Ministry of Interior draft bill: Five-year statute of limitations on debts to Municipalities

The five-year statute of limitations for all kinds of obligations to Municipalities is provided for by a bill of the Ministry of the Interior, which is under consultation. The regulation is accompanied by transitional intermediate deadlines, in order to mitigate the loss of local government revenue.

This is an institutional request of real esatte owners union POMIDA, which is accepted by the political leadership of the Ministry of the Interior, according to a relevant announcement from the Federation of Real Estate Owners.

The relevant provisions are introduced with the draft law “Innovation System in the public sector – Regulations of the General Secretariat of Human Resources of the Public Sector – Regulations for the operation of the OTAs. 1st and 2nd grade and the decentralized administrations and for the well-being of companion animals – Other urgent regulations of the Ministry of the Interior”, which was put up for public consultation on the consultation website of the Ministry of Interior.

What the new regulation provides for

As far as real estate is concerned, the new regulation covers debts from Real Estate Tax (TAP), municipal cleaning and lighting fees, Municipal Tax on Electricized Premises, various Potential Municipal Fees and the related surcharges and fines.

Today in practice the local government bodies claim and collect retroactive debts from the years 2009 to 2022, i.e. debts of 14 years. This limitation period will increase every year by one year, until it reaches 20 years.

POMIDA has requested that the 5-year statute of limitations, which already applies to all debts to the State, be reinstated for these debts. So far this has only been accepted in terms of obtaining a TAP certificate. With this regulation, the limitation period is gradually reduced to 10 years for the oldest debts before 2013, to 8 years for debts before 2018 and then to 5 years for debts from 1.1.2018 onwards. Specifically, the proposed regulation provides for the following:

Debts for the years 2009 – 2012: They are permanently deleted and are not collectable. Debts written off under paragraph A include those that were subsequently settled and have not yet been paid. However, amounts already paid are non-refundable.

Debts for years 2013-2017: May be sought, ascertained and collected for two years from the entry into force of the law. They are then time-barred.

Debts from 2018 onwards and future debts: Municipalities can collect all kinds of amounts owed, from any source, that become receivables, within a five (5) year amortization period, starting the following year from the origination of the debt, After the expiration of this period, they become statute-barred.

The plan under consultation does not include provisions for the declaration of non-powered and undeclared property surfaces, and the limitation of fines and surcharges to 50%, which POMIDA has requested.