Tax

According to the tax enforcements code of Angola, the complaint of the acts of the tax enforcement process on the grounds of suspension foreseen in the tax enforcement code are considered urgent processes and, as such, they always run continuously, having priority before the other acts of the Court.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (e.g. secured bond holders)?

For federal taxes (e.g. income tax, Goods and Services Tax and Fringe Benefits Tax), the Australian Taxation Office (ATO) generally does not take priority over any secured lenders or debt security holders. However, in certain limited circumstances, the ATO may take priority over secured lenders, for example when:

• a garnishee notice is issued to allow the ATO to recoup from third parties amounts they owe, or may owe, a tax-owing taxpayer; or
• trustees (including administrators, receivers and liquidators) are obliged to retain sufficient monies from the trust fund to pay tax if the relevant assessment has been issued.

However, for certain state taxes (e.g. stamp duties and land tax), the relevant state revenue authority can take priority over secured lenders or debt security holders.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (eg secured bond holders)?

Secured lenders and secured debt security holders take priority over the tax authorities on enforcement of security.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (eg secured bond holders)?

Yes, Brazilian tax authorities take priority over any other creditor, except creditors under labor law and labor accident law. However, in the event of a bankruptcy, tax authorities do not take priority over creditors with security over real estate property (ie a mortgage).

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (eg secured bond holders)?

Generally, secured lenders and secured debt security holders take priority over the Canada Revenue Agency on enforcement of security, provided that the Canada Revenue Agency has not previously taken steps to register itself as a secured creditor. However, the Canada Revenue Agency has a 'super priority' right over secured creditors (other than holders of a mortgage over real property) with respect to taxes collected by the debtor on behalf of the Canada Revenue Agency (including employee source deductions, non-resident withholding tax and goods and services tax (GST)). This 'super priority' does not extend to GST if the tax debtor is in a proceeding under the Bankruptcy and Insolvency Act or the Companies’ Creditors Arrangement Act.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (eg secured bond holders)?

According to the Chilean Civil Code, the tax authority takes priority over secured lenders and secured debt security holders for outstanding withholding taxes and surcharges.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (eg secured bond holders)?

Under current applicable law, the liabilities of a borrower in insolvency proceedings are discharged in the following order of priority:

• expenses incurred after the start of the insolvency proceedings;
• pension liabilities;
• liabilities covered by a security interest up to the amount of the security interest;
• tax obligations (enforcement by the Colombian Tax Authority (Dirección de Impuestos y Aduanas Nacionales (DIAN)), or the local tax administration, depending on the tax due);
• other kinds of liabilities; and
• unsecured liabilities.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (eg secured bond holders)?

No.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (eg secured bond holders)?

Secured lenders and secured debt security holders take priority over the Finnish tax authorities on the enforcement of security.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (eg secured bond holders)?

The French Public Treasury has a general privilege to ensure the collection of the main taxes (eg corporation tax and value added tax).

Determining the ranking between the French Public Treasury and secured lenders or secured debt security holders is a complex issue. Indeed, rules regarding priority on enforcement vary depending on the type of security, the creditor and the situation of the debtor (insolvent or not insolvent).

In insolvency cases, for example, French insolvency law provides for a set waterfall of payments for unsecured assets (sale of assets or business within the frame of safeguard, receivership, or liquidation proceedings) that is as follows:

• the employees' super priority (wages and paid holidays due to employees for the last 60 days preceding the opening of the insolvency proceedings);
• court expenses and legal professional fees;
• new money facilities granted during conciliation proceedings;
• claims arising after the opening of the insolvency proceedings to the benefit of the proceedings (including taxes arising after the opening of the proceedings);
• claims secured by real property or by a security interest including a right of retention or pledge on professional machinery and equipment (including any tax claim that have been converted into a security on real estate or machinery);
• other privileged or secured pre-judgment claims; and
• other pre-opening unsecured claims.

The secured lenders take priority over other creditors on any sale of collateral over which their security has been taken (it has to be noted that tax claims can be converted into security before the opening of the proceedings and therefore the tax authorities could be treated as a secured creditor).

