# "The Black"



## Relyat (Sep 29, 2013)

Having read about it, yesterday I came across it.

Having negotiated buying a car, we discussed arrangements to apy for it and collect it. The seller then said that the invoice would show a figure of x amount, equating to 75% of the actual purchase price. This figure he said was "white" and could be paid by any means I wished, the balance would be "black" and would have to be paid in cash. When I queried it, he explained that it was to do with tax, but if I wished the full purchase price to be shown on the invoice, then the price would increase to cover the amount of tax.

All this from a "proper" car sales showroom. I was surprised that it was so blatant.


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## 213979 (Apr 11, 2013)

I'm not surprised. 
One of the houses we looked at was to be paid for like that. A reduced sum over the table, the rest under. Ridiculous. The builder probably had his accounts closed or something. I was surprised how up front they were about their (illegal) wishes.


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## skip o (Aug 1, 2011)

I made offers on two properties and both counter offers had about 25% black. No thanks.


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## DunWorkin (Sep 2, 2010)

When we bought our house (11 years ago) our solicitor suggested this. 

He said the notary was aware of this happening and would leave the room while we handed over the cash. 

We said we would not do this and paid the full amount by banker's draft. This amount was what was put on the escritura.

I was shocked that a solicitor would be involved in this but even more shocked that the notary (a government employee) was also involved.


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## Pesky Wesky (May 10, 2009)

Relyat said:


> Having read about it, yesterday I came across it.
> 
> Having negotiated buying a car, we discussed arrangements to apy for it and collect it. The seller then said that the invoice would show a figure of x amount, equating to 75% of the actual purchase price. This figure he said was "white" and could be paid by any means I wished, the balance would be "black" and would have to be paid in cash. When I queried it, he explained that it was to do with tax, but if I wished the full purchase price to be shown on the invoice, then the price would increase to cover the amount of tax.
> 
> All this from a "proper" car sales showroom. I was surprised that it was so blatant.


Well, I *am* surprised that this was the case in a car showroom. We bought a car 2 years ago and it was never mentioned, neither was it for the car we bought 12 years previously, but of course everywhere's different.
In house buying it seems to be endemic and is very difficult to *not* purchase in this way.


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## larryzx (Jul 2, 2014)

About 20 years ago the Spanish Government issued a notice that in future the price declared for the purchase of a property 'should reflect more accurately the price paid '

At that time I doubt that the actual price was ever declared.

That 'system' of course had a knock on effect. If one bought say at 100,000 but declared 80,000, then when they sold, if they declared the actual price, there would be 'built in' apparent capital gain of 20,000, which would be taxable, thus it was 'normal' to perpetuate the system.


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## Rugbyplod (Oct 14, 2014)

I had to both buy and sell my property in Spain this way both times I used a solicitor and both times at the right moment the notary had to photocopy some paperwork, when I tried to pay for my hotel with the money I had been given the machines would not accept it I had a very worrying couple of hours waiting for the bank to open and accept my 500 euro notes.
I am again looking at buying in Spain and would appreciate any advice where I do not have go into this black money situation,I have even thought of paying in the uk if I bought of an expat, is that legal


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## larryzx (Jul 2, 2014)

Rugbyplod said:


> I am again looking at buying in Spain and would appreciate any advice where I do not have go into this black money situation,


If one draws up a compraventa (buy / sell agreement) that shows the actual price which has been agreed, then whatever may have been the verbal arrangement, I see no reason why when in the Notary's office one could not insist that the correct amount be shown for the transaction.

The seller could only refuse to compete, in which case he/she would be liable to repay the deposit and an equal amount in compensation.



I saw that as a potential problem when I was last selling some 12 years ago. 

The buyer's abogado suggested that the compraventa be draw to show the price which we had agreed would be declared, and the balance, between that and the actual price, as the amount the buyer was agreeing to pay for furniture and fittings. 

The Solicitor explained, in that way the buyer would have to pay considerably more in IVA if he chose to demand that the final sales contract showed the actual price instead of the agreed value.


