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A tax foreclosure results from an amount that was not paid to the State, and which may be related to taxes, social security contributions, fees, fines, refunds and replacements, etc.
In 2019, another item was approved in Parliament on debts that can be collected through tax enforcement, which also extends this possibility to missing payments related to legal proceedings.
Costs, fines, fines and other amounts charged in court proceedings, and other pecuniary sanctions established in administrative decisions, judgments or rulings relating to administrative offenses or fines, may also be charged for tax foreclosure.
This charge is made by the Tax and Customs Authority the area where the execution takes place. If the case takes place in the ordinary courts, it will pass to the competent court.
How does a tax foreclosure begin?
Tax foreclosure begins if there is no payment of a debt to Finance, Social Security or any other State service within the stipulated period.
If you don’t pay, the competent services extract a debt certificate, a document that includes the identification of the debtor, value and origin of the debt and other relevant elements.
The date from which default interest is due and the amount on which it is due must also be indicated.
This certificate is an enforceable title, that is, a legally valid document to claim a debt. Thus begins the tax enforcement process.
2nd stage of the tax execution: the citation
After deciding to collect the debt through the legal means at its disposal, the State, ie the Tax Authority, must inform the debtor that he will be subject to tax foreclosure.
This communication is designated quote and the truth is that from here the process advances very quickly.
Tell the tax law that, in computerized processes, the establishment of tax enforcement is carried out electronically, with the issuance of the enforceable title, with immediate service of process.
This document can be accompanied by a copy of the enforceable title, in order to contain all the necessary information so that the debtor realizes where the debt comes from and what its value is.
It can be done in person, by simple post, by registered letter or by registered letter with acknowledgment of receipt, or by electronic transmission of data.
In the latter case, communication is made through the public service of electronic notifications associated with the unique digital address, the electronic mailbox or in the reserved area of the Finance Portal.
It must be borne in mind that, for the State, sending the citation presupposes that it has been received within a certain time frame. If you didn’t receive it, you’ll have to prove it.
Now that you have been notified of the debt and you know that the State will do everything to collect it, what can you do?
The document informs about the deadlines for opposition to execution and for requesting payment in kind or payment in installments.
If the deadlines pass and you do nothing, an attachment will be ordered on your assets and/or income, including the salary.
Therefore, and unless you want to further complicate a situation that is already very uncomfortable, ignoring it is not a solution.
The 3rd stage of tax foreclosure: the debtor’s reaction
You then have three options for dealing with a tax foreclosure:
- Submit opposition to the tax foreclosure;
- Request payment in installments;
- Request the payment in compliance.
Let’s see, then, what each of these measures consists of and the steps you should take in each of them to resolve this issue.
Opposition to tax enforcement
If you do not agree with the tax foreclosure, you have 20 dayscounted from the summons, to oppose the tax foreclosure.
Although you have the right to object, you must base your position on one of the following grounds:
- Non-existence of tax, fee or contribution in the laws in force on the date of the facts to which the obligation relates;
- Collection is not authorized on the date on which the respective settlement took place;
- Illegitimacy of the person cited by not the debtor who appears in the title or his successor;
- In the case of being the debtor but not having been, during the period to which the debt relates, the owner of the assets that originated it;
- Falsity of the enforceable title, when it may influence the terms of execution;
- Prescription of enforceable debt;
- Failure to notify the settlement of the tax within the expiry period;
- Payment or annulment of the outstanding debt;
- Collection duplication;
- Illegality of the liquidation of the enforceable debt, whenever the law does not provide a judicial means of contesting or appealing against the liquidation act;
If you want to contest, you must file the initial petition in the Finance department or court where the process takes place.
This will have 20 days to forward the case to the competent court of 1st instance, adding the information it deems appropriate.
The tax foreclosure may be revoked by the entity that originated it, thus ending the process.
Anyway, the tax foreclosure is suspended while the opposition takes place and until a decision has been taken as to its validity.
Payment in installments
The debt in question can be paid in monthly and equal installments, with the request being made to the tax enforcement body.
In principle, and if it turns out that the debtor does not have the means to pay in one lump sum, payment in installments is accepted, but with a limit of 36 monthly installmentsnever less than one unit of account (a value updated annually and which in 2023 is €102).
Even so, and in cases “where there is a notorious financial difficulty and foreseeable economic consequences for the debtors”, there may be an exception.
The number of monthly installments can be extended up to 5 yearsif the debt exceeds 500 units of account at the time of authorisation, none of which may be less than 10 account units.
The value of the amount to be divided into installments does not include late payment interestwhich continue to fall due in respect of the debt included in each installment until full payment is made.
The default interest rate applicable to debts to the State and other public entities is, in 2023, 5.997%.
payment in kind
Another way of reacting to a tax foreclosure is to make payment in kind, that is, deliver goods to pay the debt.
This request must be made up to 20 days after receiving the quotation to the minister or executive body on whom the legally competent tax administration depends.
must include the detailed description of the goods given in payment which, with some exceptions, must not exceed the amount of the debt, plus default interest.
The process then proceeds to superior appreciation and evaluation of the assets.
The way in which the goods are to be delivered or the selection of goods accepted are communicated via dispatch.
Thus, and for the tax execution to be extinguished, payment is required (voluntary or coercive), but it is equally essential that the amount collected – through voluntary payment, donation or sale of pledged assets – be sufficient to pay the debt and the accrual.
Article originally published in July 2019. Last updated in February 2023.