Portugal’s uncollectable tax debt hits record €10.4 billion – Portugal Resident

Portugal’s Tax and Customs Authority (AT) ended 2025 with a record €10.445 billion in tax debts officially classified as uncollectable, extending a decade-long upward trend and highlighting the scale of liabilities the state is unlikely ever to recover.

According to Jornal de Notícias, the figures appear in the government’s latest report on combating tax and customs fraud and evasion, recently submitted to parliament.

The total represents an increase of €681 million, or around 7%, compared with 2024. Much of the debt is concentrated among a relatively small group of around 21,000 “strategic debtors”, who account for 63% of all tax liabilities deemed uncollectable.

Tax debts are classified as uncollectable when there are no assets available for seizure, when the debtor cannot be located, or when their whereabouts are unknown.

The AT said the increase also reflects a change in the legal interpretation governing the suspension of limitation periods for tax debts. As a result, the value of tax debts written off because they had become time-barred fell sharply from €290 million in 2024 to €114 million in 2025, even though many of those debts remain effectively impossible to recover because debtors have no seizable assets.

In its report, the tax authority stressed that, in most cases, both the debt and the debtor are identified promptly, but enforcement fails because there is nothing left to seize. For that reason, it argues that debts becoming statute-barred should not be interpreted as evidence of administrative inefficiency.

Separate figures show that €8.343 billion in tax debt remained suspended at the end of 2025 while cases were being contested in court, down €141 million from the previous year. Meanwhile, active tax debt—cases still undergoing normal enforcement proceedings—rose by €167 million to €9.161 billion.

The report highlights the growing importance of so-called “strategic debtors”, a category comprising 21,208 taxpayers whose debts represented 61% of Portugal’s total tax debt portfolio last year. Although they accounted for only 38% of active debt, they were responsible for 84% of suspended debt and 63% of debts declared uncollectable.

Under AT rules, taxpayers are classified as strategic debtors if they owe more than €500,000 within a single regional tax office or more than €250,000 spread across multiple tax offices. Companies and individuals declared insolvent are also automatically included in the category.

Many of the largest debtors are medium-sized companies, often operating regionally in sectors including manufacturing, gold trading, finance and technology, with many having since entered insolvency or liquidation proceedings.

Source: Executive Digest