Introduction: In a previous article of ours we have already referred to the speed with which the State (K.E.V.EIS. and the local Tax Offices) now proceeds to ascertain its claims against debtors and to expedite enforcement proceedings (especially bank‐account seizures and garnishments against third parties) against those who owe to it. In the present article we will focus on certain basic procedural and litigation conditions which must be met in order for a taxpayer to secure the suspension of an expedited enforcement action by the State in tax disputes (mutatis mutandis these also apply in customs disputes).
I. Statutory suspension of payment of the owed amount
- According to Article 72, paragraphs 3, 4 and 8 of the new Tax Procedure Code (Law 5104/2024): "...3. Upon filing the administrative (pre‐litigation) appeal, the payment of fifty percent (50%) of the disputed amount is suspended by law, provided that the remaining fifty percent (50%) has been paid. [...] 4. The obliged taxpayer has the right to submit, concurrently with the administrative appeal, a request for suspension of the payment foreseen in paragraph 3. The Dispute Resolution Directorate may suspend that payment until its decision is issued: (a) if the payment would entail irreparable harm to the obliged taxpayer; (b) if it is likely that the administrative appeal will be successful. [...] 8. Against the decision of the Dispute Resolution Directorate, or its tacit dismissal of the administrative appeal by lapse of the deadline for issuing its decision, the obliged taxpayer may file an appeal before the competent administrative court, in accordance with the Code of Administrative Procedure. The suspension, due to the filing of the appeal, shall apply mutatis mutandis under paragraph 3...".
- When the tax authority issues a definitive tax assessment, fine, etc., and by virtue thereof proceeds with enforcement (e.g. seizing bank accounts), the taxpayer‐debtor may initiate two parallel proceedings: a) First, he has the right to challenge the legally enforceable title of the enforcement, i.e. the act of the tax authority under which the tax / fine etc. was imposed. In that context, he files before the Dispute Resolution Directorate (D.R.D.), under the above provision and within thirty (30) days of the relevant notification of the act, an Administrative Appeal, and if this appeal is explicitly rejected by the issuance of a decision or tacitly rejected by the passage of one hundred and twenty (120) days without a decision, the taxpayer may then exercise the judicial remedy of Judicial Appeal before the competent administrative court. Under the above provision, the filing of either the Administrative Appeal or the Judicial Appeal (after the explicit or tacit rejection of the Administrative Appeal) suspends by law the payment of 50% of the owed amount, on condition that the taxpayer pays the remaining 50%. By express provision of paragraph 4 of the said article it is possible for the taxpayer to submit to the D.R.D. a request for suspension of payment of the entire amount assessed, which must be granted by the D.R.D. if the said payment causes irreparable harm to the taxpayer and the success of the Administrative Appeal is likely. Therefore, in that case the debtor will not pay any monetary sum and will await the adjudication of his Administrative Appeal. b) Second, he may file an Objection (Anakopi) against the expedited enforcement proceedings (e.g. against the seizure orders issued against him) before the competent Administrative Court, in accordance with Articles 217 et seq. of the Code of Administrative Procedure. In the framework of such Objection he may also file a Request for Suspension of the enforcement being carried out against him, pursuant to Articles 200 et seq. of that Code and under the conditions set out below; and in very urgent cases (for example, if the entirety of a business's bank accounts have been seized), he may request the issuance of a Preliminary Injunction — i.e. temporary protection before the hearing of the Request for Suspension (for instance, suspension of seizure of the bank account most essential for the business).
II. Suspension of the enforcement process following the filing of an Objection and Request for Suspension before the Administrative Courts
- Article 202 of the Code of Administrative Procedure sets out the positive and negative prerequisites that must be satisfied in order for the expedited enforcement by the tax authority to be suspended.
