Judgment;Summary — ECLI:EU:C:2024:327
Date: 2024-04-18
Language of the case: Latvian
Court formation: First Chamber
Subject matter: Approximation of laws
Procedure: Reference for a preliminary ruling
Origin: Latvia

Translation C-22/23 – 1 
Case C-22/23 
Request for a preliminary ruling 
Date lodged: 
19 January 2023 
Referring court: 
Administratīvā rajona tiesa (Latvia) 
Date of the decision to refer: 
18 January 2023 
Applicant: 
SIA Citadeles nekustamie īpašumi 
Defendant: 
Valsts ieņēmumu dienests 
  
ADMINISTRATĪVĀ RAJONA TIESA (DISTRICT ADMINISTRATIVE 
COURT) 
[…] O R D E R 
Riga, 18 January 2023 
The District Administrative Court […] 
[…] [composition of the court] […] has examined in open court the 
administrative-law proceedings brought by SIA Citadeles nekustamie īpašumi 
seeking annulment of the decision […] of the Valsts ieņēmumu dienests (State 
Tax Authority) […]. 
Subject matter of the main proceedings and relevant facts 
1 The applicant, SIA Citadeles nekustamie īpašumi, is a commercial company 
registered in the Republic of Latvia whose business includes, in particular, the 
buying and selling of real estate for its own account and the letting and 
management of self-owned real estate. 
EN 
REQUEST FOR A PRELIMINARY RULING OF 18. 1. 2023 – CASE C-22/23 
 
2  
2 Between 14 September 2021 and 4 February 2022, the Nelegāli iegūtu līdzekļu 
legalizācijas novēršanas pārvalde (Anti-Money Laundering Office; ‘the Office’) 
of the State Tax Authority carried out an inspection of the applicant in connection 
with the prevention of the laundering of the proceeds of crime, on the basis of 
which an inspection report was drawn up on 14 September 2021 […] (a further 
report followed on 4 February 2022). 
According to the findings set out in the inspection report, the applicant let a 
property owned by it […] by concluding leases on that property with lessees of 
premises, including legal persons and legal arrangements. Furthermore, as a result 
of the inspection, it is apparent that, based on the information available in the 
commercial register, some of the lessees of those premises registered their 
respective registered offices at the leased premises. 
During the inspection, the Office […] found that the applicant: 
(1) had not registered with the State Tax Authority the type of activity classified 
as ‘Provider of services relating to the establishment and operation of legal 
arrangements or legal persons’; 
(2) had not appointed a person responsible for compliance with the Noziedzīgi 
iegūtu līdzekļu legalizācijas un terorisma un proliferācijas finansēšanas 
novēršanas likums (Law on the prevention of money laundering and of terrorist 
and proliferation financing; ‘the Law on prevention’); 
(3) had not conducted an assessment of the risks of proliferation financing for 
its business or kept a documentary record of such an assessment; 
(4) had not established an internal control system; 
(5) had not submitted documents on customer due diligence and transaction 
monitoring measures. 
3 In the light of the Office’s above findings […], on 28 March 2022 the Office 
imposed on the applicant, by decision […], a fine of EUR 1 000 for infringement 
of the provisions of the Law on prevention and the Starptautisko un Latvijas 
Republikas nacionālo sankciju likums (Law on national and international 
sanctions; ‘the Law on sanctions’). The applicant challenged that decision before 
the Director-General of the State Tax Authority, who upheld the decision […] [of 
the Office] by a further decision of 15 June 2022 […] (‘the Decision’). 
The Decision is based on the State Tax Authority’s view that the applicant’s 
business, consisting of the buying and selling of real estate for its own account 
and the letting and management of self-owned real estate, should be regarded as a 
supply of services relating to the establishment and operation of legal 
arrangements or legal persons (the supply, to legal arrangements or legal persons, 
of a registered office, an address for receiving mail or a physical address for 
carrying out transactions, and the provision of other similar services), since, under 
CITADELES NEKUSTAMIE ĪPAŠUMI 
 
