The Tax Department will begin sealing the premises of businesses that owe more than €20,000 in tax this summer, making first use of powers granted under a tax reform that came into force on January 1, according to information gathered by Phileleftheros.
The measure — suspension of operations and sealing of premises — is one of several new enforcement tools available to the department under the reformed legal framework. It will apply to both natural and legal persons with outstanding tax debts above the €20,000 threshold, including surcharges.
The debts that trigger the measure cover direct taxes including income tax, special defence contribution and capital gains tax, as well as withheld taxes and contributions and VAT.
The debts must be final — meaning appeal periods have elapsed or administrative and judicial proceedings have concluded — and must not be under objection or before the courts.
Biggest debtors first
The department will launch a debtor compliance campaign targeting the largest debtors first, focusing on active businesses for which there is evidence of ongoing operation, according to Phileleftheros sources.
Officers are currently categorising debtors by the size of their liabilities to determine which businesses to approach first.
The department’s primary aim is not closure but settlement. Once debtors are identified and served with a first notice, the Tax Department will seek to bring them into payment arrangements, with debts repaid in instalments on a fixed schedule. Businesses that enter such arrangements will not have their premises sealed.
The three notices
Sealing will only follow three notices and a minimum of 25 days from the first contact by the department.
The first notice gives the taxpayer 10 days to settle their debts. If there is no response, a second notice is issued, again with a 10-day deadline. If the taxpayer still does not comply, a third notice is served, giving them five days to submit their views.
Should there still be no response, the business premises can be sealed for up to 10 days. The sealing order is lifted once the taxpayer complies, upon issue of a certificate by the Tax Commissioner. Where non-compliance continues, the Commissioner may seal the premises for a further period not exceeding 20 days.
The same process applies to businesses that fail to issue receipts and invoices.