 8 June 2006, the Seimas also adopted the Republic of Lithuania Law on Amending Articles 170 and 178 of the Labour Code and Supplementing the Code with Article 1791, which came into force on 1 July 2006. After the said law had amended the articles of the Labour Code of the Republic of Lithuania (wording of 4 June 2002 with subsequent amendments and supplements) and supplemented this law with a new article, the legal regulation was entrenched whereby one established a new type of targeted leave—paternity leave. Article 1791 “Paternity Leave” (wordings of 8 June 2006 and 4 December 2007) of the Labour Code provides that men shall be entitled to paternity leave—for the period from the date of the birth of a child until the child is one month old (Paragraph 1); a benefit provided for in the Law on Sickness and Maternity Social Insurance shall be paid for the period of the leave (Paragraph 2).
  2. It needs to be noted that after the said amendments of the Law on Sickness and Maternity Social Insurance and the Labour Code had been made, the Law on Personal Income Tax (wording of 2 July 2002), inter alia the impugned legal regulation consolidated in Item 2 of Paragraph 1 of Article 17 thereof, was not amended.
  3. It has been mentioned that, under the impugned provision of Item 2 (wording of 2 July 2002) of Paragraph 1 of Article 17 of the Law, the benefits paid inter alia from the budget of the State Social Insurance Fund are not subject to tax, save the exceptions established in the said item. Thus, after the Law on Sickness and Maternity Social Insurance had established a new benefit of paternity paid from the budget of the State Social Insurance Fund, where the said benefit had not been provided as a non-taxable income exemption in Item 2 (wording of 2 July 2002) of Paragraph 1 of Article 17 of the Law, it was not attributed to taxable income.

Consequently, paternity benefits, like maternity and maternity (paternity) benefits, are paid from the budget of the State Social Insurance Fund in order to compensate persons for a part of the lost income from work correspondingly due to paternity, maternity, maternity (paternity), however, paternity benefits, differently from maternity and maternity (paternity) benefits, under Item 2 (wording of 2 July 2002) of Paragraph 1 of Article 17 of the Law, were attributed to non-taxable income.

  1. On 23 December 2008, the Seimas adopted the Republic of Lithuania Law on Amending and Supplementing Articles 2, 3, 5, 6, 7, 8, 9, 10, 12, 131, 16, 17, 18, 19, 20, 21, 22, 23, 27, 29, 30 of the Law on Personal Income Tax and on Supplementing the Law with Article 181 which came into force on 30 December 2008. Article 12 of this law amended Article 17 of the Law.

It needs to be noted that the legal regulation established in Item 2 (wording of 23 December 2008) of Paragraph 1 of Article 17 of the Law was analogous to the one established in Item 2 (wording of 2 July 2002) of Paragraph 1 of Article 17 of the Law.

  1. On 9 December 2009, the Seimas adopted the Republic of Lithuania Law on Amending and Supplementing Articles 17, 38 of the Law on Personal Income Tax which came into force on 28 December 2009. Paragraph 1 of Article 1 of this law amended the impugned Item 2 (wording of 23 December 2008) of Paragraph 1 of Article 17 of the Law and established therein that non-taxable income shall include “benefits paid from the state and municipal budgets and the budget of the State Social Insurance Fund, with the exception of sickness benefits, maternity, paternity and maternity (paternity) benefits”.

Thus, the amendment to the Law included the paternity benefit, along with sickness, maternity, maternity (paternity) benefits, to the list of non-taxable income exemptions, i.e. it was attributed to the income subject to personal income tax.

Item 2 (wording of 9 December 2009) of Paragraph 1 of Article 17 of the Law has not been amended and/or supplemented later.

  1. Under Paragraph 4 of Article 69 of the Law on the Constitutional Court, the annulment of the impugned legal act (part thereof) or an amendment of the legal regulation in the said acts (part thereof) shall be grounds to adopt a decision to dismiss the instituted legal proceedings (inter alia the Constitutional Court’s decision of 14 March 2006, the rulings of 28 May 2010, 6 January 2011, 31 January 2011 and 10 December 2012).

However, as it has been held by the Constitutional Court more than once, when a court investigating a case applies to the Constitutional Court after it has doubts concerning the compliance of a law or other legal act applicable in the case with the Constitution (other legal act of higher power), the Constitutional Court has a duty to investigate the request of the court regardless of the fact whether the impugned law or other legal act is valid or not.

  1. While deciding whether Item 2 (wording of 2 July 2002) of Paragraph 1 of Article 17 of the Law, insofar as it did not establish that the paternity benefit (unlike the maternity, maternity (paternity) benefits) is attributed to non-taxable income exemptions, was not in conflict with the Article 29 of the Constitution and the constitutional principle of a state under the rule of law, it needs to be noted that, as mentioned before, from the aspect of the personal income tax, Item 2 (wording of 2 July 2002) of Paragraph 1 of Article 17 of the Law assessed the paternity benefit differently from the maternity and maternity (paternity) benefits.