3 
the leases entered into, the applicant permitted the lessees to register the leased 
premises as their registered office. Thus, in the opinion of the State Tax Authority, 
the applicant should be considered to be an obliged entity for the purposes of the 
Law on prevention. 1 
4 On 15 July 2022, the applicant brought an action for annulment of the Decision 
before the District Administrative Court. 
In support of its action, the applicant submits that it is not an obliged entity for the 
purposes of the Law on prevention and, therefore, it is not required to comply with 
the provisions of that law or with the provisions of the Law on […] sanctions […], 
which the State Tax Authority found to have been infringed. 
The applicant states that, in the context of its business, it engages in the letting and 
management of self-owned real estate; it does not engage in the provision of 
services intended to enable third parties to pursue a business. In the leases entered 
into, the lessees’ entitlement to register their registered office is simply one of a 
number of rights provided for under the lease, and the agreed rent does not depend 
on whether or not the lessee has registered its registered office. The applicant did 
not undertake vis-à-vis the lessees to provide other services beyond the letting of 
the premises and it does not provide such other services to them. 
The applicant maintains that, when transposing Directive (EU) 2015/849 of the 
European Parliament and of the Council of 20 May 2015 on the prevention of the 
use of the financial system for the purposes of money laundering or terrorist 
financing, amending Regulation (EU) No 648/2012 of the European Parliament 
and of the Council, and repealing Directive 2005/60/EC of the European 
Parliament and of the Council and Commission Directive 2006/70/EC […] (‘the 
Directive’), the legislature did not intend to designate as obliged entities for the 
purposes of the Law on prevention all lessors of premises, but only lessors whose 
operations are based on a service: the provision of a registered office to another 
person, even though the undertaking (the lessee) is not actually located there. Put 
another way, the service involves making it possible for an undertaking to be 
reachable at a given address, even though that undertaking does not carry on its 
business at that address. Even if the lessee registers as its registered office the 
leased premises which are intended to be used for the pursuit of its business, that 
does not alter the type of business which the applicant, as lessor, carries on (the 
letting of property), because only the lessee itself, by carrying on its business at 
the leased premises, can make those premises the place of establishment of its 
business and decide to inform third parties thereof – and also to register the 
premises as its registered office. 
 
1 Vadlīnijas Valsts ieņēmumu dienesta uzraugāmajiem Noziedzīgi iegūtu līdzekļu legalizācijas un 
terorisma un proliferācijas finansēšanas novēršanas likuma subjektiem (Guidelines for obliged 
entities for the purposes of the [Law on prevention] subject to supervision by the State Tax 
Authority) (https://www.vid.gov.lv/lv/vadlinijas-1): subparagraph 2.4: – Providers of services 
relating to the establishment and operation of legal arrangements or legal persons 
(https://www.vid.gov.lv/lv/media/3230/download?attachment). 
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5 In its submissions before this court, the State Tax Authority argues that the 
possibility for a person to register its registered office at the applicant’s property 
and to conduct a business there makes the applicant an obliged entity for the 
purposes of the Law on prevention. 
Legal framework 
European Union law 
6 The first subparagraph of Article 5(4) of the Treaty on European Union provides 
as follows: ‘4. Under the principle of proportionality, the content and form of 
Union action shall not exceed what is necessary to achieve the objectives of the 
Treaties.’ 
7 Directive 2015/849 
[7.1] Recital 8 of Directive 2015/849: 
‘(8) As concerns the obliged entities which are subject to this Directive, estate 
agents could be understood to include letting agents, where applicable.’ 
[7.2] Point (3)(a), (b)(i), (c) and (d) of Article 2(1) provides as follows: 
‘1. This Directive shall apply to the following obliged entities: 
… 
(3) the following natural or legal persons acting in the exercise of their 
professional activities: 
(a) auditors, external accountants and tax advisers; 
(b) notaries and other independent legal professionals, where they participate, 
whether by acting on behalf of and for their client in any financial or real estate 
transaction, or by assisting in the planning or carrying out of transactions for their 
client concerning the: 
(i) buying and selling of real property or business entities; 
… 
(c) … company service providers not already covered under points (a) or (b); 
(d) estate agents.’ 
[7.3] Article 2(7) of Directive 2015/849 provides as follows: 
‘7. In assessing the risk of money laundering or terrorist financing for the 
purposes of this Article, Member States shall pay particular attention to any 
CITADELES NEKUSTAMIE ĪPAŠUMI 
 