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## snikpoh (Nov 19, 2007)

larryzx said:


> The Solicitor explained, in that way the buyer would have to pay considerably more in IVA if he chose to demand that the final sales contract showed the actual price instead of the agreed value.



... but there's no IVA on second-hand property


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## larryzx (Jul 2, 2014)

snikpoh said:


> ... but there's no IVA on second-hand property


Impuesto de Transmisiones Patrimoniales


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## lyric (Oct 9, 2014)

My Solicitor has given me a discount (50€ on 200€) for cash.

When we bought 9 years ago the Nerja Notario, the one near the bus station, had a special room for cash transactions, then you went in to see "The Man" for the final transaction.


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## Pesky Wesky (May 10, 2009)

lyric said:


> My Solicitor has given me a discount (50€ on 200€) for cash.
> 
> When we bought 9 years ago the Nerja Notario, the one near the bus station, had a special room for cash transactions, then you went in to see "The Man" for the final transaction.


But as you say that's a discount, not money under the table, isn't it?


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## Pazcat (Mar 24, 2010)

We had this a number of times proposed to us when we were looking for a house.
The greedy so and so's, they could of had a sale at the price they asked for on the listing but insisted on a black payment. At least the house is still for sale and I hope they regret it when another year has passed and it's still sitting there falling into disrepair and they have to drop the price to reflect it.

No sympathy at all. 
This is also another reason that practically every single house on the market needs to be updated to reflect the actual prices paid, square meters are correct and the buildings, extensions, pools etc... need to be added to reflect what is actually there.


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## snikpoh (Nov 19, 2007)

larryzx said:


> Impuesto de Transmisiones Patrimoniales


Exactly - not IVA but ITP which is transfer tax.


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## The Skipper (Nov 26, 2014)

Despite all the measures introduced by the government to stamp out tax evasion, my Spanish friends tell me that it is still the norm to pay around 20% of the price of a house in “black” money. Banks now have to report large withdrawals to the tax office, who cross-check this with house purchase transactions around the same time, but to get around this people simply make numerous smaller withdrawals during the weeks before completion of the purchase. A friend who works in a bank told me this is normal practice. By the way, when I bought a new car this year the salesman gave me a €2,000 discount under the Government´s PIVE programme, even though I didn´t officially have an old banger to trade in. To get around this, he conducted a “ghost” transaction involving the purchase of a 12-year-old banger which I never even saw but which the paperwork showed that I owned for one day and then traded in. He assured me this is normal, legal practice, but no doubt somebody will tell me differently ...


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## larryzx (Jul 2, 2014)

snikpoh said:


> Exactly - not IVA but ITP which is transfer tax.


Sorry but of all people here, I believe you understand the significance of the point I was making. That was of course that the buyer would have shot himself in the foot had he insisted that he would show the full price as the declared value, instead of what had been agreed before his solicitor, of should I say 'abogado' as we are in Spain !


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## Chopera (Apr 22, 2013)

When you purchase a property the tax paid by the buyer is usually based on a multiple of the catastral value unless the declared purchase price is higher. During the boom the actual purchase price might have often been higher than the value based on a multiple of the catastral value, so I can see the benefit in paying some of it in black back then. But these days the actual prices paid are usually less so there's no benefit to the purchaser if they pay in black, unless they want to launder some money. For the seller there might be some CGT savings in certain cases, but again I doubt that's usually the case. The people that really did encourage the use of black money were the developers and builders selling new properties, because they could save a lot on VAT. All they had to do was accept the cash and reduce the price accordingly - no need for funny business with notaries leaving the room.


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## kalohi (May 6, 2012)

The Skipper said:


> Despite all the measures introduced by the government to stamp out tax evasion, my Spanish friends tell me that it is still the norm to pay around 20% of the price of a house in “black” money. Banks now have to report large withdrawals to the tax office, who cross-check this with house purchase transactions around the same time, but to get around this people simply make numerous smaller withdrawals during the weeks before completion of the purchase. A friend who works in a bank told me this is normal practice. By the way, when I bought a new car this year the salesman gave me a €2,000 discount under the Government´s PIVE programme, even though I didn´t officially have an old banger to trade in. To get around this, he conducted a “ghost” transaction involving the purchase of a 12-year-old banger which I never even saw but which the paperwork showed that I owned for one day and then traded in. He assured me this is normal, legal practice, but no doubt somebody will tell me differently ...


