So far in 2014, Portugal's tax department has taken action against 53,914 company owners to settle company debts owed to the State by seizing their assets, according to figures released today by the Ministry of Finance.
This record cull in just six months of 2014 represents more seizures than during 2012 and 2013 combined.
In 2011, the government set out to accelerate the collection of company tax liabilities from company directors, named officers and managers. It has been successful and 2013 saw 32,000 managers taken to task over debts owed by companies, a significant increase over the 20,000 caught out in 2012.
A Limited Company (Lda) in Portugal is meaningless when it comes to money owed to the State as directors are responsible for debts incurred if the company has no assets to seize.
The tax authority’s delight in exceeding its stiff targets is an additional punishment for those business owners that have started up in the recession, but have failed.
In these cases, administrators, managers and directors are liable for the tax obligations of companies and the government has been ruthless in collecting monies owed by failed companies from those set them up, or simply worked there.
Far from realising or admitting this system hardly fuels the entrepreneurial spirit which the government purports to encourage, the Secretary of State for Fiscal Affairs, Paul Nuncio, said today "the efficiency of debt collection has been enhanced through the use of new technology. The system is much more efficient and is able to collect the tax debts of enterprises from their managers who are accountable for the debts of companies in strict compliance with the law."
The number of outstanding cases is 160,600, all being individuals that have started companies with high hopes, or those whose businesses have failed due the collapse of the domestic market due in part to the government’s own austerity programme.
With this regime in place, Portugal will be hard pressed to encouarge risk-takers, essential to grow the small business sector into the larger companies of the future.
