Statute of limitations on debts to the National Revenue Agency (NAP)

Such unpleasant surprises signal that enforcement proceedings have been opened over unpaid debts to the state or the local administration.

What should you do in such a situation? First of all, do not panic. The first impulse is to pay off all the debts. But that is not always the right thing to do. To begin with, you need to check whether the limitation period on your debts has expired. Bear in mind that if you pay a debt of your own free will and then find out that its limitation period has already expired, there will be no way to get the money back.

Debts to the tax authorities

These are all kinds of obligations to the state — taxes (in accordance with the annual return filed), social security contributions, corporate tax, local taxes on real estate and cars, the waste collection fee, VAT debts, interest on these debts, and also unpaid fines.

Under tax legislation, if the enforcement officers take no action in respect of a debt, the state loses the right to collect it. The limitation period is set out in Art. 171 of the Tax and Social Insurance Procedure Code (ДОПК). According to this document, there is an absolute 10-year limitation period, after which existing debts are written off regardless of whether the limitation period was interrupted or suspended during that time. This does not apply to cases where the obligation was deferred or rescheduled.

Thus, after 10 years the debt is written off automatically. Two important points should be taken into account here:

• Interested parties who object to the write-off of the debt may in this case file an appeal.
• The limitation period on obligations starts to run from 1 January of the year following the year in which the debts arose. For example, if a debt had to be paid by the end of April 2010, the limitation period is counted only from 1 January 2011 and ends on 1 January 2021.

General limitation period for debts to NAP

A debt to the state is extinguished after the 5-year period expires (Art. 171, para. 1 of ДОПК). For example, if a debt had to be paid by the end of April 2015, the limitation period runs from the beginning of 2016 and ends on 1 January 2021.

Incidentally, tax officials are for obvious reasons not inclined to publicise this information, so it is better to consult independent accountants rather than them. This approach will help you save money.

Limitation periods for fines

The general limitation period does not apply only to fines issued electronically and to penalty decrees. These types of debt are extinguished and cease to be valid 2 years after the date on which the penalty decree or electronic fine entered into force. This rule, however, does not apply to property sanctions imposed on legal entities.

The limitation period may be interrupted or suspended. If it is interrupted, the 5 years start to run again from that moment. It is interrupted by actions of the enforcement officer aimed at collecting a specific debt — freezing bank accounts, attaching a debt held by third parties (for example, an employer), seizing a car, making an inventory and putting property up for auction, and so on. All these actions must be carried out in strict compliance with the law.

The notice of the freezing of a bank account is sent to the bank, and the notice of the seizure of a car is sent to the KAT at the place of registration. It is from the moment these notices are received that the limitation period is considered interrupted. At the same time, the seizure of a car that has previously been confiscated in accordance with the law is not regarded as seizure of the debtor’s property and does not interrupt the limitation period.

Sending a notice of voluntary payment does not always interrupt the limitation period. The law gives no unambiguous interpretation on this point, and to obtain a precise answer to the question you need to consult a lawyer.

Writing off tax obligations after the limitation period has expired

First of all, you need to apply to the enforcement officer handling your case for a written certificate. It is advisable to entrust this work to a lawyer, who can assess the lawfulness of the enforcement officer’s claims and whether there are grounds for filing an appeal so that the debts are written off or extinguished because the limitation period has expired.

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