The government's coronavirus compensation was unequally distributed among entrepreneurs and contradicts the Constitution, Chancellor of Justice Ülle Madise said on Wednesday.
In spring 2021, the minister of entrepreneurship and IT developed a compensation scheme for entrepreneurs impacted by the pandemic which was measured in comparison to turnover in 2019.
Under the regulation, businesses registered for VAT between January 1 and December 31, 2019 that only started to provide services at the end of the year were excluded.
One accommodation company, which did not qualify for support, challenged the compensation rules in court and the Supreme Court requested Madise's opinion on the matter.
In a letter sent to the court, she said the regulation contradicts the constitution.
"There is no reasonable and relevant reason why undertakings in substantially similar situations should be treated differently on formal grounds," Madise said.
She pointed out the funding was intended for entrepreneurs who were directly impacted by pandemic measures in place between March and April 2021. Turnover was compared against the total for 2019 to check the validity of claims.
The rules said companies that only started offering services at the end of 2019 were not entitled to compensation, even if they paid VAT for the whole year.
"By being VAT registered for the whole of 2019 alone, businesses were deprived of the subsidy, despite the fact that they actually suffered losses due to the March and April 2021 restrictions, which could be identified," Madise said.
The chancellor believes denying entrepreneurs support due to this rule was a contradiction to the measure's aim and to the "principle of equal treatment".
Editor: Karin Koppel, Helen Wright