Major decline in state debtors

Some 400,000 fewer taxpayers owe money to the tax authorities compared to five years ago

Major decline in state debtors

The use of electronic transactions, the reduction of taxes as well as the favorable repayment arrangements (72 and 120 installments) have led to the reduction of state debtors by some 400,000 compared to 2018, according to the data of the Independent Authority for Public Revenue (AADE).

Tax administration officials say automated procedures for identifying debtors and even reminding taxpayers of their tax obligations have significantly reduced overdue debts as well as the number of state debtors.

However, despite the reduction of debtors and increased tax compliance, the AADE figures processed by the Parliamentary Budget Office are worrying: The total overdue balance at the end of January 2023 was 114.5 billion euros, increased by €1.5 billion compared to January 2022.

Even if the €26.3 billion that has been classified as bad debts is subtracted from this amount, the “real” overdue balance amounts to €88.2 billion. In fact, the vast majority of bad debts are owed by a few people with extremely large debts.

According to the data, an increase in the total overdue balance on an annual basis is observed in almost all categories of debt (the exception being the first category of debt that concerns amounts up to €50, as well as the category concerning debts from €500 to €5,000), with the most owed by those with a debt amount of more than €1 million. In this category of debt there has been a 597-million-euro increase in the overdue balance, along with a slight increase in the number of debtors – by 197 taxpayers.

It is noted that 79.5% of the total overdue balance and only 0.2% of debtors are concentrated in that particular category of debt. That is, 9,022 taxpayers owe a total of €90.9 billion.

The contribution of businesses to the increase of the overdue balance in the debt bracket of more than €1 million is important, as the debts there increased by €333 million on an annual basis. It is noted that 73% of the debts in that specific debt range come from enterprises.

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