The tax authority has activated new legislation that allows significant penalty reductions from 25% to 50% for taxpayers who immediately accept their obligations from tax audits. This innovative regulation aims to accelerate tax and penalty collection while simultaneously reducing court workload from appeals against the state.
How the new out-of-court settlement procedure works
The new out-of-court settlement framework represents a strategic move by the state to rationalize relations between citizens and tax administration. The tax authority now rewards compliance and cooperation, offering substantial opportunities to settle obligations on reasonable terms.
The regulation’s philosophy is simple: encourage immediate acceptance of tax obligations, accelerate public revenue collection, and avoid time-consuming judicial disputes.
Graduated penalty reduction percentages
The maximum 50% penalty reduction is achieved when taxpayers immediately accept their tax obligation within ten days of receiving the provisional corrective assessment notice. Acceptance is accompanied by payment of 25% of the total debt within three working days, while the remainder can be arranged in up to 12 installments.
The remaining reduction percentages are graduated according to acceptance timing:
• 40% reduction after corrective assessment notification but before appeal to DED
• 30% reduction before filing appeal to Administrative Court
• 25% reduction before court hearing begins
Participation requirements for the new system
To qualify for the tax authority’s penalty reduction scheme, specific conditions must be met. Initial or amended tax returns must be filed within prescribed deadlines after audit order notification.
Additionally, returns must show amounts owed with complete tax and penalty certifications. The acceptance declaration must be submitted no later than 15 days from tax return submission or clearance.
Automated process and flexibility
The tax authority has designed an easy, automated procedure that in most cases requires no application from taxpayers. Penalty reductions are processed automatically, except in cases of previous payment where proof must be sent to the competent tax office or central service.
The system offers flexibility with clearly defined limits. If advance payment isn’t made, there’s opportunity to resubmit declarations within the deadline. For those who have already paid their entire debt, a specific procedure provides refunds for amounts corresponding to penalty reductions.
Throughout the arrangement, penalty amounts subject to reduction remain suspended from collection. Reductions become final only when all installment payments are completed consistently, creating a secure framework for both tax authorities and taxpayers.
