Interruption of enforced recovery
An interruption of enforced recovery means that the recovery of a tax by the enforcement authorities is stopped while an appeal on the matter is being processed. You can request the Tax Administration for the interruption when filing a claim for adjustment.
Enforced recovery of tax can be interrupted during an appeal
You can request that the enforcement of a tax is interrupted while your appeal is being processed. You can make the request in your claim for adjustment or in a later appeal. You can also submit a separate request for interruption after you have already made your claim for adjustment or appeal.
Interruption is granted unless it is obvious that your claim for adjustment or appeal has no grounds.
In most cases, it is best to still pay the tax even if you make a claim for adjustment. Do not request an interruption of enforced recovery if
- you want to avoid late-payment interest
- you are going to pay the tax in full despite the appeal
- you are going to pay the tax in full despite the appeal
- you need a certificate of paid taxes. Read more about the certificate of tax debts.
If paying the tax by its due date seems difficult, consider requesting a payment arrangement. Read more about payment arrangements.
If your claim for adjustment is accepted and you have no other tax debt, the tax you paid in excess is automatically refunded to you with interest.
Effects of the interruption
The enforcement of a tax can be interrupted entirely if the tax has not yet been sent to the enforcement authorities. This is known as a prohibition of enforcement. Prohibition means that the tax is not transferred to the enforcement authorities and none of the refunds you have received or payments you have made to the Tax Administration will be used to pay the tax. If you have agreed on a payment arrangement for other taxes, you can keep following the arrangement.
Enforcement can also be interrupted partially. This is known as an injunction of sales and transfer. In these cases, the Tax Administration or other appellate authority has deemed that distraint is necessary to ensure that the tax is collected. Your tax refunds may be used to pay the tax or it may be sent to the enforcement authorities for recovery. In addition, the authorities may seize your property. However, they are not allowed to sell the property before the appeal process has been concluded and the decision on the matter is legally valid.
If the enforcement of your tax is partially prohibited, your tax refunds as well as any payments you have made to the Tax Administration may be used to pay the tax.
Unpaid taxes are subject to late-payment interest during the interruption
Late-payment interest is added to the tax even if its enforced recovery is interrupted, starting from the original due date up until the date of payment. This means that even if you make a claim for adjustment and file an appeal, paying the tax may still be the best option. If the amount of tax is later reduced due to the appeal, the Tax Administration will refund the amount you have paid in excess with interest.
Example 1: A taxpayer notices a calculation error in his tax decision. Because of this error, he has been imposed €400 too much in taxes. The taxpayer files a claim for adjustment but does not request an interruption of enforced recovery. He pays the tax as it is stated on his tax decision. Later, the claim for adjustment is accepted. The Tax Administration refunds the taxpayer the €400 he paid in excess as well as its credit interest.
Example 2: A taxpayer is not satisfied with her income tax decision. The decision states that she must pay €1,000 in back taxes. The taxpayer files a claim for adjustment and requests an interruption of enforced recovery.
The request for interruption is accepted. However, the taxpayer’s claim for adjustment is later rejected on a separate decision. The taxpayer wants to pay the tax before it is sent to the enforcement authorities. Now she must pay the €1,000 as well as late-payment interest that has been added to the tax from its original due date up to the date of payment.
If the taxpayer had wanted to avoid the late-payment interest, she should have paid the back taxes on the original due date and not request an interruption. She could still have filed the claim for adjustment. If the claim had been accepted, she would have been refunded the tax she paid in excess.
Example 3: A company has been imposed VAT, late-payment interest and a punitive tax increase. The company files a claim for adjustment and requests an interruption of enforced recovery.
The interruption is granted. However, the company decides to pay the tax on time in order to avoid any more late-payment interest. The company pays the tax with the reference number for self-assessed taxes (such as VAT and employer’s contributions). Because the enforced recovery of the unpaid tax has been interrupted while the adjustment process is ongoing, the payment is not used on the tax in question. Instead, the payment is used on other self-assessed taxes with a later due date.
The company’s claim for adjustment is rejected. They must now pay the original amount of tax because it could not be paid during the interruption. In addition, the VAT and punitive tax increase have caused more late-payment interest to be added to the total amount of tax during the interruption, and the company must pay that as well.
If you want to pay a tax when an interruption of enforced recovery is in force, contact the Tax Administration’s service number 029 497 026 (Payment transactions, limited service in English) for the necessary instructions for payment. If you use the original reference number to pay the tax, your payment will not be allocated correctly. Instead, it will be refunded to you or it will be used to pay your other unpaid taxes.
What if my request for interruption is rejected?
A request for interruption of enforced recovery is rejected if there are no grounds for adjustment. If the request has been rejected, the decision on the interruption will state so. This means that the unpaid tax may be sent to the enforcement authorities for recovery.
Even if the request is rejected, a filed request for interruption of enforcement results in certain constraints to the activities of the enforcement authorities. The decision on the rejection lists the types of assets that the enforcement authorities are prohibited by law to sell during the appeal process. These include real estate units, shares in housing companies, and shares in mutual real estate companies.