Enforcement

What can cause an item to appear on our tax account that we are not aware of?

Taxes payable are declared either by the taxpayer personally or indirectly through their accountant. In a basic scenario, the tax authority initiates enforcement based on the difference between the amount of tax declared in the return and the amount actually paid. Unpaid tax constitutes arrears. Once enforcement proceedings have been initiated, this is referred to as a debt.

If the amount of tax declared and the amount paid are identical, it is likely that another tax-related payment obligation imposed by the tax authority has not been settled (e.g. fines or penalties).

Late payment interest

Late payment interest may also go unnoticed, as it is aggregated each year in September and relates to the settlement of the previous year. The tax authority sends annual notifications regarding arrears or overpayments shown on the tax account, however many taxpayers do not collect or read correspondence from the tax authority and therefore remain unaware of their outstanding liabilities.

Public debts recoverable in the same manner as taxes are also recorded on the tax account.

Following the integration of the duties office into the tax authority in 2007, unpaid duties are also enforced by the tax authority.

A tax account statement may be requested at any customer service office of the tax authority in order to review the recorded data. (It can also be requested online via the Client Gate system.)

In most cases, taxpayers become aware of enforcement proceedings initiated against them when the tax authority debits the amount of the debt directly from their bank account by way of an immediate collection order.

This enforcement measure is usually the tax authority’s first “attempt”. Although the bank levy remains on the account only for a limited period, the authority may repeat this enforcement action at any time until the full amount of the debt has been settled.

If enforcement is initiated against a private individual, their salary or pension may be subject to garnishment (up to 33% of the minimum wage).

This is followed by enforcement against movable assets. The enforcement officer may visit the company’s registered office for the purpose of seizing movable property.

In the case of enforcement against real estate, the land registry will notify the debtor of the registration of an enforcement right, or, in the case of a vehicle, the Ministry of the Interior will notify the debtor of the seizure of the vehicle.

Enforcement can be suspended

The submission of a request for payment relief suspends enforcement until the request is decided, provided it is the first such request. Submitting the request itself should not cause any difficulty, however the completion of the required data form should be entrusted to a professional. The content of the form is crucial. Many people believe that listing only information that creates a favourable impression for the tax authority will result in approval. This approach is ineffective. Submitting payment relief requests requires thorough preparation in order to achieve the best possible outcome.

The request may seek: reduction, deferment, or payment by instalments.

An enforcement objection may also be submitted if a tax authority official has taken an unlawful measure during the enforcement procedure.