Tax enforcement

What it means

Tax enforcement is the compulsory recovery of arrears carried out by the tax office itself. It needs neither a court nor a bailiff: its own enforceable decision or a statement of arrears is the enforcement title.

It differs from ordinary civil enforcement in procedure and in ranking. It runs under the Tax Code: it opens with a decision to start enforcement proceedings, the debtor is then served an enforcement demand, and only after that comes the enforcement order.

Enforcement is not the only tool the tax office holds. It can also secure arrears with a lien on the debtor’s property: a lien merely encumbers the asset and blocks its sale without the office knowing, whereas enforcement actually sells the property or takes money from the account.

How it works in practice

The tax administrator picks the method from what it knows about the debtor: attaching the bank account, deductions from wages, sale of movables, securities or real property.

Before that point a company still has room. Permission to pay in instalments or a deferral can be requested while the arrears are not yet in recovery; afterwards talks are harder and the costs of the proceedings are added to the debt.

We check the client’s taxpayer account at least every time a return is filed. Arrears the director does not know about - a forgotten advance or a penalty for late filing - can then be paid, or an application filed, before the office starts to enforce them.

What to watch out for

The first sign is usually a frozen account, and that stops payments unrelated to the tax as well: wages, levies and rent. One set of arrears then breeds others - penalties at the Social Insurance Agency and interest owed to suppliers.

Paying the debt does not release a frozen account at the same moment. The bank holds the money until the tax office tells it enforcement has been stopped or narrowed, so the office should be contacted straight after payment; otherwise the company spends several more days unable to pay even wages that no longer have anything to do with the debt.