Tax Office: New out-of-court settlement procedure begins today – Who gets up to a 50% reduction in fines

The tax office offers the opportunity for those who have committed tax violations to reduce the fines imposed on them by up to 50%. However, to secure a reduction in the fines, they must pay 25% of the assessed amount within three days after the settlement.

With the amendment of the Tax Procedure Code (Law 5104/2024), which takes effect today, taxpayers have the option to accept the results of an audit and “cut” the fines depending on when they accept the findings.

From the time the audit order is communicated to up to 10 days after the temporary tax assessment is issued, taxpayers can voluntarily comply. During this period, they have the option to submit an initial or amended tax return, voluntarily disclosing undeclared taxable income or other elements, thus avoiding additional fines.

The fine imposed, whether a return is submitted or the violation is identified by the auditor, remains the same (up to 50% of the primary tax) and is reduced by 50% if the taxpayer pays at least 25% of the debt within three days and settles the remaining amount in up to 12 installments.

Specifically, the new procedure for dealing with taxpayers identified by the tax authorities for tax violations can secure reductions in fines ranging from 25% to 50%, as follows:

• 50% Reduction: Fines will be reduced by 50% if the violations are acknowledged (e.g., failure to file returns or submitting inaccurate returns) after the audit order is issued and before the temporary tax assessment notice is issued, or if the primary tax debt is accepted up to 10 days after the temporary tax assessment notice. To secure the discount, the taxpayer must file the related overdue initial or amended returns before the temporary tax assessment is issued (with the audit order) or submit the related returns within 10 days after the temporary tax assessment notice.
• 40% Reduction: Fines will be reduced by 40% if the primary tax debt is accepted after the final tax assessment notice is issued but before an appeal is made to the Dispute Resolution Directorate (DED). The taxpayer has 30 days from the issuance of the final tax assessment notice to appeal to the DED, and during this period, they can accept the audit results and reduce the fine to avoid the risk of the appeal being rejected by the DED and the entire fine being imposed.
• 30% Reduction: Fines are reduced by 30% if the primary tax debt is accepted before an appeal is submitted to the competent administrative court. After the DED adjudicates the case, which must happen within 120 days of the appeal, the taxpayer may appeal to the tax courts if they dispute the audit result and the DED decision.
• 25% Reduction: Fines are reduced by 25% if the primary tax debt is accepted before the court hearing begins.

Taxpayers who accept the settlement for the fine reduction, from 25% to 50%, are required to pay 25% of the total debt within three days of accepting the relevant application, which must be submitted electronically via an AADE platform that will be activated in the coming days. The remaining 75% of the debt can be paid in up to 12 interest-bearing monthly installments or alternatively included in the permanent 48-installment arrangement.

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