- Positive prerequisites are: (a) that the enforcement causes irreparable harm to the litigant; and (b) the manifest (obvious) merits of the Objection. It is sufficient that one of the two is satisfied for the suspension of enforcement; they need not both be present concurrently. (See e.g. Decision DPrAth1072/2018, in which: "...Since the above, the reason concerning the manifest merits of the pending appeal in question must be rejected as unfounded, because the grounds advanced in it do not appear, in the judgment of the Court, to be well‐founded [...] Furthermore, as regards the second reason, i.e. irreparable material harm, the Court, considering the amount of the disputed claim, which is the particularly high total sum of €11,050.54 in relation to the overall financial situation of the applicant, as emerges from the financial statements submitted from business activity (Form E3), finds that immediate enforcement of the contested Act would cause irreparable harm to him. Thereupon [...] the Court finds that the request for suspension must be granted and immediate enforcement of the contested Act suspended until final judgment on the appeal filed by the applicant...").
- Irreparable harm is required; a merely difficult or burdensome harm is not sufficient. However, the concept of irreparable harm is not only literally non‐reversible, but that whose remediation under the economic and other circumstances in which the particular obliged party is found is so difficult that, in practice, it cannot realistically be reversed. For determining the harm to the taxpayer from the enforcement, case law considers: the economic and family situation and age of the applicant, the amount of the debt, the inability to fulfil commercial obligations due to the enforcement, etc. (see for example the irreparable harm suffered by a business from execution of cash‐certification acts by the head of a Tax Office by imposing garnishment in the hands of third‐party clients, in Decision MDPrKom. 1/2021, where: "...Moreover, given the foregoing data, the Court, as to the contested cash‐certification acts, considering: (a) the economic condition of the applicant, which is precarious, insofar as, as appears from the submitted financial statements of business activity (Form E3), she experienced losses of €377,332.78 in the fiscal year 2018 and €362,363.80 in the fiscal year 2017, (b) the applicant's debts to EFKA totaling €915,612.62, for which she pays a monthly installment of €661.79, (c) the fact that garnishment orders have been issued for her debts in the hands of 52 natural and legal persons as third parties, including those contested by this request, (d) the fact that her only real property constitutes the commercial premises used for her business activity, and (e) the very large total amount of cash‐certified debt under the contested acts (1,326,986.59 euros), the Court finds, at first instance, that the applicant will incur irreparable harm from the further enforcement of the contested cash‐certification acts against her...". Similarly see TDEfAth 31/2023, 46/2023.)
- Furthermore, if the tax authority has seized a business's bank accounts, it is possible to grant suspension of the seizure of at least one of the accounts so that the business can pay employees, suppliers, social security etc., and not be driven to closure. It should be noted that the suspension of one account (rather than all of them) is in line with paragraph 2 of article 202 C.A.P., which specifically for tax disputes provides the Court the ability to exclude some measures of enforcement from the suspensive effect. Also note that such suspension of bank account seizures is valid for the future and has no retroactive effect. This means in practice that funds already frozen or collected by the State are not unfrozen/returned, but only that the seizure does not apply to funds that enter the account from now on.
- Suspension may however be granted even if the enforcement will not cause irreparable harm to the taxpayer. This happens if the Court of Suspension considers that the main remedy (the Objection) against the enforcement has manifest merits. An Objection is considered manifestly well‑founded when its relevant argument is supported by established case law of Administrative Courts. As an example, an Objection by a taxpayer in tax disputes is manifestly well‑founded when one ground of the Objection is that the enforcement by the tax authority was expedited before the expiry of the deadline set by Article 72 of the Tax Procedure Code for filing the aforesaid Administrative Appeal. (See DPThess 4380/2024.)
- Negative prerequisites for the Administrative Court to grant Suspension under the above provision are: (a) the manifestly inadmissible / unfounded nature of the main remedy of the Objection against enforcement, (b) the balancing of interests of the taxpayer – the State – third parties turns out ultimately to be against the taxpayer; and (c) failure to submit or essential omissions / inaccuracies in the declaration of worldwide income. (See below.)
