Dealing with debts to the Tax Agency. What a nightmare!


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Dealing with debts to the Tax Agency

At a certain point in our lives, we may receive a letter from the Tax Office claiming that we have an outstanding debt. The reasons for this can vary, but nobody likes this situation, and it’s common to feel a bit lost. Are the surcharges I have to pay correct? We will help you understand better how the Tax Agency and the Spanish Administration, in general, deal with debts.

What is a debt?

When you have to pay a tax or any surcharge to the administration, they provide you with a voluntary period to make the payment. The length of this period depends on each specific tax form. For instance, the non-resident tax deadline is on the 31st of December, and the council tax (IBI) deadline is set by each town hall, usually around Q2 (the second quarter of the year).

If we fail to pay on time, we incur a debt with the Tax Agency, which becomes the basis for surcharges, fines, and late interest.

How much are the surcharges?

We are no longer in the voluntary period. Now, we enter what is known in Spain as the “Ejecutivo” period, which consists of different phases. The more advanced we are in this period, the more severe the consequences become. Here are the corresponding percentages:

  • 5%: The Tax Agency should send us a notification regarding the outstanding debt. However, if we are quicker than them and we pay between the deadline and their notification, the surcharge will be 5%
  • 10%: Upon receiving the notification, you will only have to pay a 10% surcharge if you settle the outstanding debt within the terms provided by the Tax Agency. This means if the notification is received between 1st and 15th, you can pay until 20th of the next month. Between 16th and last day of the month, you can pay until the 5th of the second month.
  • 20%: Since you didn’t pay within the previous terms, the surcharge has now increased to 20%, and you are also liable for late interest (4.06%). There is no specific time frame given at this point, but the next step for the Tax Agency is to initiate an embargo.

You always can apply for a deferral before they start an embargo.

If you don’t submit a tax on time and you voluntarily, do it later, the surcharge is 1% for each month after the deadline, 15% after one year and 20% when you don’t pay.

Can I be repossessed?

Yes, the Tax Agency can initiate an embargo, but the magnitude of the embargo will be proportional to the debt. Here is the preferential order of assets they can repossess.

  • Cash and bank accounts
  • Credits
  • Salaries
  • Properties
  • Other income
  • Jewellery
  • Cars

You should always receive a notification of the embargo. While it’s not immediate, depending on the case, it can happen relatively quickly. Based on our experience, the most common assets subject to embargo are bank accounts, credits, salaries, and cars. For smaller amounts, properties may only face an embargo to prevent their sale.

Do you need assistance?

We understand that this process can be tedious, and your peace of mind is paramount. Rest assured that you are in safe hands with our team. We are here to guide you in making the right decisions. Our expertise allows us to conduct thorough research into the origin and current state of the debt, enabling us to find the best possible solutions tailored to your needs.

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