It has been mentioned that the petitioner substantiates its doubts regarding the compliance of the impugned provision of the Law with the Constitution by the fact that, after establishing that maternity and maternity (paternity) benefits are subject to personal income tax, the paternity benefit should also be attributed to the income subject to this tax, since there is no substantial difference between those benefits.

Thus, while assessing the compliance of the impugned legal regulation with the Constitution in the aspect specified by the petitioner, it is important, first of all, to elucidate whether the legislator was allowed to establish that maternity and maternity (paternity) benefits are subject to personal income tax.

  1. The Constitutional Court, while construing, in its ruling of 27 February 2012, inter alia the imperative entrenched in Paragraph 2 of Article 38 of the Constitution, whereby family, motherhood, fatherhood and childhood shall be under the protection and care of the state, noted that in the course of implementation of the constitutional obligation of the state to create a favourable environment for the family, motherhood, fatherhood and childhood various forms of protection and support thereof may be developed; in this area the legislator, while taking account of various social, demographic and economic factors, inter alia the material and financial opportunities of the state, enjoys broad discretion to choose concrete instruments of protection and support.

The Constitutional Court’s ruling of 27 February 2012 also held the following:

– the state guarantee of care and support for the families that raise and bring up children at home is entrenched in Paragraph 1 of Article 39 of the Constitution; the legislator may establish various forms of implementation thereof, inter alia: provide for rendition of financial support; ensure a possibility for parents to make use of leave for raising and upbringing children at home; give an opportunity not only to the mother, but also to the father to raise and bring up the child at home.

– the Constitution does not establish any grounds, conditions and length of the leave for raising and bringing up children, nor any amounts of financial support to be rendered during such leave—it must be established by the legislator by paying heed to the norms and principles of the Constitution (inter alia the constitutional imperatives of a state under the rule of law, justice, reasonableness, proportionality, protection of acquired rights and legitimate expectations, equality of rights, balance among constitutional values, and social harmony);

– the legislator enjoys the discretion to choose the sources from which the support for families raising and bringing up children at home will be funded: such support inter alia may be funded from the state budget, also, such legal regulation may be established whereby the rendition of the said support would be grounded upon social insurance, or a different model of funding such support may be chosen.

14.1. In the context of the constitutional justice case at issue it needs to be noted that the legislator, while enjoying the exceptional constitutional powers to establish taxes (Item 15 of Article 67 and Paragraph 3 of Article 127 of the Constitution), while taking account of inter alia economic factors, the material and financial possibilities of the state, enjoys discretion also to decide whether to tax various payments, inter alia the financial support rendered to working parents at the time of the leave designated for raising and bringing up children at home. While establishing taxation of payments, the legislator must heed the norms and principles of the Constitution, inter alia the principle of equality of persons consolidated in Article 29 of the Constitution, the constitutional imperatives of a state under the rule of law, justice, reasonableness, proportionality and social harmony.

14.2. It has been held in the Constitutional Court’s acts more than once that such essential elements of the tax as the object of the tax, subjects of tax relations, their rights and duties, sizes (tariffs) of the tax, payment terms and exceptions must be provided for by the law (the Constitutional Court’s rulings of 15 March 2000, 3 June 2002, 17 November 2003, 2 September 2004, 24 January 2006, 26 September 2006 and 29 November 2007).

  1. Thus, under the Constitution, the legislator may establish that the financial support rendered to working parents at the time of the leave designated for raising and bringing up children at home, is subject to tax.
  2. The Constitutional Court has held more than once that the constitutional principle of a state under the rule of law is a universal principle, upon which the entire legal system of Lithuania and the Constitution itself are based, that the content of the aforesaid constitutional principle reveals itself in various provisions of the Constitution, inter alia Article 29 thereof, in which the principle of equality of rights of persons is entrenched. The violation of the constitutional principle of equality of rights of persons is, at the same time, the violation of the constitutional imperatives of justice and harmonious society, thus, it is also the violation of the constitutional principle of a state under the rule of law (the Constitutional Court’s ruling of 6 February 2012).

It needs to be noted that the constitutional principle of equality of persons before the law, which means the innate right of the person to be treated equally with the others and obliges to assess the homogenous facts in the same manner and prohibits to arbitrarily assess the facts, which are the same in essence, in a different manner and it does not permit to discriminate persons and to grant them privileges, would be violated if certain persons or groups thereof were treated in a different manner, even though there are not any differences in their character and extent between these groups that such uneven treatment could be objectively justified (inter alia the Constitutional Court’s rulings of 27 February 2012 and 29 June 2012).

  1. It has been mentioned that the legislator enjoys the exceptional constitutional powers to establish taxes, inter alia also to establish that the financial support rendered to working parents at the time of the leave designated for raising and bringing up children at home is subject to tax; while doing so, the legislator must heed the principle of equality of rights of persons entrenched inter alia in Article 29 of the Constitution.

17.1. It has been mentioned that the legislator opted for such a model for financial support of parents raising and bringing up children in the family, where maternity, maternity (paternity) benefits are paid from the budget of the State Social Insurance Fund and are subject to personal income tax.