In conclusion, the position of the tax authorities compared to secured lenders and secured debt security holders in the context of insolvency proceedings depends on the nature of the tax claim and whether or not the tax claim has been converted into security with collateral before the opening of the insolvency proceedings.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (eg secured bond holders)?

The German tax authorities do not take priority over secured lenders or secured debt security holders on enforcement of security.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (e.g. secured bond holders)? 

Secured lenders and secured debt security holders take priority over the Ghana Revenue Authority on the enforcement of security. However, in the event of a windup of a corporate body, taxes owed to the government or any local authority which became due and payable within the year preceding the date of the commencement of the winding-up will have priority over claims of debentures holders under any floating charge created by the company.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (eg secured bond holders)?

In the case of an enforcement procedure, a mortgage concerning movable or immovable property takes priority over the claims of the tax authority.

In the case of a liquidation procedure, taxes and social security contributions related to employment and termination of employment take priority over debts secured with a mortgage. Other claims of the tax authority related to taxes and social security contributions are subordinated to a debt secured with a mortgage.

Generally speaking, secured lenders and secured debt holders (excluding holders of floating charges) take priority over Revenue claims on enforcement of security.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (eg secured bond holders)?

Yes, the Italian state usually has a special privilege on any debt associated with indirect tax.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (e.g. secured bond holders)?

Secured lenders and secured debt security holders take priority over tax authorities on enforcement of security.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (e.g. secured bond holders)?

Secured lenders and secured bond holders take priority over national and local taxation authorities regarding the enforcement of security, provided that the relevant debts are secured before the mandated deadline for tax payment. Also, once a loan or bond is secured, the priority position of the lenders and bond holders are maintained even if the collateral subject to the mortgage is transferred to a taxpayer with a tax liability to national or local tax authorities.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (eg secured bond holders)?

On the enforcement of security, the tax authorities have priority over secured lenders and secured debt security holders.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (e.g. secured bond holders)? 

Secured lenders and secured debt security holders take priority over the Mauritius Revenue Authority on enforcement of security.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (eg secured bond holders)?

Secured lenders and secured debt security holders take priority over the Mexican Tax Authorities on enforcement of security.

The Treasury has a general lien on moveable properties and other personal effects belonging to taxpayers wherever they are located.

Therefore, when the tax has not been paid on the due date and in the absence of a claim with a request for suspension of payment, the Treasury accountant must send the taxpayer a letter of formal notice at least 20 days before the first act of prosecution is notified.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (eg secured bond holders)?

Secured lenders and secured debt security holders take priority over the tax authorities (Belastingdienst) on enforcement of a security.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (e.g. secured bond holders)?

Generally not, but whether or not the Inland Revenue has priority over secured lenders/secured debt security holders will depend on a number of factors (including whether and when the security interest has been perfected, the nature of the tax owed to the Inland Revenue and the status of the debtor (e.g. whether it is in liquidation)). On a liquidation, the Inland Revenue can have priority in some circumstances.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (eg secured bond holders)?

No.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (eg secured bond holders)?

Tax authorities take priority on enforcement over secured lenders or secured debt security holders.

However, in the context of a bankruptcy proceeding, lenders or debt security holders may take priority over the tax authorities when the loans or the debt securities are supported under a warranty before the entry date of the debtor to such a proceeding.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (eg secured bond holders)?

There is no general rule of priority entitling the tax authorities to take priority over secured lenders or secured debt security holders during enforcement proceedings. Any priority is determined on the basis of general rules provided by law. For example, in the case of a compulsory mortgage established in favor of the State Treasury and a mortgage securing the rights of secured bond holders, it is the relative position of the mortgages which determines which mortgage is executed in the first place and therefore takes priority. If the mortgage securing the bonds was determined as the mortgage with first position, then this mortgage will be treated as executed before the compulsory mortgage of the State Treasury and will take priority.

Notwithstanding the above, in the case of bankruptcy of a debtor, the law distinguishes certain categories of liabilities that should be paid by the bankrupt entity in a given order. In this respect, liabilities owed to tax authorities may be privileged – that is they are paid just after liabilities owed to employees and before liabilities owed to other unsecured creditors.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (eg secured bond holders)?