Totally legal. I also bought a car this year under the plan PIVE without having an old banger to trade in. The car dealership also arranged for me to buy an old car for a day. That was no "ghost" transaction that was carried out. I really did own the old car for a day, and the law that governs the Plan PIVE allows this. It may sound shadey, but part of the idea behind the Plan PIVE is to get old clunkers into the junk yard. That old car that I bought is now in a junk yard. Government's mission accomplished.


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## kalohi (May 6, 2012)

The Skipper said:


> Despite all the measures introduced by the government to stamp out tax evasion, my Spanish friends tell me that it is still the norm to pay around 20% of the price of a house in “black” money. Banks now have to report large withdrawals to the tax office, who cross-check this with house purchase transactions around the same time, but to get around this people simply make numerous smaller withdrawals during the weeks before completion of the purchase. A friend who works in a bank told me this is normal practice. By the way, when I bought a new car this year the salesman gave me a €2,000 discount under the Government´s PIVE programme, even though I didn´t officially have an old banger to trade in. To get around this, he conducted a “ghost” transaction involving the purchase of a 12-year-old banger which I never even saw but which the paperwork showed that I owned for one day and then traded in. He assured me this is normal, legal practice, but no doubt somebody will tell me differently ...


And you do realise that you didn't actually get a €2,000 discount from the car dealer. A good part of that is money given to you by the government, and it will have to be declared on your income tax.


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## anles (Feb 11, 2009)

larryzx said:


> Sorry but of all people here, I believe you understand the significance of the point I was making. That was of course that the buyer would have shot himself in the foot had he insisted that he would show the full price as the declared value, instead of what had been agreed before his solicitor, of should I say 'abogado' as we are in Spain !


I don't think that most people would consider that paying the full amount of tax was "shooting themselves in the foot". To do otherwise (which admittedly was done frequently) is not only illegal but also puts you at risk of having to pay a lot more in CGT should you sell your property at a later dtae to someone who is more honest and insists on the full amount they are going to pay being reflected on the deeds. You also run the risk of hacienda not accepting the valuation and increasing the tax. Of course, this can happen when you do declare the full amount but is much more likely to happen if you do not. I found that the vast majority of people were much more comfortable doing things above board when I worked as a translator even though in many cases this option was offered to the buyers.


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## larryzx (Jul 2, 2014)

anles said:


> You also run the risk of hacienda not accepting the valuation and increasing the tax..


Sorry but you are showing your lack of experience. 

When I have sold or bought. in the days when declared value and actual price were normally different, I have always checked on the value which Hacienda would be satisfied with. An abogada can check the tables and come up with the per square metre figure for any property. To do otherwise would have been extremely foolish. Although I know some have either taken the risk or were not even aware of it.


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## anles (Feb 11, 2009)

larryzx said:


> Sorry but you are showing your lack of experience.
> 
> When I have sold or bought. in the days when declared value and actual price were normally different, I have always checked on the value which Hacienda would be satisfied with. An abogada can check the tables and come up with the per square metre figure for any property. To do otherwise would have been extremely foolish. Although I know some have either taken the risk or were not even aware of it.


I know of several cases where the full amount was declared but as the catastral value had not been revised in 1994, they still had to pay more because it was very low. Yet the figures on paper were correct. It's not just a case of sq metres either is it? As you know, a property in a big city has a much higher catastral value than one in a rural area. I live in an identical flat to my neighbour, they are VPOs, but she bought hers from the original owner and the xunta revalued it so she actually paid just over double a month to what the rest of us paid.


