The solvency of enterprises may be limited for a variety of reasons, including temporary commercial issues as well as changes in the economic sector or beyond. The Tax Administration will review taxpayer cases individually, analyzing and including every influencing factor in the taxpayer’s history, as well as providing more detail for each type of unpaid tax.
When a financial circumstance prevents a taxpayer from paying tax liabilities on time, they may be allowed to enter into an installment payment agreement at any time.
Simultaneously, the taxpayer must prove that they are in a state of financial inability to pay the tax liability in full and demonstrate that, despite the financial circumstances, they are able to fulfill the agreement.
The tax administration cannot enter into an installment payment agreement if the auction procedure for the sale of confiscated assets for that outstanding tax liability has already commenced.
The request must be made in writing and addressed to the director of the regional directorate or the head of a similar unit in the regional directorate where the taxpayer is registered.
The request must be made within 15 days from the date the assessment notice is considered received. The installment payment agreement is made in writing, within 10 calendar days from the date of submission of the request, and is signed by the taxpayer and the director of the regional directorate or the head of a similar unit.
To sign an installment payment agreement, the taxpayer is obliged to immediately pay at least 20% of the value of the liability for which the agreement is being made.
The installment payment agreement is concluded for a period starting from the date of signing until the end of the next calendar year following the moment the agreement is drafted. Upon signing an installment payment agreement for a tax liability, late payment interest (overdue interest) continues to be paid on the tax liability, but late payment penalties are not calculated.
The director of the regional tax directorate, when the taxable person's request is unsubstantiated and unjustified by the circumstances, may refuse the request for an installment payment agreement or may require a bank guarantee before entering into such an agreement.
The guarantee must be provided by one of the banks of which the taxable person requesting the installment payment is a client. In this case, the bank issuing the guarantee becomes the guarantor for the taxable person's liability.
Once the taxable person presents the document of this guarantee, the director of the regional tax directorate may agree to sign the installment payment agreement for the unpaid tax liabilities.
The installment payment agreement may be terminated by the tax administration at the earliest moment the taxable person fails to comply with it regarding the regularity of payments, as well as when they fail to pay other tax liabilities arising during the period covered by the agreement.
In this case, the taxable person is obliged to pay all unpaid tax liabilities covered by this agreement within 30 calendar days from the date of receiving the decision to terminate the agreement. If these liabilities are not paid, the tax administration shall collect the debts in accordance with the legal provisions.
Source: General Directorate of Taxes.