The obligations for taxes, social insurance contributions and interest are public debts. The Tax-Insurance Procedure Code (TIPC) contains the terms and conditions for public enforcement by a public enforcement official.
The public debts extinguish with the expiry of the prescription period of 5 or 10 years provided in the TIPC. The prescription may be interrupted when certain conditions are at hand. Interruption means that the expired prescription period is cleared off and a new one starts.
The interruption of the prescription according to the TIPC and the court-case so far
According to the TIPC the prescription shall be interrupted:
- with the issuance of the act for determination of the public debt or
- undertaking of actions on public enforcement.
The judges’ views on which actions of public enforcement official were “enforcement actions” and which one of them interrupted the prescription were opposite.
The opening of an enforcement case and the service of a notice with invitation for voluntary payment appeared to be a challenge.
- According to some judges: these actions do not interrupt the prescription for extinguish of the public debt, because they are not real enforcement actions.
- According to other judges: these actions interrupt the prescription because they set the beginning of the enforcement case. According to some court decisions, the prescription is interrupted by sending the notice, where according to other ones – by serving it.
The Supreme Administrative Court (SAC) clarified the above in its interpretative decision dated 15.04.2021.
The interpretative decision of the SAC
The SAC gave answers in it to the following questions:
- Does the opening of an enforcement case under the TIPC interrupt the prescription period?
- Does the notice of the public enforcement official with the invitation to the debtor to pay voluntarily in the term of 7 days interrupt the prescription? If so, from which moment – from sending or serving of the notice?
According to the SAC, the opening of the enforcement case and the notice of the public enforcement official do not interrupt the prescription. These actions are not real enforcement actions.
The real enforcement actions:
- are specified and oriented to the debtor’s property;
- aim at satisfying the creditor and extinguish of the public debt;
- are undertaken when the debtor, after being invited, has not voluntarily paid the established debt.
The opening of an enforcement case is not a real enforcement action and does not interrupt the prescription because:
- The opening is the first action – it only starts the proceedings against the debtor.
- The opening is an action related to the preparation of the enforcement – preparatory actions are undertaken after the opening.
- The opening is a condition for undertaking of enforcement actions.
- The prescription in the enforcement cases under the TIPC is a way that terminates the possibility for the public debt to be collected through enforcement.
- The reference to expired prescription period is a means of protection for the debtor – therefore, he should know in advance about any action that interrupts the prescription period.
- The debtor does not take part in the opening and therefore the opening cannot interrupt the prescription.
The notice of the public enforcement official is not a real enforcement action and does not interrupt the prescription because:
- The notice warns the debtor of the consequences of the lack of voluntary payment within 7-days term – the consequences are the undertaking of enforcement itself.
- Therefore, no enforcement actions have been undertaken upon sending of the notice.
- Sending of a notice is explicitly excluded from the enforcement actions.
- The notice does not satisfy the creditor – it aims to inform the debtor, to enable him to pay voluntarily and to warn him of the consequences in case of failure for payment.
- The notice is aimed at collection of the debt, but voluntarily.
- No enforcement actions can be undertaken within the 7-day period for voluntary payment given with the notice.
Further to the above and according to the SAC, the enforcement proceedings under the TIPC can be divided into two stages:
- first stage – preliminary – where the enforcement case is opened and a notice for voluntary payment is sent to the debtor;
- second stage – real – where determined actions against the debtor’s property are undertaken.
The interruption of the prescription is relevant to the second stage. Only the real enforcement actions interrupt the prescription period.