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## larryzx (Jul 2, 2014)

anles said:


> As you know, a property in a big city has a much higher catastral value than one in a rural area. I live in an identical flat to my neighbour, they are VPOs, but she bought hers from the original owner and the xunta revalued it so she actually paid just over double a month to what the rest of us paid.


VOPs I believe are different in that until they are removed from the system they can only be sold (legally, thus the black economy is rife there) at a controlled price. 

However, I do know that tables are accessible by abogados, notaries etc which classify a property, then a formula for that property (so it does of course vary with the type, location, etc) based on the catastral value is used to decide the Hacienda per sq metre value. 

It's not rocket science nor guesswork, just plain maths, performed by those who do know how. I have a notary friend who never got it wrong.


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## mrypg9 (Apr 26, 2008)

anles said:


> I don't think that most people would consider that paying the full amount of tax was "shooting themselves in the foot". To do otherwise (which admittedly was done frequently) is not only illegal but also puts you at risk of having to pay a lot more in CGT should you sell your property at a later dtae to someone who is more honest and insists on the full amount they are going to pay being reflected on the deeds. You also run the risk of hacienda not accepting the valuation and increasing the tax. Of course, this can happen when you do declare the full amount but is much more likely to happen if you do not. I found that the vast majority of people were much more comfortable doing things above board when I worked as a translator even though in many cases this option was offered to the buyers.


I agree with you 100%. Tbh I'm surprised that someone who has, we are told, many years of experience in the Met investigating any and every crime you can think of should in any way condone tax evasion, and on such a scale. Tax evasion is as you say illegal. It matters not one iota if 'everyone does it'. It's wrong whether it's politicians or businesspeople or people selling houses.
Even after six years here I am shocked at the number of times apparently respectable companies avoid IVA. We changed garages for our car because the village taller accepted cash only without any invoice. We now use one where we pay more but get an invoice showing IVA paid and also part numbers and details of work done. The people who work on our house give proper invoices. We had some work done recently, I had to ring the company and ask for a 'proper' invoice and I got one, with IVA.. My OH was scrupulous about paying all taxes due when she owned her business, whether VAT, CT or whatever. We did not do 'discounts for cash'.
When I worked I had no choice other than to pay tax so as far as I'm concerned so should everyone else.
This acceptance of what is criminal activity is contributing to making Spain a poor place in which to do business. It is also a factor contributing to lack of trust and anyone who has run a successful business will know that enterprise flourishes where the trust level is high.
Spain is trying hard to deal with its problems. Corruption in high places is rife, as we know. But that is no excuse for anyone to descend to that level, stealing from the public purse at a time when Spain needs every cent of tax revenue it can get. 
I know this is an unpopular viewpoint but if you can't afford to pay the full price for a house, whatever, without fiddling the tax,you can't afford it period.


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## larryzx (Jul 2, 2014)

mrypg9 said:


> I agree with you 100%. Tbh I'm surprised that someone who has, we are told, many years of experience in the Met investigating any and every crime you can think of should in any way condone tax evasion, and on such a scale. .


Mary I have never stooped to relying on making pathetic remarks about your antecedents. I am surprised that someone with your educational background so often finds the need to do so.


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## Horlics (Sep 27, 2011)

I bought this year. I used a lawyer who a friend used approximately 11 years ago. 

11 years ago my friend took to the notary office a large bag containing 20% of purchase price in cash. This was pre-arranged, of course, with the seller's and buyer's lawyers.

No mention of any such arrangement was made while I went through the process this year. At some point I asked the lawyer about it and he said "we don't do that these days - thing of the past".

So it seems times are changing, in some areas at least.

(And note... When we discussed the practise I was not in any way exploring whether I could do it - i wouldn't)


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## anles (Feb 11, 2009)

larryzx said:


> VOPs I believe are different in that until they are removed from the system they can only be sold (legally, thus the black economy is rife there) at a controlled price.


I don't understand what you mean. If they can only be sold legally, why would black economy be rife? The system has now changed, but these flats were owned by the Xunta and we paid our mortgage to the Xunta directly. Once you had paid a certain percentage you could sell it and the new owner took on the mortgage with the Xunta unless the previous owner had paid off the full amount which was only possible after a certain time.


