Decree Law No. 35-C/2016, of June 30th

On the 30th of June, it was published the Decree Law No. 35-C/2016 which amended the Decree Law No. 42/2001 and the Decree Law No. 213/2012, which regulate the flexibility of the Social Security’s debts payment.

I – Debts in enforced collection

With this change it becomes possible for companies and other taxpayers with Social Security’s debts under tax enforcement to make payment arrangements, which allows them to increase their compliance and prevent new debt situations.

After the entry into force of the Decree Law the payment may be extended:

  1. Up to 60 installments if the enforced debt exceeds € 5,100.00;
  2. Up to 120 installments as long as, cumulatively, (i) the enforced debt exceeds € 51,000.00 at the time of the authorization; (Ii) the debtor provides a suitable guarantee or requests an exemption and the same is granted; (Iii) the debtor demonstrates notorious financial difficulty and foreseeable economic consequences.

Individuals can still see an increase on the number of payments up to 150 if, cumulatively, the following requirements are fulfilled: (i) the enforced debt exceeds € 5,100.00 at the time of the authorization; and (ii) the debtor provides a suitable guarantee or requests an exemption and the same is granted.

Note that the payment agreements currently in progress can already benefit from these changes, upon request made by the debtor.

II - Debts in a pre-litigation stage

The Decree Law also brought changes in cases of regularization results from non-compliance situations. This regimen is subject to the fulfillment of two conditions: (i) the debt subject to the agreement cannot be pointed to enforced collection and the taxpayer cannot have, at the date of the request, debt contributions or contributions in enforced collection, judicial or extrajudicial of conciliation. Thus, it is allowed that the maximum number of installments authorized in a voluntary debt payment agreement can be extended up to 12 months, as long as the total amount of debt covered by the agreement exceeds € 3,060.00 for individuals and € 15,300 for legal persons.

Another innovation brought by the DL 35-C/2016 is that the Social Security Institute may authorize the deferred payment of the calculated contributions to legal persons and individuals with business activity in the quality of contracting entities.

A final note to highlight the fact that the agreement’s compliance and the timely payment of contributions and monthly contributions, make it possible to issue a tax certificate stating the debt’s regularization, valid for 4 months.

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