Electronic seizures of business bank accounts by the Independent Authority for Public Revenue (AADE) and the risk of abuse of its powers

Legal Insight

April 2025

George Psarakis, LL.M. (mult.), PgCert

(republished from mononews.gr)

Summary: In recent years, the Independent Authority for Public Revenue (ΑΑΔΕ) frequently resorts to electronic seizures of bank accounts, suddenly freezing businesses’ liquidity. Although case law requires that taxpayers be given proper prior notice of the debt and a 30-day period before any enforcement measure is taken, this practice is often circumvented. The result is that the working capital of businesses can be unexpectedly “frozen,” thereby threatening their viability. It is crucial to establish a clear legal framework that balances the necessity of revenue collection with economic reality.

The Issue of Electronic Bank Account Seizures

For some years now, ΑΑΔΕ has had the power to electronically seize bank accounts. Within minutes—and with the assistance of “Teiresias S.A.”—all bank accounts of a business may be “frozen,” making it impossible to process payments to third parties, suppliers, the State, the national social security agency (EFKA), employees, landlords, etc. Thousands of electronic seizure notices are sent out daily by ΑΑΔΕ as part of this process.

Greek courts have held the following: in order for the ΑΑΔΕ to proceed with the seizure of a bank account, a 30-day period must first have elapsed following the taxpayer’s receipt of the individual notice (under Article 46 of the Code of Tax Procedure). Through this notice, the taxpayer is informed of the debt, the possibility of enforcement measures, and the possibility of settling the debt. Thus, while the ΑΑΔΕ may indeed proceed with enforcement measures, it must also give the taxpayer the opportunity either to challenge the relevant acts in court or to enter into a settlement (or submit a request via the out-of-court mechanism established by Law 4738/2020, etc.), if the taxpayer chooses to accept the audit findings.

Moreover, there is no real point in “taking the business by surprise” (which is often ΑΑΔΕ’s goal when making unexpected seizures), because—according to common sense—once a tax audit begins, if the business has substantial liquidity in its bank accounts, it could simply transfer those funds elsewhere or distribute them as profit (e.g., an interim dividend). The real problem arises in connection with current transactions and incoming payments. It is there that genuine “panic” can ensue once the business suddenly realizes its bank accounts are “frozen,” preventing any financial transactions from taking place.

Consequences of Bank Account Seizures for a Business

Liquidity and Operations: A seizure can wipe out a company’s available cash reserves overnight. Accounts used for paying salaries, suppliers, rent, taxes, etc. are “frozen.” This can paralyze the company’s operations: employees may go unpaid, checks may bounce due to insufficient funds, and the company may be unable to purchase raw materials. Seizures can even lead to breaches of contract and a domino effect (e.g., inability to fulfill an order because of unpaid suppliers, and so on).

Reputation and Credibility: When a company is subject to this type of freeze, partners may become aware (for example, when checks are returned, or when partnering banks become alarmed). This damages the company’s credit profile. As a result, credit lines may be canceled or reduced, and insurers may lower credit insurance limits.

Consequently, such aggressive collection tactics by the ΑΑΔΕ can prove shortsighted. If the seizure results in the company’s bankruptcy (i.e., a cessation of payments), the State may permanently lose the ability to collect in the future (as the company might no longer be able to recover and repay). Moreover, jobs are lost, as are social security contributions, etc.

The Council of State’s Position

The Council of State (ΣτΕ) has ruled that the seizure of bank accounts without prior service of the actual seizure document is permissible only if the debtor has previously been notified of the initial individual notice regarding the debt (see Council of State Decision No. 2080/2014). In that decision, the Court states:

“Within this framework, a debtor to the State, against whom the debt has already been ascertained in the broad sense [i.e., the amount owed has been established], and who may ordinarily challenge that debt in court through legal proceedings, is informed—via service of the tax office’s record of the debt or of the individual notice, whose legality may also be challenged in court—that a valid title now exists against him (in the strict sense of the established debt) and that he is formally considered a debtor. Obviously, without this notification, no valid further procedure can take place (see Council of State Decisions Nos. 1566/2012, 4417/2011).”

Practically speaking, this means that if ΑΑΔΕ fails to serve the individual notice on the debtor, any subsequent seizure can be annulled by a court. In short, that first notice is a fundamental step in the procedure: it provides the legal basis for enforcement and informs the debtor of his or her alternatives.

Despite the courts’ repeated rulings—and despite numerous judgments confirming that it is mandatory for ΑΑΔΕ to follow the proper notification procedure (see, for example, a relevant statement issued by the Athens Court of First Instance on 19/10/2020 referencing many decisions and entitled, “Annulments of Seizures Due to Failure by the Greek State and EFKA to Prove That the Individual Notice Was Served on the Debtor”)—ΑΑΔΕ often does exactly the opposite: it freezes bank accounts immediately after a tax audit is concluded.