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## mrypg9 (Apr 26, 2008)

larryzx said:


> Mary I have never stooped to relying on making pathetic remarks about your antecedents. I am surprised that someone with your educational background so often finds the need to do so.


And I have never stooped to condoning tax evasion. Not avoidance. Evasion. A crime.
I repeat that I am surprised that someone who spent their career in law enforcement could adopt such a stance. My 'antecedents' - not the correct choice of word in this context, btw, I presume you mean to say 'previous employment' - involved trying to instil into young people decent values such as honesty, a task that often seemed fruitless. But if we all give up and fall back on cynicism, opportunism and downright greed, we cannot complain about the kind of society we live in.


I found it hard to make sense of your post but I would say this: if one is going to brandish the law and knowledge of it like a badge, surely one should show respect and obey it?

Tax evasion, fiddling the benefit system, all are crimes. The former does not rank higher than the latter either. Both are theft from the public purse.


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## mrypg9 (Apr 26, 2008)

Horlics said:


> I bought this year. I used a lawyer who a friend used approximately 11 years ago.
> 
> 11 years ago my friend took to the notary office a large bag containing 20% of purchase price in cash. This was pre-arranged, of course, with the seller's and buyer's lawyers.
> 
> ...


I think you are in a majority of honest folk on this Forum.


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## Madliz (Feb 4, 2011)

One is frequently quoted prices without IVA/VAT when making enquiries here. When looking at fireplace inserts recently, I asked if it was included and told, with a sneer, that I could pay it if I wanted, with the inference that I must be stupid if I did.

I'm sure these are the same people, both sellers and buyers, who are up in arms at any cuts in services.


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## Horlics (Sep 27, 2011)

I don't know much about the backgrounds of anybody here, so I am not trying to provoke anybody in particular, but I have to say.....

Your dealings with Dibble must have been different to mine over the years. And judging by the news throughout 2014, the law enforcement authorities in the UK have problems with conduct and honesty at every level.



mrypg9 said:


> I repeat that I am surprised that someone who spent their career in law enforcement could adopt such a stance.


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## larryzx (Jul 2, 2014)

mrypg9 said:


> And I have never stooped to condoning tax evasion. Not avoidance. Evasion. A crime.
> I repeat that I am surprised that someone who spent their career in law enforcement could adopt such a stance. My 'antecedents' - not the correct choice of word in this context, btw, I presume you mean to say 'previous employment' - involved trying to instil into young people decent values such as honesty, a task that often seemed fruitless. But if we all give up and fall back on cynicism, opportunism and downright greed, we cannot complain about the kind of society we live in.
> 
> 
> ...



Sorry. Please excuse me for making it so difficult for you to understand my posts, but my lack of education and ability to string a few coherent sentences together, is down entirely to the rubbish teachers I had to tolerate. I hope over the intervening years that teachers now try a little harder to do a professional job. 

I will continue to try and overcome that poor start they inflicted on me. and will be duly grateful for all the corrections you make to my posts. Thank you so much Miss.


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## baldilocks (Mar 7, 2010)

One of the _carpinterias de aluminio_ in the village will no longer do any work for us because we asked for a receipt (it was for about 1100€) - his loss because we now want four windows changed from wooden to uPVC, so the business goes to one who is above board.


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## Madliz (Feb 4, 2011)

baldilocks said:


> One of the _carpinterias de aluminio_ in the village will no longer do any work for us because we asked for a receipt (it was for about 1100€) - his loss because we now want four windows changed from wooden to uPVC, so the business goes to one who is above board.


To go off topic a little,  when I had my energy certificate done, I was told by the inspector that my wooden windows would help the rating as they are much more thermally efficient than aluminium ones.


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## baldilocks (Mar 7, 2010)

Madliz said:


> To go off topic a little,  when I had my energy certificate done, I was told by the inspector that my wooden windows would help the rating as they are much more thermally efficient than aluminium ones.


They are also much more draughty, thereby negating any improvement in insulation value.


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