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financial activity which is considered to be particularly likely, by its nature, to be 
used or abused for the purposes of money laundering or terrorist financing.’ 
[7.4] Article 3(7)(c) of Directive 2015/849 provides as follows: 
‘For the purposes of this Directive, the following definitions apply: 
… 
(7) “… company service provider” means any person that, by way of its 
business, provides any of the following services to third parties: 
… 
(c) providing a registered office, business address, correspondence or 
administrative address and other related services for a company, a partnership or 
any other legal person or arrangement;’ 
Latvian law 
8 The Law on prevention transposes Directive 2015/849. 2 
[8.1] Article 1(10) of the Law on prevention provides as follows: 
‘The following terms are used in this Law: 
… 
(10) providers of services relating to the establishment and operation of legal 
arrangements or legal persons: a natural or legal person who has a business 
relationship with the customer and provides the customer with the following 
services: 
… 
(c) the provision, to legal arrangements or legal persons, of a registered office, 
an address for receiving mail or a physical address for carrying out transactions, 
and the provision of other similar services;’ 
[8.2] Points (4)(a), (5) and (6) of Article 3(1) of the Law on prevention provide as 
follows: 
‘1. Persons who carry on the following business or professional activities shall 
be regarded as obliged entities for the purposes of this Law: 
… 
 
2 […] 
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(4) notaries, lawyers and other independent providers of legal services, where, 
acting on behalf of and for their client, they assist in the planning or carrying out 
of transactions, participate in such transactions or carry out other professional 
activities relating to transactions for their client concerning the: 
(a) buying and selling of real estate or company shares; 
… 
(5) providers of services relating to the establishment and operation of legal 
arrangements or legal persons; 
(6) intermediaries in real estate transactions;’ 
9 Komerclikums (Commercial Code). 
[9.1] Version of the Commercial Code in force until 31 July 2021. 
[9.1.1] Article 23(1) and (3) of the Commercial Code provides as follows: 
‘1. The opening of a branch, upon application by the trader, shall be entered in 
the commercial register. 
… 
3. The application shall be accompanied by evidence that the owner of the 
property (building or part thereof privately owned by a co-owner) consents to the 
registration of the registered office of the branch at the building or in the part 
thereof concerned. …’ 
[9.1.2] Article 25(2) and (3), point (5), of the Commercial Code provides as 
follows: 
‘… 
2. The opening of a branch of a foreign trader shall be entered in the 
commercial register, upon application by that trader. 
… 
3. The following documents shall be attached to the application for entry of a 
branch of a foreign trader in the commercial register: 
… 
(5) Evidence that the owner of the property (building or part thereof privately 
owned by a co-owner) consents to the registration of the registered office of the 
branch of the foreign trader at the building or in the part thereof concerned. …’ 
CITADELES NEKUSTAMIE ĪPAŠUMI 
 
