Tax deferment and waivers – what deadlines apply?

Waivers of default interest, penalties, interest on the deferred tax amount, and tax deferment itself offer interesting options for mitigating the negative effects of the assessment of additional tax. What are the relevant time limits for applying for waivers and deferments? And what are the time limits applicable to the tax authorities in this respect?

In many past articles in this section of Tax and Legal Update, we described how tax deferments and waivers may mitigate the sanctions associated with the assessment of additional tax and postpone the date on which the tax is due. However, it is always necessary to apply for these remedies in a timely manner, and often pay an administrative fee. However, time limits also apply to the tax administrators who are expected to make relatively quick decisions in this respect.

Waivers of default interest and interest on the deferred tax amount: The taxpayer may seek a waiver of such interest from the tax administrator if there are justifiable reasons. A waiver may be granted from the time the tax liability arises until the time limit for payment of the tax expires and even after the tax has been paid. The time limit for payment of the tax is six years, starting from the date on which the tax is due.

We recommend not delaying and submitting your application as soon as possible. The tax authority is expected to decide on a waiver within three months from the date of receipt of the application. In certain cases, the time limit may be interrupted. However, this deadline is not directly stipulated by law but only by an instruction from the General Financial Directorate. Should the tax authority fail to make a decision within this period, this does not automatically mean that the waiver has been granted.

Waiver of penalties: An application for the waiver of penalties may be filed within three months from the date on which the payment order establishing the obligation to pay the penalty becomes legally enforceable. In practice, this usually means within three months of the date on which the decision on an appeal (if lodged) is received. This time limit does not run for as long as the payment of the tax additionally assessed has been deferred or deferment has been applied for. An application for the waiver of penalties should also be resolved within three months of the receipt of the application by the competent tax authority.

Tax deferment: Deferment may be granted from the due date of the tax at the earliest, even retrospectively. The period of deferment may not be longer than the time limit for the payment of the tax, which is six years (as stated above) starting from the date on which the tax is due. The law sets no time limit for applying. Since in practice deferment is usually granted from the date of filing the application, it is advisable to do so as soon as possible. The tax administrator has 30 days for its decision on an application for deferment starting from the date the application was filed.

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