- Regarding the first two negative prerequisites above, even if the taxpayer suffers irreparable harm from enforcement, the enforcement will not be suspended if first, the writ of the Objection is held to be manifestly inadmissible or unfounded; and secondly, if the balancing of interests between taxpayer on one side and the public interest on the other shows that the negative consequences of granting the request for suspension are judged to be more serious than the benefit to the taxpayer (which, of course, is rarely the case in practice).
- Particular mention must be made of the third negative prerequisite above, which relates to the declaration of asset status and worldwide income. According to article 203.2 CAP: "...In tax and customs disputes in general, together with the request for suspension a certified copy of the appeal is submitted. In such disputes as in the preceding sentence, the request for suspension must include, under penalty of inadmissibility of its filing, a declaration in which the applicant states: (a) his/her worldwide income from every source; and (b) his/her asset status in Greece and abroad. If the applicant is an individual, declared is also the worldwide income from every source, as well as the asset status anywhere in Greece and abroad of his/her spouse and minor children. If the applicant is a legal entity, the worldwide income from every source is declared, as well as the asset status anywhere in Greece and abroad of any legal entity connected to the applicant and of the natural persons who according to the applicable provisions are personally responsible for the tax and customs obligations of the legal entity..."
- As appears from the above provision, an element of the admissibility of the writ of the Request for Suspension is the declaration of assets and worldwide income of the debtor. It is a form (see here: ...), where the debtor and applicant of the Suspension declares his/her asset status domestically and abroad, as well as his/her worldwide income from every source (regarding what the asset status includes is further provided by the same article. By way of example: real rights and contractual property rights in real property — the estimated market value of such assets is also mentioned — deposits, related banking products, private motor vehicles, shares, participations, voting rights and participation in legal entities etc.). If the applicant is an individual, he/she is also obliged to declare the asset status and worldwide income of his/her spouse and minor children. Correspondingly, if the applicant is a legal person, he must also declare in addition the worldwide income and asset status of each entity connected with it, and every natural person who is personally and jointly liable for the tax obligations of the legal person (see in this regard article 49 of the Tax Procedure Code. These persons are: ex‑executive presidents, directors, general managers, managers, CEO's, those entrusted with administration and liquidators of legal persons and legal entities, as well as persons who in fact exercise management or administration of the legal person or entity).
- Given the complexity of the declaration in some cases (existence of many assets, many connected persons etc.) it is recommended that it be filled out by a suitably qualified person, since omissions in the declaration or inaccuracies lead to rejection of the Request for Suspension as unfounded. It has been held in case law, however, that non‐material deficiencies have no effect when they do not prevent the Court from forming a safe judgment. (TDEfAth 26/2023). Moreover, care is required in the following: the Request for Suspension is considered inadmissible if said declaration is not incorporated into the writ of the Request for Suspension, even if it has been filed with the Court registry. (DEfAth in Council 16/2014, 68, 69/2014).
Conclusion: From the above it becomes clear that suspension of collection of tax debts is certainly not a simple matter. The law itself, for the automatic (without judicial decision) suspension of payment of the owed amount, requires advance payment of 50% thereof. Furthermore, suspension of the enforcement procedure passes through its own prerequisites, the formalistic requirement of which can prove disastrous for the taxpayer and lead the taxed enterprise to cease operations. The issue is the declaration of asset status and worldwide income. Its mere submission to the Court is not sufficient and omission of it from the writ of the Request for Suspension entails rejection of the relevant writ as inadmissible (!) Furthermore, one must take into account in some cases the time‐consuming procedure of completing that declaration (e.g. when the taxpayer has many assets etc.), a fact which stands in stark contrast to the speed which generally characterises enforcement proceedings and, consequently, their suspension. Thus, even if a business suffers irreparable consequences from non‑suspension of enforcement and, at the same time, there are sound grounds for an Objection against the enforcement procedure, it is possible that it will not secure the suspension if the above declaration has been inadequately completed.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
