What are enforcement surcharges?
If your business fails to pay the amount due on a tax notice or self-assessment and does not defer or suspend its debt, you will have to pay penalties and surcharges.
Who likes paying tax?
I’ve been a tax adviser for almost 20 years and my answer is: nobody likes paying tax. And that’s the truth.
Human beings are selfish by nature and don’t like having their pockets picked.
La pela es la pela, as the Catalans say.
But now imagine that they don’t just put their hand in their pocket, they put it in twice.
This is even more serious, and is known as the dreaded “recargos de apremio”.
Surcharges are akin to a fine for non-payment of a tax debt.
Let’s take a closer look at what surcharges are.
Uncollected debt
Enforcement period
If your company does not pay a tax debt within the voluntary period available to it and does not postpone, appeal or offset the debt, the so-called “enforcement period” will begin, in which the Tax Authorities will start their collection machinery .
This can occur either if your company fails to pay a tax assessment issued by the Tax Authorities (resulting from a tax audit, IBI, IAE, etc.) orif you do not pay the amount of a self-assessment (for example, if you submit a self-assessment for VAT “with recognition of debt”, but then do not formalise the request for deferral).
Surcharges
In these cases, in addition to the unpaid debt, the tax authorities will require your company to pay surcharges that are higher the longer you take to regularise your situation:
Surcharge.
The surcharge will be 5% if the entire debt is paid before the notification of the enforcement order (notification in accordance with the start of the enforcement period).
Reduced levy.
This surcharge will be 10% if the entire debt is paid together with the surcharge itself once the enforcement order has been notified and within the new payment period granted.
Ordinary levy.
Finally, the surcharge will be 20% if payment is not made within the new period granted.
In this case, the tax authorities will also pay interest for late payment (counted from the end of the voluntary period).
Explained in another way
Voluntary period
When the tax authorities issue a tax assessment, they allow you a few days to make payment.
This period, known as the voluntary period, is determined by the date on which the tax assessment is notified:
- Notifications received between the 1st and 15th of each month: until the 20th of the following month. So, if you receive a notice on 5 September, you can pay up to 20 October.
- Notifications received between the 16th and the last day of each month: until the 5th day of the second month thereafter. If you receive a notice on 20 September, you may pay the tax by 5 November.
Instead of paying, you also have the option of requesting a postponement or, if you do not agree with the assessment, of providing guarantees of payment (such as a guarantee) and appealing against it.
Enforcement period
But if you do nothing and do not pay, the so-called enforcement period will begin , in which the tax authorities will set in motion all their collection machinery to get you to pay what you owe, also increasing the amount owed with surcharges that will be higher the longer you take to regularise your situation:
- Surcharge of 5% if you regularise your situation before receiving the “providencia de apremio ” (notification from the tax authorities demanding payment).
- Surcharge of 10% if you regularise the situation once you have received the writ of enforcement, within the new period that you will be granted.
- Surcharge of 20% plus interest for late payment (calculated from the day following the expiry of the voluntary period) if you do not comply with the orderwithin the new period granted.
New deadline
The new deadline granted in the enforcement order for payment is much shorter than the voluntary period:
- Order received between the 1st and 15th of each month: until the 20th of the same month.
- Order received between the 16th and the last day of the month: until the 5th day of the following month.
Deferment
In any case, even if the enforcement period has already begun, you still have the possibility of requesting a deferral of the debt, provided that the Inland Revenue has not notified you of the agreement to dispose of the seized assets.
Remember that if a taxpayer does not pay voluntarily, the tax authorities can end up seizing the taxpayer’s assets.
Perhaps it is clearer now?
Example of a surcharge
We will give an example of a surcharge to make it even clearer:
Example of Surcharges
On 4 July, the Tax Authorities sent you a notice to pay 10,000 euros for a tax assessment that you had not paid.
Assuming that the deadline for voluntary payment of this settlement was 20 May, see the surcharges that you will have to pay in each of the following cases:
| Settlement payment date | Surcharge% Surcharge | Surcharge(euros) | Int. late payment(euro) |
| 4 June | 5% (1) | 500 | 0 |
| 17 July | 10% (2) | 1.000 | 0 |
| 2 August | 20% | 2.000 | 101 |
On 4 June he had not yet received the order for payment, so that when he paid on that date the surcharge is only 5%.
- The deadline for payment of the order for enforcement is 20 July.
- The interest for late payment applicable in this case is 5% and is calculated on the 74 days elapsed from 21 May to 2 August.
Please note that :
5% surcharge
If you pay the debt before receiving the order for enforcement (in which case, as indicated above, the surcharge is 5%), pay only the outstanding debt, without adding the surcharge.
In this case, once you have paid the entire debt, the tax authorities will send you a letter of payment with the 5% surcharge.
Pay all or nothing
Please also note that the 5%, 10% and 20% surcharges are incompatible with each other and that they are calculated on the entire debt not paid in the voluntary period.
Therefore, if you decide to pay the debt before receiving the order for enforcement (so that only the 5% surcharge is applied), or within the period of the order (so that the 10% surcharge is applied), pay the entire debt.
If you only make a partial payment, this will not reduce the surcharge.
If the debt is in the enforcement period and your company wants to pay earlier in order to be required to pay a lower surcharge, pay the entire debt. If you pay only part of the debt, it will not help you to reduce the tax authorities’ surcharge.