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[9.1.3] Article 75(1) and (4) of the Commercial Code provides as follows: 
‘1. Any natural person who carries on a business shall be required to apply for 
entry as a sole trader in the commercial register …. 
… 
4. The application shall be accompanied by evidence that the owner of the 
property (building or part thereof privately owned by a co-owner) consents to the 
registration of the business address of the sole trader at the building or in the part 
thereof concerned. …’ 
[9.1.4] Article 78(1), (2) and (21) of the Commercial Code provides as follows: 
‘1. The formation of a company shall be entered in the commercial register. 
2. Registered office shall mean the postal address at which the management of 
the company is located (head office). Any change of registered office shall be 
entered in the commercial register. 
21. The application shall be accompanied by evidence that the owner of the 
property (building or part thereof privately owned by a co-owner) consents to the 
registration of the registered office of the company at the building or in the part 
thereof concerned. …’ 
[9.1.5] Article 139 of the Commercial Code provides as follows: 
‘1. The registered office shall be the address at which the management of the 
company is located (head office). In the event of a change of registered office, the 
directors shall apply to the commercial register for the corresponding entry to be 
made. 
2. The application shall be accompanied by evidence that the owner of the 
property (building or part thereof privately owned by a co-owner) consents to the 
registration of the registered office of the company at the building or in the part 
thereof concerned. …’ 
[9.2] Current version of the Commercial Code, which came into force on 
1 August 2021. 
[9.2.1] Article 23(1) and (3) of the Commercial Code: 
‘1. The opening of a branch, upon application by the trader, shall be entered in 
the commercial register. 
… 
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3. The application shall state the registered office of the branch … and shall 
confirm that the branch is reachable at the indicated registered office and has a 
legal basis for its location there.’ 
[9.2.2] Article 25(2) and (31) of the Commercial Code provides as follows: 
‘2. The opening of a branch of a foreign trader shall be entered in the 
commercial register, upon application by that trader. 
… 
31. The application shall state the registered office of the branch of the foreign 
trader … and shall confirm that the branch is reachable at the indicated registered 
office and has a legal basis for its location there.’ 
[9.2.3] Article 75(1) and (4) of the Commercial Code provides as follows: 
‘1. Any natural person who carries on a business shall be required to apply for 
entry as a sole trader in the commercial register …. 
… 
4. The application shall state the business address of the sole trader … and 
shall confirm that he or she is reachable at the indicated address and has a legal 
basis for his or her location there.’ 
[9.2.4] Article 78(1), (2) and (21) of the Commercial Code provides as follows: 
‘1. The formation of a company shall be entered in the commercial register. 
2. Registered office shall mean the address which the company has entered in 
the commercial register. 
21. The application shall state the registered office … and shall confirm that the 
company is reachable at the indicated registered office and has a legal basis for its 
location there.’ 
[9.2.5] Article 139 of the Commercial Code provides as follows: 
‘1. The registered office shall be the address which the company has entered in 
the commercial register. In the event of a change of registered office, the directors 
shall apply to the commercial register for the corresponding entry to be made. 
2. In the application, the directors shall state the registered office of the 
company … and shall confirm that the company is reachable at the indicated 
registered office and has a legal basis for its location there.’ 
Reasons why the referring court is unsure about the application and 
interpretation of European Union law 
CITADELES NEKUSTAMIE ĪPAŠUMI 
 
