Effective debt resolution: Out-of-court strategies and accessing tax information

A circular issued by the Independent Authority for Public Revenue (ADEA) describes in detail all the steps for repayment or prepayment, as well as for the write-off of balances through the prejudicial mechanism, to obtain tax clearance.

This is a new guide that explains the process of repayment and discounting debts through out-of-court settlement, providing debtors with clear instructions.

Under Law 4738/2020, those who complete their repayments are exempt from the balance of debts included in the arrangement. The balance is deleted automatically, regardless of whether the tax administration has completed the registration.

The process starts with the application on the platform of the extralegal mechanism and the signing of the restructuring agreement. Upon regular payment of all installments, debtors receive a tax clearance, while the remaining debts are canceled.

Those who opt for prepayment benefit from a discount on interest on future installments, reducing the total amount due.

The final amount is calculated based on the interest and surcharges in effect at the time of payment.

The circular also provides for the possibility of offsetting debts against tax refunds to which the debtor is entitled from the State. In these cases, the amount of the refund is used to repay the debts in a certain order of priority:

• – first, the unadjusted debts are covered,
• – then other regulated debts, and finally debts that have been included in the write-off procedure.

Upon completion of the payment, the debtor becomes entitled to obtain a tax clearance certificate, necessary for financial transactions such as property transfers. At the same time, coercive measures, such as seizures, which were imposed on settled debts are lifted. Then, the AADE proceeds with the cancellation of the remaining debts included in the regulation, issuing the relevant decision.

The circular also provides clarification on the liability of third parties, such as guarantors or co-debtors. The latter remains responsible for the repayment of debts unless they have been repaid or fully canceled through the arrangement.

Typical examples include cases of debtors who complete their installments and benefit from the cancellation of the balance, those who pay off early and secure an interest deduction, and those who offset debts with tax refunds, facilitating faster repayment.

By implementing these procedures, debtors are able to fully settle their debts, ensuring tax compliance and financial stability.

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