Crack down on under-declared property sales
January 25th, 2008
There has been talk of a new crack down on under-declared property sales in Spain.
Q: What procedures and evidence do buyers need to follow / produce when purchasing a property to ensure they are not under-declaring? What are the possible penalties if found guilty of undeclaring?
A: Since the late eighties and during the nineties, under declaration on the purchase price in the Title Deeds has been an unfortunate, and endemic, practice in Spain. When the Euro was going to come into force in 2001, a massive exchange of B monies was produced for obvious reasons: the peseta was going to disappear. It would be naive to say that under declaration does not exist anymore, but because of the incorporation of the Euro as a new currency and due to the strict attitude of the Inland Revenue (Hacienda Publica) and the Public Prosecution Department (Ministerio Fiscal), this is a practice which appears to have been virtually abandoned. In fact, it is difficult to find this practice if you are buying from a well-known, reputable developer.
Buyers must ensure that every payment is made / transferred from their account to the seller’s account. The balance of the purchase price should also be made by means of a Bank Transfer or handing over a cheque or bankers draft on completion at the notary’s office. You should never make cash payments or payments which have not been documented prior to completion of your purchase. You should also ask – and this should be agreed in your contract – whether the full price is declared in your title deeds; otherwise you should pull out of the deal.
When you attend completion before the Spanish Notary, make sure all monies you have paid are declared in the title deeds and check that the price that appears in the deeds is the price agreed and paid by you. If you notice that the price to be declared is less than the one you have agreed and paid, you should mention this to the Notary and refuse to sign the title deeds unless the full price is declared. Nowadays, under declaration may not only lead to a penalty with surcharges and interest from the Inland Revenue, but in some cases, it may lead to imprisonment.
Story from www.opp.org.uk
