How to react to seizures by the tax office?

There is a word that anyone with a business or company is terrified of Seizures (or Embargo in Spanish), and the Spanish tax agency AEAT or Hacienda is an insatiable monster. We do not say so, says the biggest debtor in Spain. Asesoria Orihuela Costa will advise you on how to avoid problems with the tax authorities and show you how to deal with seizures by the tax office.

The collection of tax debts is a power attributed to the tax authorities, and they do not fail. If you have a debt, sooner or later, you will pay your debt.

Financial institutions (banks and savings banks) are authorised to perform the cashier’s service in administrations and delegations.

Although they are not responsible for the management and are not considered collection bodies, they do act as collaborating entities when it comes to collecting taxes.

The collection of these taxes can be carried out in the voluntary period or the enforced collection period. However, when payments are not made within these periods, the Administration may seize the taxpayer’s assets until the debt is fully paid.

Payment of taxes in the voluntary period

In Spain, the seizures by the tax office are not paid by bank transfer but with a tax receipt that can be paid online or at a bank branch.  If you are a natural person, you can receive your tax bill by post, or if you are a company, you can receive it by notification.

Having a digital certificate makes it much easier for you to pay a debt to the tax authorities. 

We all have a deadline for making our tax payments to the Inland Revenue.

These payments are made on your own initiative. The settlements made by the Administration must be paid in the voluntary period.

When the taxpayer does not pay the debt voluntarily, the collection begins in the enforcement period.

The collection is carried out through the enforcement procedure using the notification of an enforcement order, which is the act of the Administration that orders enforcement against the debtor’s assets.

Surcharges for the enforcement period

There are three types of surcharges during this period:

– Executive:

is a surcharge of 5% and is applied when the total amount of the debt not paid in the voluntary period is paid in full before the notification of the enforcement order.

– Reduced penalty:

this 10% surcharge is applied when the total amount of the debt is not paid in the voluntary period, and the surcharge itself is paid before the deadline for payment of debts in the enforcement period notified using an order for enforcement.

– Ordinary penalty :

a surcharge of 20% is applied when the two aforementioned surcharges do not apply, i.e. when payment is made after the deadline for payment in the enforcement period has expired.

These surcharges are incompatible with each other and are calculated on the total amount of the debt not paid in the voluntary period. The only surcharge compatible with interest on late payments is the ordinary surcharge (20%).

The procedure for seizures by the tax office of the debtor’s assets 

If the taxpayer does not pay the tax debt by the deadline stipulated for payment, a seizure order is issued for the taxpayer’s assets. In this way, the amounts owed, the levy surcharge, interest and, if applicable, the costs of the levy procedure are collected. 

The tax seizure process determines the assets that cannot be seized, the assets that can be seized and the order in which the seizures are carried out. According to the regulations, the seizure of assets is carried out in the following order:

– Money in cash or accounts opened in credit institutions.

If an account is held by more than one person, only the part of the account belonging to the debtor is seized.

– Claims, bills of exchange,

securities and rights realisable on the spot or in the short term (unless the debtor is the debtor).

or short-term (less than six months). They can be sold regardless of the date of final repayment. The sale is carried out through official secondary markets under the best possible conditions and must comprise several securities covering the total amount of the debt.

– Wages, salaries and pensions.

These items are intended to finance the debtor’s basic needs. In accordance with article 607 of the Civil Procedure Act, wages, salaries, wages, wages, pension, remuneration or its equivalent, which do not exceed the Minimum Interprofessional Wage (SMI), are unattachable.

– Property in Spain

To seize property, it must be owned by the debtor. If a property owned by the debtor, according to a public deed, is not registered in his name in the Register because it has not been presented, the Tax Authorities can request its registration and then seize it. According to article 140 of the Mortgage Regulation, the seizure is initially suspended, and a note of the suspension is taken and, later, the person who considers himself to be the owner is required to register his ownership and, in the event of refusal, a judicial request can be made.

– Interest and rents.

If the seized assets are income from commercial, industrial and agricultural enterprises or activities, a receiver or administrator may be appointed. When the income to be seized corresponds to the exploitation rights of a work protected by the Industrial Property Law, it is considered to be wages.

– Commercial or industrial establishments.

A diligence is drawn up, listing all the goods and rights existing in each seized establishment, as well as the tools that are seized. In addition, a preventive annotation of seizure must be made in the Register of Movable Goods.

– Jewellery, precious metals and antiques.

– Movable property.

Article 92.4 of the Invoicing Regulation, regarding the seizure of cars, lorries, motorbikes, boats, aircraft or other vehicles, states that the debtor is notified of the seizure so that he/she can make it available to the collection bodies within five days, together with his/her documentation and keys. If the debtor fails to do so, the authorities are ordered to seize, deposit and seal these assets.

– Long-term receivables (over six months).

The seizure is carried out through a seizure order that must identify the securities known to the Administration and comprises several securities covering the total amount of the debt.

Which assets are unseizable

Furniture and household goods, as well as the debtor’s and his family’s clothes, which cannot be considered excessive, are not subject to seizure. In general, assets such as foodstuffs, fuel and others, in the court’s opinion, are essential for the debtor and his dependants to be able to provide for their subsistence with dignity.

Likewise, books and instruments necessary for the exercise of the profession, art or trade in which the debtor is engaged are unattachable when their value is not in proportion to the amount of the debt claimed.

Other assets that cannot be seized are sacred goods and those dedicated to the worship of legally registered religions, amounts expressly declared unseizable by Law and assets declared unseizable by Treaties ratified by Spain.

How to act when faced with seizures by the Tax Authorities
The first thing to do when you are seized is to request the administrative file. Here you can check whether the procedure has been followed legally and whether the seizure is justified.

If the procedure has not been followed, you can challenge the seizure by filing the appropriate appeals.

If you have exhausted all administrative remedies, you can file a contentious-administrative appeal in the courts.