Everything you need to know about tax debt in Spain
What is the debt recovery process, what is it for, and what are the deadlines involved? Get the answers you need in our fact-packed guide.
4 min read
Ever wondered what will happen if you don’t pay your taxes in Spain? The tax debt recovery process is an administrative procedure that the Spanish Tax Agency uses to collect unpaid tax debt. But what exactly does this process look like, and what are the deadlines and charges involved? Find the answers and more here.
What is the tax debt recovery process and what is it for?
Agencia Estatal de Administración Tributaria (AEAT), the Spanish Tax Agency, takes tax bills seriously—and is more than willing to chase overdue tax payments. Taxpayers who don’t pay their outstanding tax bill or self-assessment (the taxpayer’s calculation of the taxes they owe) during the voluntary payment period will enter into what’s called an “enforcement period.” This kicks off a debt recovery process, which is designed to settle the tax debt as soon as possible.The entire process is carried out by the Spanish Tax Agency. First, they’ll send a debt recovery notice to claim payment of the outstanding taxes. In order for this document to be valid, it needs to contain the name and surname of the taxpayer as it appears on their Spanish national ID card, along with their address and tax number. It also needs to include the debt amount, information on the unpaid tax payments, the settlement procedure as established by tax law, and the corresponding late-payment interest and fees.
Phases of the tax debt recovery process and deadlines
The tax debt collection process occurs in three phases: the initial phase, the recovery phase, and the end phase. However, it’s worth noting that the earlier the debtor pays their tax debt, the shorter the process will be. Here’s a breakdown of what to expect in each phase:
Initial phase. In this first phase, the debtor receives a notice from the Spanish Tax Agency. This sets out the payment deadlines and the corresponding charges. If the debt recovery notice is received between the 1st and 15th of the month, the taxpayer will have until the 20th of that month to settle their tax debt. If they receive it after the 15th, they will have until the 5th of the following month. Those who wish to avoid the late-payment interest will need to pay off the full debt amount as soon as possible, as well as a 10% late-payment fee on the outstanding tax bill. If the deadline given in the debt notice passes and the amount still hasn't been paid, the late-payment fee will increase to 20%. Additionally, the taxpayer will need to pay interest on the debt that has accrued since the beginning of the enforcement period.
Recovery phase. If the deadline from the debt notice has passed and the debt remains unpaid, the Spanish Tax Agency can enforce the guarantees that the debtor gave, or freeze assets (including immovable assets), suspend the taxpayer’s rights, and—if these measures fail—collect the debt via a public auction, direct sale, or tender. This is when the so-called “enforcement period” of tax debt collection begins. At this point, all interest payments and late fees have to be paid, as well as the costs incurred by the Spanish Tax Agency as a result of the recovery process. Note that if the taxpayer sends a delay request for their tax debt, the Spanish Tax Agency can’t begin the recovery process until they have analyzed and responded to the request.
End phase. The debt recovery process can end in one of three ways:
- The outstanding debt is paid off. - If the amount is deemed to be either fully or partially irredeemable, the process will be considered complete. However, this doesn’t mean that the Spanish Tax Agency will forget about the debt. If the taxpayer returns to solvency during the prescribed period, the process recommences. - The debt is written off through an agreement between the taxpayer and the Spanish Tax Agency.
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