four installments
The state has recently corrected a recognized error and extended the maximum payment term for tax liabilities to 36 months, with deferrals and installments managed by the State Tax Administration Agency. As reported in September, the treasury has included a budgetary change for the next year, adjusting terms that had been mistakenly discounted in the recent reform law and agreement published in the Official State Gazette at the end of summer.
The relevant provision currently allows for tax deferrals to be paid over a maximum of six, nine, or 12 months, depending on the case, as opposed to the previous 12, 24, and 36 months that had stood until now. Maria Jesus Montero indicated that the change stemmed from a mismatch between parliamentary groups rather than a policy shift by the ministry itself. The Treasury had already signaled its intent to include this adjustment in the budget law and stated that the change would not harden payment terms.
This adjustment is reflected in the 2023 draft government accounts, at the final approval stage. The project clarifies a new framework for postponement and installment of tax debts under the renewed bankruptcy law, restricted to pre-bankruptcy situations. This detail, not explicitly described in the law, was approved in September. It applies to a debtor who is actively pursuing negotiations with creditors, provided that a restructuring plan has not yet been formalized in public instruments, no continuation plan has been approved, bankruptcy has not been declared, and no micro-enterprise special procedure has been opened.
Beyond this important clarification, the Treasury has also reduced deadlines for deferrals, though the maximum limits set by the bankruptcy law reform have not been fully aligned with the previous regime. In short, a new temporary framework changes the duration: four installments rather than three become the standard. The maximum deferral periods now stand at six months for debts under 30,000 euros; 12 months in situations where no asset is available to guarantee the debt and the execution would seriously affect productive capacity; 24 months when the debt is secured by mortgage, pledge, personal or joint surety, or any other acceptable guarantee; and 36 months when a guarantee from a bank or mutual guarantee company is involved.
The Treasury’s fixes for tax debtors reduce the non-competition restrictions that had defined the earlier regime established by the Tax Office in January 2017. The new schedule allows a maximum maturity of 36 months if a bank guarantee and a surety – insurance certificate are provided; up to 24 months if other guarantees are given; and up to 12 months in cases of exemption or full exemption from guaranteeing the debt. The ability to exceed these maximum periods exists only under exceptional circumstances.
Economists have argued that now may not be the right moment to shorten current deadlines given ongoing crisis conditions and liquidity needs for companies. President Valentín Pich pointed out that facilities to defer tax debts for small and medium-sized enterprises were expanded in 2020 due to the pandemic, and the coalition has decided to adjust these deadlines to reflect the current realities created by the war in Ukraine.
Overall, the administrative decisions aim to balance relief for taxpayers with the financial stability of the state. The reforms seek to provide breathing room for businesses facing temporary liquidity issues while preserving the integrity of the tax system and ensuring that debt arrangements remain enforceable and transparent. The changes also emphasize a phased approach to deferrals, offering more flexible terms for those who demonstrate need and a solid repayment plan, while maintaining safeguards against abuse. In practice, this means more debtors can structure repayment over longer periods, improving cash flow in the near term and reducing the risk of outright bankruptcy in the longer term. These adjustments reflect a broader shift toward stabilization measures that respond to evolving economic conditions and the aftermath of recent global events. (Source: State Treasury)