How should you respond to seizures by the Spanish tax authorities?

The Spanish Tax Agency (AEAT) is the body responsible for managing and collecting taxes in Spain. Accordingly, the Tax Agency may seize the property and assets of individuals or legal entities that owe taxes.

The collection of tax debts is a power vested in the tax authorities. Financial institutions are authorized to provide cash-desk services at tax offices and delegations.

Although they bear no responsibility for tax management and are not considered collection bodies, they do act as collaborating entities in the collection of taxes.

These taxes may be collected during the voluntary payment period (periodo voluntario) or during the enforcement period (periodo ejecutivo). However, when payments are not made within these periods, the tax authorities may proceed to seize the taxpayer’s assets until the debt has been fully satisfied.

Payment of taxes during the voluntary payment period

We all have a deadline for paying our taxes to the tax authorities. These payments are made on our own initiative. Tax assessments issued by the tax authorities must be paid during the voluntary payment period. When the taxpayer fails to pay the debt during the voluntary payment period, collection in the enforcement period begins. Collection is carried out through the enforcement procedure (procedimiento de apremio), by serving an enforcement order (providencia de apremio), which is the act of the tax authorities ordering enforcement against the debtor’s assets.

Enforcement-period surcharges

There are three types of surcharges during this period:

– Enforcement surcharge (recargo ejecutivo): this is a 5% surcharge, applied when the full amount of the debt not paid during the voluntary payment period is paid before the enforcement order is served.

– Reduced enforcement-order surcharge (recargo de apremio reducido): this 10% surcharge applies when the full amount of the debt not paid during the voluntary payment period, together with the surcharge itself, is paid before the end of the period established for paying debts in the enforcement period that have been notified by means of an enforcement order.

– Ordinary enforcement-order surcharge (recargo de apremio ordinario): a 20% surcharge applies when neither of the two previous surcharges applies, that is, when payment is made after the deadline for payment in the enforcement period has expired.

These surcharges are mutually incompatible and are calculated on the full amount of the debt not paid during the voluntary payment period. The only surcharge that is compatible with late-payment interest is the ordinary enforcement-order surcharge (at 20%).

The procedure for seizing the debtor’s assets

If, once the deadline set in the enforcement order has expired, the taxpayer has not paid the tax debt, a Seizure Order (Providencia de Embargo) is issued against their assets. In this way, the amounts owed, the enforcement-order surcharge, the interest, and, where applicable, the costs incurred in the enforcement procedure are collected.

The tax authorities’ seizure process determines which assets are exempt from seizure, which assets may be seized, and the order in which seizures are carried out. Under the regulations, assets are seized in the following order:

– Cash, or funds in accounts held with credit institutions. If an account is held jointly by several persons, only the portion belonging to the debtor is seized.

– Receivables, commercial paper, securities, and rights realizable immediately or in the short term (in less than 6 months). They may be sold regardless of their final redemption date. The sale is carried out on official secondary markets on the best possible terms and must include a number of securities sufficient to cover the total amount of the debt.

– Salaries, wages, and pensions. These items are intended to meet the debtor’s basic needs. Under Article 607 of the Civil Procedure Law (Ley de Enjuiciamiento Civil), any salary, wage, daily wage, pension, remuneration, or equivalent that does not exceed the national minimum wage (SMI) is exempt from seizure.

– Real estate. For a property to be seized, it must be owned by the debtor. If a property owned by the debtor under a public deed is not recorded in the debtor’s name in the Land Registry because the deed was not submitted for registration, the tax authorities may request its registration and then seize it. Under Article 140 of the Mortgage Regulations (Reglamento Hipotecario), the seizure is initially suspended and a note of the suspension is entered; subsequently, the person deemed to be the owner is required to register their title and, if they refuse, registration may be sought through the courts.

– Interest and income. If what is seized is income generated by businesses or by commercial, industrial, and agricultural activities, an administrator or receiver may be appointed. Where the income to be seized derives from the exploitation rights of a work protected by the Industrial Property Law, it is treated as salary.

– Commercial or industrial establishments. A seizure record (diligencia) is drawn up, inventorying all the assets and rights existing in each seized establishment, as well as the equipment being seized. In addition, a provisional entry of the seizure (anotación preventiva de embargo) must be made in the Movable Property Registry.

– Jewelry, precious metals, and antiques.

– Movable property. Article 92.4 of the Invoicing Regulations, concerning the seizure of cars, trucks, motorcycles, boats, aircraft, or other vehicles, provides that the debtor is notified of the seizure so that, within 5 days, they place the vehicle at the disposal of the collection bodies, together with its documentation and keys. If they fail to do so, the authorities are instructed to take possession of, impound, and seal these assets.

– Receivables realizable in the long term (in more than 6 months). The seizure is carried out by means of a seizure record, which must identify the securities known to the tax authorities and must comprise a number of securities sufficient to cover the total amount of the debt.

Which assets are exempt from seizure

Household furniture and furnishings, as well as the clothing of the debtor and their family, are exempt from seizure insofar as they cannot be considered superfluous. In general, this covers goods such as food, fuel, and others that, in the court’s opinion, are essential for the debtor and their dependents to provide for their subsistence with dignity.

Likewise, the books and instruments necessary for practicing the profession, art, or trade in which the debtor is engaged are exempt from seizure when their value is disproportionate to the amount of the debt claimed.

Other assets exempt from seizure include sacred objects and objects devoted to the worship of legally registered religions, amounts expressly declared exempt from seizure by law, and assets declared exempt from seizure by treaties ratified by Spain.

How to respond to seizures by the tax authorities

The first thing you should do when your assets are seized is request the administrative file. In it, you can verify whether the procedure has been followed lawfully and whether the seizure is justified.

If the procedure has not been complied with, you can challenge it by filing the appropriate appeals.

If you have exhausted all administrative appeal routes, you can file a judicial review appeal before the administrative courts (recurso contencioso-administrativo).