Possible buyer who wants to pay part cash


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This topic contains 8 replies, has 7 voices, and was last updated by Profile photo of jp1 jp1 5 months, 4 weeks ago.

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  • #190554
    Profile photo of Colin McC
    Colin McC

    I wrote earlier in the year to get some advice on taxes for selling our apartment in central Barcelona, at that time we had a buyer but it fell through.It gave us a chance to check out legal implications although we have since been trying to find another buyer and despite the so-called buzzing property market, we have had very few visits and no offers. Today we had a visit and the estate agent contacted my partner excitedly to say they are very interested, they live abroad and are leaving tomorrow. She was asked if we would be interested to sell for a selling price on paper that is just a few thousand above the purchase price on the deeds from 2002. This means the buyer will pay around a third of the sale in cash. This saves them considerable taxes and would do the same for us, especially as our main issue was not proving our tax residency status (even though we are 100% residents) and the prospective of having to pay a large amount in CGT. It is our only property worldwide and we need every cent. But, as with every silver lining, there is a big dark grey cloud! There would be implications for having such a large amount of cash surely? Plus we want to send the funds to my UK bank account and buy property in the UK, if we had thousands of euros in cash we would need to transfer into sterling and best rates are online in large sums, this is assuming we can even get that kind of cash into the UK! Even if we could and would be willing to convert into sterling over a period of time, we would need to prove where we got all that cash from? The sales documents would only reflect the lower figure. We want to sell but not sure how viable or safe this kind of transaction would be. I would assume that the risk is more for the buyer who risks being charged high CGT when they come to sell in the future? Any comments and advice would be greatly appreciated! thanks

  • #190570
    Profile photo of Mark Stücklin
    Mark Stücklin

    Hi Colin,

    Sorry to hear the last buyer fell through. This sounds like trouble to me.

    All the questions you raise are spot on, and basically you answer your own questions. You also have to consider the risk of being given counterfeit notes.

    It’s unusual to hear of a potential buyer wanting to pay such a big % under the table these days (it used to be very common).

  • #190590
    Profile photo of Speakfreak

    Why do people somehow think it’s alright to not pay taxes? It’s the worst sort of stealing. It’s racking up a bill (for schools, hospitals, security, pavements) and skipping town without paying up even though you have the money. No better than not paying any other bill at a restaurant or shop. Taxes apply to you too- so pay up. Why should my taxes subsidise your life?

    And when you get stuck with a suitcase of fake notes don’t you dare think of going to the police or to the court- you didn’t want to pay for them remember. This is called corruption.

    • This reply was modified 6 months, 1 week ago by Profile photo of Speakfreak Speakfreak.
  • #190592
    Profile photo of Colin McC
    Colin McC

    Thanks Mark, I wanted to put this out here as this goes on a lot here in Spain and the Spanish are more guilty of this than foreigners! We had already decided not to touch this kind of transaction and my partner wrote to the Spanish estate agent to tell her we will not touch anything illegal, she insisted on writing to her via WhatsApp as it cannot be traced as with emails, so they are more than aware of the illegality but offered it as a possibility so they too are condoning such practices to get a sale! If we were more naive, we could have agreed and found ourselves accused of money laundering, tax evasion and as you say, be left with forged euro notes!

    So SpeakFreak, you should not be too fast to accuse people of tax evasion before finding out the facts, aside from this there are sometimes valid reasons for having to consider doing things outside the law. Not sure if you live in Spain but if you do, the attitude to paying taxes is quite different. Having said that there are plenty like that back in the UK too. We always paid our taxes there and my partner has a job where she pays hers in Spain also. If we sold our apartment and owed CGT without paying it, the reason would not be for tax evasion but because it is our only property worldwide and the the law is very unfair here, we would pay the required retention which is what we are obliged to pay. The money came from the UK in the first place. If I were you I would be careful of making assumptions.

    • #190600
      Profile photo of Chris Nation
      Chris Nation

      As we see in Mark’s news on rentals, “The biggest number of black market rental properties are located in Murcia (61%), followed by the Canaries (56%), and Andalusia (55%).” These are amazing figures and how any level of government can live with them for a moment is astonishing. But in Spain, this has been the case for decades.

      Yes, it is true that tax dodging and cash deals are a form of stealing, But the levels of the black market economy in Spain, not just in property but across the board, indicates that some societies regard some forms of stealing as acceptable or, at least, are condoned by society at large. In southern Europe, paying tax is widely regarded as discretionary.

      In researching a possible commercial property purchase – a guest house in Mojacar – I was told that 60% of the turnover of ALL business in Andalucia was on the black market. The rate for Mallorca was given as 40%. These figures were confirmed by a second opinion.