9 
10 The term ‘provider of services relating to the establishment and operation of legal 
arrangements or legal persons’ appearing in domestic legislation (the Law on 
prevention, which aims to prevent money laundering and terrorist and 
proliferation financing) was introduced in accordance with Article 3(7) of 
Directive 2015/849, which defines ‘company service provider’. 
Under Article 3(7)(c) of Directive 2015/849, ‘company service provider’ means 
any person that, by way of its business, provides third parties with a registered 
office, business address, correspondence or administrative address and other 
related services for a company, a partnership or any other legal person or 
arrangement. 
Neither that provision nor the other provisions of Directive 2015/849 specify 
whether the service provided to companies consisting of the provision of a 
registered office, business address, correspondence or administrative address and 
other related services must be interpreted as referring to a discrete service which 
does not arise from a transaction involving the letting of self-owned real estate 
and is not linked to such a transaction. 
11 Under domestic legislation, in order for a legal person or legal arrangement to be 
entered in the commercial register, the applicant must inform the competent 
authority of the registered office, which is usually […] also the place where the 
business is carried on. Until 31 July 2021, when stating the registered office of the 
legal person or legal arrangement to be entered in the commercial register, it was 
necessary at the same time to produce evidence that the owner of the property 
consented to the registration of the registered office at that particular property. 
However, since 1 August 2021, such consent is no longer necessary, as it is 
sufficient to indicate the legal basis for the location of the legal person or legal 
arrangement at the indicated address. 
As is apparent from the documents submitted to the court by the applicant, the 
leases which the State Tax Authority examined were entered into by the applicant 
and the lessees before 1 August 2021, that is, when the statutory obligation was in 
force under which the person to be entered in the commercial register had to 
obtain authorisation from the owner of the property in order to be able to register 
its registered office at that particular property. 
Thus, the fact of the matter is that it is possible to take the view that the 
authorisation relating to the leased property appearing in the leases entered into by 
the applicant and the lessees is merely an authorisation granted to ensure 
compliance with the Commercial Code, not a discrete service provided to 
companies. 
Furthermore, an assessment of the legislation in force after 1 August 2021 shows 
that the statement of the registered office for the purposes of entering a legal 
person or a legal arrangement in the commercial register is unconnected to the 
owner of the property, because it is not necessary to produce a document 
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evidencing the owner’s express consent, which, in turn, may give rise to a 
situation in which the owner of the property is completely unaware of the entry of 
the third party’s registered office in the register when that entry takes place. 
Therefore, this court is of the view that the existence of such circumstances cannot 
make the lessor of the property a company service provider within the meaning of 
Article 3(7) of Directive 2015/849. 
12 At the same time, it must be borne in mind that, under the Commercial Code, the 
registered office is the address at which the legal person or legal arrangement is 
reachable. The foregoing, together with the fact that the legal person or legal 
arrangement is actually located at the registered office and carries on a business 
there, since that particular property is let for that purpose, distinguishes this case 
from cases in which a registered office is provided as a discrete service in order to 
obtain a ‘letterbox address’ or a separate physical address for the conclusion of 
specific transactions, at which the legal person or legal arrangement does not in 
fact carry on a business on a day-to-day basis. 
13 In this court’s view, the proposition that the concept of ‘company service 
provider’ defined in Article 3(7) of Directive 2015/849 does not include the 
letting of self-owned real estate is supported by recital 8 and point (3)(a), (b)(i), 
(c) and (d) of Article 2(1) of Directive 2015/849, since, as regards transactions 
involving real estate, that directive applies both to notaries and other independent 
legal professionals and to estate agents. By contrast, company service providers 
differ from the persons mentioned above in that they are separate entities for the 
purposes of that directive with no links to real estate transactions. 
14 At the same time, account must be taken of Article 2(7) of Directive 2015/849, 
which provides that, in assessing the risk of money laundering or terrorist 
financing for the purposes of that article, Member States are to pay particular 
attention to any financial activity which is considered to be particularly likely, by 
its nature, to be used or abused for the purposes of money laundering or terrorist 
financing. 
It can therefore be concluded that the legitimate aim of preventing money 
laundering or terrorist financing entitles Member States to scrutinise a broad range 
of activities carried out by individuals which may seek to achieve an unlawful 
objective. Therefore, in the view of this court, there may be situations in which a 
lessor who lets self-owned real estate may be involved, by entering into leases, in 
money laundering or terrorist financing. In order to reduce the likelihood of such 
situations arising, a lessor should also be regarded as a company service provider 
where it lets self-owned real estate to a lessee and the lessee in turn registers its 
registered office at that property and carries on a business there. 
15 The question also arises as to whether all persons who let self-owned real estate 
can be regarded as company service providers within the meaning of Article 3(7) 
of Directive 2015/849. Put another way, the question is whether, where a natural 
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person lets a property, that person should be subject to the same requirements as a 
legal person or legal arrangement, regardless of the factual circumstances, for 
example, the number of properties which the natural person owns and lets, 
whether the letting of the property is unrelated to the business, or other 
circumstances. 
16 In the light of the foregoing, and in order to clarify how the rules of EU law on the 
prevention of money laundering and terrorist and proliferation financing are to be 
applied, the court considers it necessary to refer the matter to the Court of Justice 
of the European Union. 
[…] 
Operative part 
Pursuant to Article 267 of the Treaty on the Functioning of the European Union 
[…], the District Administrative Court 
hereby decides 
1. To refer the following questions to the Court of Justice of the European 
Union for a preliminary ruling: 
1.1. Is the concept of ‘company service provider’ set out in Article [3](7)(c) of 
Directive 2015/849 to be interpreted as referring to a discrete service which does 
not arise from a transaction involving the letting of self-owned real estate and is 
not linked to such a transaction, irrespective of whether or not the [lessor] has 
consented to the lessee registering its registered office at the leased property and 
carrying out transactions there? 
1.2. If the answer to the first question is in the negative, is the concept of 
‘company service provider’ set out in Article [3](7)(c) of Directive 2015/849 to be 
interpreted as meaning that, where a natural person lets a property, that person 
should be subject to the same requirements as a legal person or legal arrangement, 
regardless of the factual circumstances, for example, the number of properties 
which the natural person owns and lets, whether the letting of the property is 
unrelated to the business, or other circumstances? 
2. To stay the proceedings pending a ruling from the Court of Justice of the 
European Union. 
[…] [procedural references, signature of the judge] […]