The Tax Code allows the tax administrator to secure unpaid tax by establishing a lien on the property of the taxable entity. If the taxable entity fails to pay the tax secured by the lien in a proper and timely manner, there is a risk that the tax administrator may recover its claim from the property on which the lien was established.
To date, the Tax Authorities has interpreted the term “unpaid tax” extensively and has used the lien to secure a tax that has not been finally assessed yet. This led to situations in which the tax administrator established a lien on a tax, with the assessment of which the taxable entity did not agree and filed an appeal against its amount. In extreme cases, the tax administrator could resort to the establishment of a lien even after the tax assessment subsequently became ineffective following the success of the taxable entity in the court proceedings.
The rights of the taxable entities, concerning whether a tax administrator is entitled to establish a lien on a tax that is subject to an appeal, have been confirmed by the Supreme Administrative Court in its recent judgement in which it stated that a lien may only be established on a final and enforceable tax identified in the assessment procedure. Thus, in the context of this judgement, the practice of the Tax Authorities, when a lien is established on non-finally assessed tax, must be considered unlawful.
It is thus clear from the judgement of the Supreme Administrative Court that it does make sense to defend your rights and property if the tax administrator establishes a lien even though you disagree with the tax assessment and have filed an appeal against it that is yet to be decided.