Beware the black economy

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This topic contains 7 replies, has 5 voices, and was last updated by Profile photo of Anonymous Anonymous 10 years, 9 months ago.

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  • #51607
    Profile photo of Anonymous
    Anonymous
    Participant

    Be warned that the Spanish land registrars are clamping down on the cash element involved in so many sales. They have valued one property in the Costa Brava at 280k when 230k was paid and demanded 7 per cent of the difference from the buyer. An appeal has gone in to say this was the correct price, but it would appear the authorities believe that every deal involves cash (so many do, of course, or they simply wouldn’t go through). Does anybody have info on how the appeal system works and has anybody had any success. In the meantime, think long and hard about being involved in a purchase that involves any cash.

  • #61145
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi Colin,

    I’m not sure about the appeal system but no doubt your lawyer can advise you on this, or possibly other forum members. On a general note, when the ownership of a property, land or building, is transferred a tax form has to be completed and without this the Registrar will not normally register the change of ownership. If taxes apply then this has to be indicated on the form. However, the authorities have a set period, not sure if 2 or 3 years, when they can assess the validity of any transaction and if they consider the sales price is, or was, too low, then they will demand the difference between the tax actually paid and that which they consider should have been paid.

  • #61225
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    Anonymous
    Participant

    Generally and roughly the appeal involves the Authorities giving a value different than yours… if you appeal the court will name an independent appraiser… If his valuation does not exceed in a 20% the price you gave you win and they pay the process costs, but if it goes higher… they fine you and you have to pay

  • #61264
    Profile photo of Anonymous
    Anonymous
    Participant

    Rather than the land registry, we are, in fact, discussing the sinisterly named ‘oficina liquidadora’.

    The oficina liquidadora is effectively a back office to the property registry which is run by the regional government and assesses declared property values. The office often detects apparently under-declared values and issue tax demands – up to 4 years after the transaction has completed.

    Note that a buyer may receive a tax demand from the liquidadora even if no black money was involved. If a buyer was able to secure a very good price from, say, a distressed seller, the liquidadora may nevertheless issue a tax demand – ‘notificacion de liquidacion provisional del impuesto de transmisiones patrimoniales y actos juridicos documentados’ – based on the assessed value and not the price paid. The tax demand would be set at 7 per cent of the difference in price plus interest.

    After receiving the notification, the buyer has one month to appeal and organise his own professional valuation – as well as paying for an official ‘tasacion pericial contradictoria’. Oh, the demand must be paid before the appeal can be made.

    In short, care must be taken to ensure that a newly purchased property is not under-declared – even if all the money is paid in white. Your local notary should be able to advise you regarding the minimum acceptable value for declaration – which is a function of the official, or ‘catastral’, value.

    This is how the system works in Valencia. However, being Spain I am sure there are regional variations.

  • #61266
    Profile photo of Anonymous
    Anonymous
    Participant

    One of our companies bought some land on Fuerteventura during the eighties and a couple of years later the tax office (oficina de liquidadora) did in fact demand more tax and we had to pay so the system is generally the same throughout Spain. I wouldn’t say it is particularly sinister though. It’s only like a tax inspection elsewhere in Europe where the authorities would demand more tax if some one had underdeclared their income, possibly also with a penalty.

    In the end it is best to declare the real price paid. I would still do this even if it is low because of a distressed sale becuse this could help any appeal. It is deliberate low valuations, thorugh “split” payments which are the main problem The catastral value could be used but in the Canaries this is still not always the true value but some authorities accept it or close to it.

    Good Luck

    Terry English

  • #61269
    Profile photo of Anonymous
    Anonymous
    Participant

    I did not mean that oficina liquidadora was sinister in itself – only that the name does sound rather sinister.

    I also agree with you wholeheartedly – the best policy is to declare all and pay with best smile you can manage. 🙂

  • #61273
    Profile photo of Anonymous
    Anonymous
    Participant

    so would this mean that people buying from places like direct auctions where prices are suposedly much much lower than they should be that person will end up paying full whack for it anyway?¿

  • #61279
    Profile photo of Anonymous
    Anonymous
    Participant

    I wouldn’t have thought so since there is normally a reserve price, e.g. if an Ayuntamiento sells land or buildings due to unpaid taxes.

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