      The Institute for Economic Affairs survey into the black economy stated, “Around half of all construction workers in Germany undertake shadow work; and over 80% of all Danes find shadow work acceptable – at least in some circumstances.”. In other words, an employed German or Danish plumber or electrician will, for example, install a new sink or wire a garden shed with mains sockets, on a weekend, for cash.

      But the overall level of black market activities in these countries, and in UK, is very low. In Spain, it’s huge.

      “There are sometimes valid reasons for having to consider doing things outside the law”. Sorry. Not so. There may be reasons why someone might consider doing something outside the law but, by definition, those reasons cannot be described as ‘valid’. The OED includes this definition of  “<span class=”definition”>Legally binding due to having been executed in compliance with the law:</span>”

      So, though tax dodging is endemic in Spain and regarded as less antisocial than appearing drunk in public, it can never be ‘valid’. But it will continue to be widely practiced because, as everyone [Spanish] kept telling me when faced with a cash deal situation recently “Es normal”.

  • #190603
    Profile photo of Speakfreak

    @Colin. I do live in Spain. In fact I live in Barcelona like you- but that’s irrelevant to whether or not your proposal to skip town without paying your tax is “valid”. I am well aware of the different attitude to tax compliance that still exists here- and I’m against that too. I can imagine one root is a historical disempowerment of people as a result of the Franco dictatorship where people were understandable keeping money for themselves rather than propping up a bunch of fascists and their cronies. I’m even for a kind of “mini-job” tax free environment to legitimise the truly destitute trying to survive day-to-day.

    But none of that applies to you. Let me be frank. You rolled up in Barcelona 12 years ago from one cushy free western democracy to another, chasing the dream to be an “artist” and yet a owning your own home. In paradise. However you didn’t bother with trifling things like registering properly or paying your dues to society. How many rich artists do you know? And how many poor ones? Did you actually try and sell any of your work? I mean properly- to people with money- not just to a bunch of equally penniless hipsters in some side street in Born? If they didn’t buy- then maybe it’s because your art just isn’t what people want to buy. Dream over- it becomes a hobby and you learn Spanish and get another job that pays money.

    What you can’t do is expect everyone else who was a little more grounded in reality pay for your fantasy of artist and homeowner and then complain when it bursts that the law is unfair taxing you on “the only home you own worldwide”- that’s worth €200,000.

    The 3% retention isn’t all you obliged to pay. It’s an attempt by the government to reduce the losses of ex-pats skipping town without paying their bills. People like you.

    BTW I wouldn’t rely on them not coming after you- they’ve repealed the ETSD and are replacing it with automatic exchange of financial information between EU states. That leads the way to easier pursuance of cross-border tax evasion with the UK. What about moving to Panama? Ah second thoughts, maybe not…

    • This reply was modified 6 months ago by Profile photo of Speakfreak Speakfreak.
  • #190661
    Profile photo of GarySFBCN

    It’s good to see a few responses that advocate paying one’s share of taxes.  I see so many people spending a great deal of time trying to figure out how evade taxes.  Maybe it is easier for those from EU member countries (I am not), but I would never be so bold as to knowingly break the law as a guest-resident in a foreign country.  I certainly wouldn’t expected anything less than the maximum penalty if caught.

    I agree that some processes should be streamlined and that the taxes in Spain are high – so high that I’ve delayed my ‘fiscal residency’ for a few years.  But who moves to Spain without knowing that?

    I too have a place in Barcelona.  It is a pretty clean city with solid infrastructure and great public services, such as public transportation.  It is easy to how the tax revenue is spent.

  • #190662
    Profile photo of MoltMaca

    It’s very encouraging to see the responses in favor of paying taxes. As a US citizen residing permanently in Barcelona I appreciate knowing my tax euros are going to positive activities, like keeping the streets clean and providing social services (much preferable to supporting the military-industrial complex.) Gotta pay your fair share.

  • #190663
    Profile photo of jp1

    Colin, I know you have said you aren’t prepared to do this…

    But continuing with the theme, I have wondered what would happen if you sign in the notaries office and then the buyer doesn’t hand over the cash. Or if the notary doesn’t leave the room prior to signing so that cash can be handed over. I have also heard, whether this is urban legend or not I don’t know, but sellers then being robbed in the streets, as they leave the notaries office, presumably the buyer getting his cash back.

    I remember shopping in Ikea in Malaga about 4 years ago and the guy in front of me had bought some very large purchases. the bill came to just over 4000 Euros, he then proceeds to count out the sum in cash from his pocket.



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