Tax collection folders in 120 installments: the key points of the reform

Understanding the New Legislation on Tax Collection

Following the approval of the tax collection reform on July 4, 2024, a second review of the text was given the green light by the Council of Ministers on July 22.
This was necessary due to the removal of securitization of sums discharged from the text.
At this point, it is merely a formality, as the Minister of Economy and Finance considers the reform to be complete.

There are several upcoming changes, ranging from longer installment plans to the automatic discharge of unrecovered tax bills within 5 years.

Key Points of the Tax Collection Reform

1.
Tax Bills in 120 Installments

The reform aims to make the entire collection system more efficient and quicker, especially considering the State’s debts exceed 1.2 trillion euros (with only 100 million likely to be recoverable).
The decree text extends the installment payments up to a maximum of 120 months (a number currently only reserved for extraordinary installments) for individuals with debts not exceeding 120,000 euros.
Those with higher debts must demonstrate financial hardship.

This reform has been a government priority since it was announced and was part of the campaign platform.
Various legislative decrees have already been definitively approved, entering into force.
Now, the focus is on presenting decrees related to collection and penalties, which require urgent regulatory intervention.

The collection mechanism needs to be revamped and made more accessible, especially to those facing financial difficulties in settling their tax debts.
The goal is to increase the maximum monthly installments from the current 72 to a gradual increase, eventually reaching a duration of 120 installments.

Starting in 2025, there will be significant changes for taxpayers, not just in terms of longer installment plans but also a sort of “discharge” of tax bills.
If left unpaid, these bills will be returned to the taxing authority.
Let’s see what’s in store for the next year.

2.
Tax Bills Discharged After 5 Years

Another novelty concerning debtors is the discharge provision: after five years, the Revenue Collection Agency must return unrecoverable bills to the taxing authority for evaluation on whether to pursue new recovery requests.
This approach allows focusing on collectible credits and streamlines the process.

The automatic discharge of credits after five years will enable returning these credits to the taxing authority, potentially removing them from the balance sheets.
Importantly, this concerns tax bills, not the debt itself.
The creditor, upon acquiring new financial information about the debtor, can reinitiate the collection process.

Additional Changes and Notifications

Furthermore, the expectation is that tax bills must be notified within 9 months from the assignment to the collection agency starting in 2025.
Additionally, there’s the option to consolidate credits under the same taxpayer (via tax code), allowing for a single tax bill encompassing various dues, including taxes and fines.