Who will pay your tax debt?

The third-party guarantee and the assumption of debt

Continuing our legal thoughts on taxation, we take a look at the rules related to tax debt.

We proceed as usual; which means first of all we clarify the concepts and later we put these concepts into a system to make them more transparent and understandable.

The person obliged to pay the tax is the person who is obliged to pay the tax when it is based on the relevant laws. Deducted tax and advance tax must be paid by the person who deducted it. The collected tax (e.g.: tourist tax) must be paid by the tax collector.

The relevant legislation mentions the important point for us; according to which: if the taxpayer has not paid the tax and it cannot be collected from the taxpayer; the guarantor; and the person who assumed the tax debt can be obliged to pay the tax by decision. The approved contract includes the previously assumed tax. The taxpayer who is obliged to pay the tax may not include his claim against the state or the local government in his tax debt.

Pursuant to the relevant legislation; the payment of the tax can be assumed by a guarantor; or the tax debt can be taken over by someone else than the taxpayer; during which the legal title of the tax authority’s claim does not change.

Pursuant to the relevant section; the undertaking of the third-party guarantee becomes valid with the approval of the tax authority. The tax authority will refuse the approval if the payment of the tax debt is not ensured in the person of the guarantor or the person who assumes the debt.

The contract of guarantee

With the contract of guarantee; the guarantor undertakes an obligation towards the entitled; that if the obliged (the taxpayer) does not perform; he will perform for the entitled (the tax authority) instead. The contract must be written.

The assumption of debt

If the obliged and the entitled agree with a third party (the person who undertakes the payment of the debt) that the obliged will assume the obligations of the obliged towards the entitled; the entitled can only demand the service from the person who assumed the tax debt.

If the person (who assumed the tax debt) does not pay the assumed debt by the due date; the debt can be enforced from the originally obligated taxpayer (without a mandatory decision).