Cash Under The Table
April 7, 2008 by tony · Leave a Comment
Two things in life are unavoidable – and one of them is taxes. Avoiding paying tax is a national sport, but evading taxes is a criminal activity and in France can mean big fines and prison, luckily the guillotine is not used, often.
One of the reasons France has a strong property market, when prices in many other countries, including the US, the UK and Ireland are dropping, is that speculation in property is handicapped by taxation on transfers and on profits. Also loans are much more carefully arranged in France.
Evading taxation by dealing in cash was once a very common practice, I am not saying it does not still happen, but with modern communications and tracking systems it is far more dangerous.
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Hello,
Great Newsletters… Do you know if it’s still common practice to under declare the sale price of a flat in Paris…? I am looking to buy and have come across people asking me to pay in cash so they can avoid tax..
Also should I offer to do that anyway or will people think I’m a criminal… many thanks for your advice,
Marie
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Hello Marie,
The reason people ask for cash is to avoid paying Capital Gains Tax on the sale of their property – this is a criminal offense and the Notaire will ask if this has been done when you purchase.
The disadvantage for the buyer, apart from being a criminal offense that is, is that the price paid is lower than the value and when the property is resold again, the buyer has to pay a lot more tax (unless they keep if for 16 years or it is their main residence and they are French tax payers).
I know (so do the tax authorities) that this is still done – my advice is not to get involved in this in any way – the price is rarely reduced and only the seller gains, the buyer loses.
This used to be a common practice, Notaire were known for “leaving the room” for a discrete moment and envelopes were passed around, I have heard of buyers using forged notes to “pay” this cash sum – the seller cannot complain of course as they risk imprisonment anyway for tax evasion.
I hope you find your perfect apartment with all the right “feelings”
Best wishes
Tony
Tags: frenchproperty, france real estate,