Portuguese civil law and tax procedural legislation establishes the rules for ranking creditors competing over the same asset, alongside the State Revenue, as follows:

• General preferential rights do not prevail over secured rights.
• Special preferential rights only prevail over secured rights if constituted first.
• General immovable preferential rights do not prevail over secured rights.
• Special immovable preferential rights prevail over secured rights, regardless of being constituted after those secured rights.

The State Revenue benefits from the general preferential right, and particular taxes benefit from preferential rights. Stamp duty (where the operation for which it would be levied involves real estate) and real estate transfer tax grant the State Revenue an immovable preferential right, and for that reason, tax authorities take priority on enforcement in such cases. As regards municipal property taxes, the State Revenue benefits from a special preferential right in its enforcement, only prevailing over secured rights if constituted first.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (e.g. secured bond holders)?

With respect to real property taxes, the Puerto Rico Municipal Revenue Collection Center (known as CRIM for its Spanish acronym) has a preferential lien, which has priority over any other lien. The lien is limited to real property taxes owed for the current fiscal year and the previous five fiscal years.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (eg secured bond holders)?

As a general rule, tax authorities take priority over other types of creditors in the case of enforcement of security interests. However, in situations where loans are secured over real estate properties or other assets and certain notification procedures have been complied with, secured creditors may take priority over the tax authorities on enforcement.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (eg secured bond holders)?

Secured lenders and secured debt holders take priority over the Federal Tax Service of the Russian Federation on enforcement of security.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (e.g. secured bond holders)?

Secured lenders and secured debt security holders take priority over tax authorities on the enforcement of security.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (eg secured bond holders)?

Secured lenders and secured debt security holders take priority over the Inland Revenue Authority of Singapore on enforcement of security.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (e.g. secured bond holders)?

No. Only the National Bank of Slovakia takes priority on the enforcement of security relating to secured lenders and secured debt security holders.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (eg secured bond holders)?

The South African Revenue Service (SARS) is a preferred creditor under the Insolvency Act, 1936. However, SARS still ranks behind any secured creditors on the liquidation of a company, but ranks (with other preferred creditors) ahead of concurrent creditors.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (e.g., secured bond holders)?

In case of real estate transactions, the Spanish Tax Authorities take priority for the collection of payments of Spanish Real Estate Tax (Impuesto sobre Bienes Inmuebles) corresponding to the year of the enforcement and the four previous years. Furthermore, the Spanish Tax Authorities take priority for the collection of transfer tax and stamp duty due on previous transfers or other taxable events related to the property itself in a period of four years.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (eg secured bond holders)?

Secured lenders and secured debt security holders take priority over the Swedish Tax Agency on enforcement of security.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (eg secured bond holders)?

Secured lenders and secured debt security holders take priority over the Revenue Department on enforcement of a security. 

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (eg secured bond holders)?

The State Fiscal Services of Ukraine does not have a priority over secured lenders or secured debt security holders, provided the security is registered in accordance with Ukrainian legislation prior to the emergence of any tax lien.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (eg secured bond holders)?

Secured lenders and secured debt security holders take priority over HM Revenue and Customs on enforcement of security.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (eg secured bond holders)?

Secured lenders and secured debt security holders take priority over HM Revenue and Customs on enforcement of security.

Preferred creditors (including any amounts owed to the government) will take priority over both ordinary unsecured creditors and secured creditors.

We note that the new United Arab Emirates (UAE) Federal Bankruptcy Law came into effect on 29 December 2016, and this law similarly provides that amounts payable to government authorities are considered to be preferred debts. However (to our knowledge) this law remains relatively untested before the UAE courts and so we are unable to express a view on the scope or application of that new law (or its executive regulations, if any) on preferred creditor status.

On the enforcement of security, do tax authorities take priority over secured lenders or secured debt security holders (e.g. secured bond holders)?

Federal taxes

Although the United States Internal Revenue Service has a super-priority lien that arises upon the assessment of a federal tax even before a notice of tax lien is filed, federal tax liens do not take priority over secured creditors with respect to their collateral.

State and local taxes

State taxing authorities do not take priority over secured creditors with respect to their collateral. However, there is an exception for real property taxes, which are liens themselves by statute in each local jurisdiction.