Abstract: The purpose of the article is to focus on the possibility of settling debts to the tax and social security funds up to 240 instalments, and the advantages that the procedure of the Extrajudicial Mechanism offers.
Now, the out-of-court debt settlement mechanism of Law No. 4738/2020, seems to have convinced a large part of the debtors of the State and the banks – funds, that it can solve the debt problem faced by thousands of debtors, whether they are individuals, professionals and businesses.
But what are the advantages of the Out-of-Court Settlement Mechanism for debts to tax and social security funds?
- The proposed arrangement is derived from the law’s calculation tool, i.e. an algorithm that takes into account the debtor’s income, real estate (in NFI values), vehicles (private or business), deposits, shares or bonds, as well as his/her expenses and/or the working capital needs of the business.
- The duration of the arrangement can be up to 20 years (240 monthly instalments), as opposed to the fixed arrangement of 12 or 24 instalments offered by the tax authorities and insurance funds.
- The interest rate of the arrangement is fixed at 3% for the duration of the arrangement and lower than the interest rate of the fixed arrangement.
- The regulation allows for the possibility of cancellations, depending on the debtor’s financial situation, income and the type of debt (surcharges, interest, fines and, under certain conditions, the basic debt).
- The arrangement resulting from the calculation tool of the law (algorithm) is always accepted by the tax authorities and the social security funds, without checking whether the debtor’s viability is confirmed by his financial data. On the contrary, in the case of banks – funds, the debtor’s application for a regulation may be rejected if his income is not sufficient.
- Upon completion of the procedure and acceptance of the arrangement, the debtor (individual or company) can obtain a tax and insurance certificate of a certain period of validity.
- With the final submission of the application on the platform of the Extra-Judicial Mechanism, the validity and the taking of coercive measures against the debtor is suspended until the completion of the procedure. However, the protection from enforcement measures is still valid after the acceptance of the arrangement and provided that the debtor complies with it.
- With the activation of the arrangement and the payment of the first instalment, the debtor can request the inactivation of the seizures on his bank accounts, i.e. the lifting of the seizure for the present and the future.
- The debts that are not included in the regulation through the out-of-court mechanism, can be regulated in two ways: a) with the fixed regulation of 2 to 24 instalments (Law 4152/2013), b) or be regulated in the framework of the out-of-court mechanism but after the expiry of 12 months from any previous regulation of old debts (Article 7(3d) of Law 4738/2020).
- With the final submission of the application, criminal prosecution for non-payment of debts and non-payment of insurance contributions is suspended . If the regulation is complied with then the criminality of the acts is eliminated.
- Now, debts to tax authorities can also be settled & EFKA of a legal person that has been dissolved or is in liquidation or has ceased to exist. Thus, the natural person who is co-responsible (e.g. general partner, manager, member of the Board of Directors, etc.) can now settle his debts up to 240 instalments and with partial write-off.
- With the final submission of the application, the natural or legal person as a debtor enjoys a net of legal protection , as until the completion of the procedure, any enforcement against the debtor (e.g. seizure or auction) is suspended, as well as criminal prosecution for debts to the State and insurance funds.
- Active businesses have a unique opportunity to settle their accumulated debts to the State and the Insurance Funds, up to 240 instalments with the possibility of cancellation, when their alternative is the fixed 24 instalments.
Therefore, all indications are that the out-of-court mechanism is here to stay, as an effective tool for regulating private debt, which can provide a way out of accumulated debts of both individuals and businesses.
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