In this video we are going to talk about what happens if an entrepreneur does not pay his or her taxes on time. The first thing to take into account in this case is a so-called official tax assessment by the Tax Authorities. An official assessment is an estimate made by the Tax and Customs Administration on the amount that you must pay for the period in which you did not file a tax return. This amount is often three or four times the amount you actually owe. It is important that you make the correct declaration as soon as possible. If it is the case that you still do not pay your taxes, the tax authorities will send you a reminder. Interest is also added to that. The amount you owe is therefore increasing.
After this, the Tax Department will engage a bailiff. For example, the bailiff can seize your belongings. If you still don't pay, your assets will be sold publicly. In a public sale, the proceeds are usually only 10% of what the assets are worth. Even if most of the proceeds are used to pay the tax debt, this is not a solution because the debt usually cannot be fully paid off.
All in all, this is quite a doom scenario. It is therefore important that you take action early. When you notice that you cannot or cannot pay your taxes on time, you must communicate this to the Tax Authorities and request deferral of payment.
How can you apply for deferment of payment from the tax authorities? We explain this in our video "Taxes: Deferral of Payment".