Greece’s Independent Public Revenue Authority is implementing a radical clearance of “red” tax debts, freezing over €10 billion in outstanding obligations that will practically never be collected. The overwhelming majority concerns large debts, as €9.8 billion comes from cases exceeding €1.5 million, while only €200 million corresponds to smaller debts.
These are mainly old debts that have remained for years in tax office and customs records, originating from businesses that have gone bankrupt, deceased debtors, or cases without income and assets. Despite periodic collection efforts, these amounts have stagnated for decades in the tax administration’s books while increasing annually due to surcharges and penalties. The write-off process is not automatic. According to the updated Public Revenue Collection Code, for a debt to be characterized as “uncollectable,” all forced collection measures must have been previously exhausted without result, and it must be proven that collection is objectively impossible.
To date, the tax authority has characterized debts worth €27.32 billion as uncollectable, out of the total overdue amount reaching €112.5 billion. Thus, the actual overdue debt stands at €85.18 billion. With the completion of archiving an additional €10 billion, the total amount of debts considered uncollectable will exceed €37 billion.
Characterizing an overdue debt as “uncollectable” constitutes the first stage before the possibility of writing it off from the state’s books. With recent amendments to the Public Revenue Collection Code, the procedure has been specified and provides clear criteria to objectively determine when debt collection is impossible.
Initially, a complete investigation by tax administration services is required regarding the debtor’s assets and those of co-liable persons. If no assets are identified during the check or if previous disposal that cannot be reversed has occurred, it is considered that all forced collection means have been exhausted. Similarly, the existence of a bank safety deposit box does not prevent characterization, provided seizure has already been imposed. Additionally, legal criminal prosecution action must have been taken in cases where provided, while a special tax authority auditor certifies that collection is unattainable.
Under the new regulations, it is now possible to characterize debts as uncollectable even when property exists, provided it is of small value relative to the total debt amount. Specifically, when real estate does not exceed 5% of the debt or €100,000, the debt can be characterized as uncollectable. If the value is greater, only the debt amount remaining after subtracting an amount equal to twice the property value is considered. Similar provisions apply to movable property, with a limit of €30,000. When dealing with total basic debts exceeding €1,500,000, acts are communicated to the Court of Audit Commissioner service, which is responsible for public revenue control. If deemed necessary, audits can be conducted on acts concerning debts below this amount.
Special cases, such as companies in liquidation for more than ten years or debtors who died without property and with heirs who have renounced inheritance, also lead to characterization as uncollectable without further procedures. Once a debt is characterized as uncollectable, it is not immediately written off. It remains recorded for ten years, with “frozen” statute of limitations. During this period, the debtor cannot obtain tax clearance or transfer property, while bank accounts can be seized. If new evidence emerges, the state has the right to return and pursue collection.