It has also been mentioned that after the Law on Sickness and Maternity Social Insurance established, on 8 June 2006, a new type of benefit of social insurance, a paternity benefit, this benefit, under Item 2 (wording of 2 July 2002) of Paragraph 1 of Article 17 of the Law, was not attributed to the income subject to personal income tax. Thus, the persons receiving paternity benefits and the persons receiving maternity and maternity (paternity) benefits, from the aspect of taxing of those benefits, were treated in a different manner.

17.2. It has been held in this ruling that paternity benefits, like maternity, maternity (paternity) benefits, are awarded in order to compensate persons for a part of the lost income from work correspondingly due to paternity, or maternity, maternity (paternity); they are paid from the budget of the State Social Insurance Fund.

Consequently, there are not any differences in their character and extent between the persons receiving maternity, maternity (paternity) benefits and the persons receiving paternity benefits so that such uneven treatment of those persons, where maternity, maternity (paternity) benefits are subject to personal income tax, whereas paternity benefits are not, could be objectively justified.

17.3. Thus, it needs to be held that, after the paternity benefit had been established by law, the legal regulation established in Item 2 (wording of 2 July 2002) of Paragraph 1 of Article 17 of the Law, insofar as both maternity and maternity (paternity) benefits had been attributed, but paternity benefits had not been attributed to taxable income, and the persons receiving paternity benefits and those receiving maternity and maternity (paternity) benefits designated for compensation for the insured for a part of the lost income from work correspondingly due to paternity or maternity, maternity (paternity), were treated in a different manner, violated the formal equality of all persons consolidated in Paragraph 1 of Article 29 of the Constitution and deviated from the constitutional principle of a state under the rule of law.

Taking account of the arguments set forth, one is to draw a conclusion that Item 2 (wording of 2 July 2002) of Paragraph 1 of Article 17 of the Law, insofar as, after the paternity benefit had been established by law, it was not established that it is attributed to non-taxable income exceptions, was in conflict with Paragraph 1 of Article 29 of the Constitution and the constitutional principle of a state under the rule of law.

  1. While deciding whether Item 2 (wording of 23 December 2008) of Paragraph 1 of Article 17 of the Law, insofar as, after the paternity benefit had been established by law, it was not established that it is attributed to non-taxable income exceptions, was not in conflict with Paragraph 1 of Article 29 of the Constitution and the constitutional principle of a state under the rule of law, it needs to be noted that, as mentioned before, the legal regulation established in Item 2 (wording of 23 December 2008) of Paragraph 1 of Article 17 of the Law was analogous to the one established in Item 2 (wording of 2 July 2002) of Paragraph 1 of Article 17 of the Law.

Thus, having held that Item 2 (wording of 2 July 2002) of Paragraph 1 of Article 17 of the Law, insofar as, after the paternity benefit had been established by law, it was not established that it is attributed to non-taxable income exceptions, was in conflict with Paragraph 1 of Article 29 of the Constitution and the constitutional principle of a state under the rule of law, on the grounds of analogous arguments it needs to be held that Item 2 (wording of 23 December 2008) of Paragraph 1 of Article 17 of the Law, insofar as it was not established therein that the paternity benefit is attributed to non-taxable income exceptions, was in conflict with Paragraph 1 of Article 29 of the Constitution and the constitutional principle of a state under the rule of law.

Conforming to Articles 102 and 105 of the Constitution of the Republic of Lithuania and Articles 1, 53, 54, 55, and 56 of the Law on the Constitutional Court of the Republic of Lithuania, the Constitutional Court of the Republic of Lithuania has passed the following

ruling:

  1. To recognise that Item 2 (wording of 2 July 2002; Official Gazette Valstybės žinios, 2002, No. 73-3085) of Paragraph 1 of Article 17 of the Republic of Lithuania Law on Personal Income Tax, insofar as, after the paternity benefit had been established by law, it was not established that it is attributed to non-taxable income exceptions, was in conflict with Paragraph 1 of Article 29 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law.
  2. To recognise that Item 2 (wording of 23 December 2008; Official Gazette Valstybės žinios, 2003, No. 149-6033) of Paragraph 1 of Article 17 of the Republic of Lithuania Law on Personal Income Tax, insofar as it was not established therein that the paternity benefit is attributed to non-taxable income exceptions, was in conflict with Paragraph 1 of Article 29 of the Constitution of the Republic of Lithuania and the constitutional principle of a state under the rule of law.

This ruling of the Constitutional Court is final and not subject to appeal.

The ruling is promulgated in the name of the Republic of Lithuania.

Justices of the Constitutional Court:                         Egidijus Bieliūnas

                                                                                             Toma Birmontienė

                                                                                             Pranas Kuconis

                                                                                             Gediminas Mesonis

                                                                                             Ramutė Ruškytė

                                                                                             Egidijus Šileikis

                                                                                             Algirdas Taminskas

                                                                                             Romualdas Kęstutis Urbaitis

                                                                                             Dainius Žalimas