Debt prescription

Some companies that provide utilities such as water, electricity, telecommunications and other public services try to charge thousands of euros for bills related to consumptions done more than six months ago. This type of debt collection, although not illegal, can be blocked by the consumer, who sometimes does not know this.

Law number 23/96 of July 26 (Public Services Law) is quite enlightening. Firstly, it is important to identify the types of services covered: water supply service; electric power supply service; natural gas and LPG – Liquefied Petroleum Gas supply service; electronic communications service; postal services, wastewater collection and treatment services; and urban solid waste management services.

The Public Services Law establishes rules that must be obeyed for the protection of the consumer when providing essential public services.

Concerning the prescription period, the law says that “the right to receive the payment for the service provided shall expire six months after being provided”. This means that the right of the company to receive the money of the service rendered prescribes after six months. Thus, the consumer of this type of service does not have to pay anything that is older than six months. This applies to private customers and companies.

It is, therefore, advisable that the consumer checks the invoice dates before paying them. Although this charge is not illegal, because the companies are not obliged to warn the customer that the values have prescribed, the consumer can refuse to pay. To do so, the consumer must oppose to pay, expressly invoking the prescription, according to the law, and request the cancellation of the required amounts.

The prescription must be invoked by the contract holder, addressing the company, through a registered letter with acknowledgment of receipt, keeping a copy of the letter and safeguarding the record of sending it. The prescription can also be argued in court in debt recovery proceedings.

The user of the service should not pay first and complain later. The consumer must invoke the prescription period before the payment because, once paid, it won’t be possible to recover the money.

In toll management services, it’s different. If the driver uses an electronic toll without having an appropriate equipment, they have to make the post-payment within five working days. After these five days, the drivers still have 15 days to pay the amount of the rates due and avoid a fine and a tax foreclosure procedure. If the driver does not pay within 15 days, the owner of the car is notified again, this time by the Finanças.

Drivers with debts to the tax authority (Finanças), related to non-payment of toll rates, receive a judicial notification. Those notifications are sent by post to users who have not paid toll charges, administrative costs and fines.

Law number 25/2006, of June 30, concerning “Transgressions – Toll Charges” is the law that regulates this type of misconduct. The infraction occurring in a SCUT (name given to the motorway and highways financing model implemented in Portugal) is punished with a fine of a minimum value corresponding to 7.5 times the respective toll rate, but never lower than €25, with a maximum value corresponding to four times the minimum value of the fine.

The general regime of tax offences is applied to these administrative offences, so the tax authority is responsible for promoting the compulsory collection of tolls, as well as interest, fines and respective costs of the procedure.

For events that happened before 2012, the prescription period is two years; however, currently, the limitation period of the misdemeanour procedure is five years (for events occurring after 2012). This is relevant because if the driver does not pay this debt to the tax authority, the owner of the vehicle can ultimately have his/her salary, the vehicle or eventually his/her house seized.

By Dr Eduardo Serra Jorge
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Dr Eduardo Serra Jorge is founding member, senior partner and CEO of lawyers firm Eduardo Serra Jorge & Maria José Garcia – Sociedade de Advogados, R.L., created in 1987.
In his column, he addresses legal issues affecting foreign residents in Portugal.
Faro office at Gaveto das Ruas Pedro Nunes e José de Matos, 5 R/C
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