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This topic contains 7 replies, has 4 voices, and was last updated by Profile photo of Anonymous Anonymous 11 years, 2 months ago.

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  • #51272
    Profile photo of Anonymous
    Anonymous
    Participant

    Am just about to close on apartment in Costa Blanca. Was given the option to reduce the amount of VAT I have to pay of reducing the purchase price by 20% – even though on the contracts the price are printed for the full amount. It sounds great not to have to pay as much VAT but If I ever decide to sell for some reason or another would this have any reprocussions on my resale value. Would like some advice from anyone that knows.

    🙄 Guest

  • #59037
    Profile photo of Anonymous
    Anonymous
    Participant

    Have you been asked to pay the 20% reduction in another “unoficial” way? If so and you go ahead you could end up paying more tax if you ever sell in the future and a buyer wants to do things properly.

    The VAT is related to the price so I don’t see how you can reduce the VAT unless the price is reduced.

    Hope this helps

    Terry English

  • #59040
    Profile photo of Anonymous
    Anonymous
    Participant

    If VAT is involved you must be buying from a developer. Personally I would be wary of any developer asking for under-the-table payments, what they call ‘B’ money in Spain.

    As Terry points out, when you come to sell you will have to find a buyer prepared to pay you 20% under-the-table, and if you don’t then you will end up paying some of the tax the developer avoided when selling to you.

    Of course you might save some VAT at this point. Many Brits spend around 150,000 Euros on a property, and if you are ‘average’ then you’ll save around 2,000 Euros. However if you then had to sell tomorrow, and couldn’t find a buyer prepared to pay you under-the-table, then you would pay around 10,500 Euros in extra CGT (assuming you are non-resident). Also you’ll have to arrange to get 30,000 Euros in cash without raising any questions, oh, and it’s also a fiscal fraud with heavy penalties if you’re caught. But it’s up to you.

    Mark

  • #59041
    Profile photo of Anonymous
    Anonymous
    Participant

    YAWN! It is an insider “tip” salesmen offer, in hushed tones, to the expats paraphrased as ” I shouldn’t be telling you this so mention it to no one as I could lose my job if it came out but as I like you and you are a class above most I have to deal with I will show you how to save…….

    I hear it so often and it makes my blood boil!

    Historically Spain has had such a large black income economy most Spanish did this as their declared income would not support the real capital purchase price and they would also get a minor VAT saving. ( Portugal has the same problem so recently introduced a Law which gives the Local Council the option to buy the property at the purchase price declared to them. A clever tax policy IMO and Spain may well follow. )

    Anyway Non Residents of Spain should already be refusing any under declaration due to their CGT position:

    Take a purchase of a new property at 400K by a non resident and held for over a year:

    VAT and Stamp Duty ( IVA & Actos Jurídicos Documentados) is 8% so the bill would be 32K. To under declare by 20% reduces the bill to 25,600K so “saves” 6,400K in IVT and AJD.

    What the salesmen don’t say is the CGT rules in Spain will probably mean a Bill for 35% ( less any inflationary gain ) on the 80K under declaration come the time the property is sold.

    In other words they seem to be advising you to become a tax evader for a “gain” that is really a potential loss of around 20K.

    On the basis of this offer I suspect you are dealing with a crooked salesman or just a salesman who knows very little about Spain. As such trust nothing they say and engage one of lawyers or professionals this site recommendeds b4 closing and also make sure you can’t purchase cheaper going direct or via another agent.

    Best

    Loco

    NB: No one should take this post as being a definitive, authoritative or comprehensive overview of Spanish or International General Tax/Property Law.

    @guest wrote:

    Am just about to close on apartment in Costa Blanca. Was given the option to reduce the amount of VAT I have to pay of reducing the purchase price by 20% – even though on the contracts the price are printed for the full amount. It sounds great not to have to pay as much VAT but If I ever decide to sell for some reason or another would this have any reprocussions on my resale value. Would like some advice from anyone that knows.

    🙄 Guest

  • #59042
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi Terry,

    Yes the price of apartment would be reduced on paper if you like. Hence insted of VAT @ 7% being on my property approximately E16,000 it would be reduced down to E12,900. A saving of E3000. I would be a bit worried if I go to sell in future. Now developer so far and they are very bit has been nothing but professional and they have lots of very well appointed and finished developments. This reduction was mentioned to me by one of the staff – she didn’t push, said it is up to yourself. I am thinking along the lines of exactly what you have all said on the forum so far. For the sake of the E3000 now it might be better to pay it and have everything above board.

    Thanks and any more advice appreciated.

    Guest

  • #59043
    Profile photo of marios
    marios
    Participant

    Yes I would definitely not under declare as you will lose a lot more than you gained when you come to sell.

  • #59044
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi Guest

    Better in the long term to follow advice given by all contributors and pay the correct price.

    Good Luck

    Tery

  • #59046
    Profile photo of Anonymous
    Anonymous
    Participant

    Thanks for the advice am taking it on board and doing the right thing. Don’t what to pay hugh Capital gains in a couple of years time for the sake of saving E3,000.

    😀 Guest

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