In Spain some building companies prefer payments in cash to avoid paying taxes.
"Black money" is not then declared to the Spanish Inland Revenue (Hacienda).
The company uses the black money to pay, its own undeclared expenses (undeclared
wages to illegal immigrant workers, purchase of materials...) which, in turn,
reduces the overall company costs. If you pay by cheque, the building company
has to pay the cheque into its bank account, which means the money becomes visible,
which means it has to declare it to the Inland Revenue and pay the corresponding
taxes.
If you decide to go ahead with your purchase,
it is very very important that before handing over any cash at all you sign a
formal, and legal, private purchase/sale contract (checked by an expert) which
clearly specifies the following basic elements of the purchase and the sale agreement:
- Identification of the seller as the legal owner of
the property you are going to buy
- Exact description
of the property which is going to be built - squared meters, closed price, materials
to be used in the construction
- Form of payment.
This is particularly important, because if you agree to hand over certain sums
of money at certain stages of the building process, the builders will only be
legally bound to keep to the dates of completion if the dates and amounts are
reflected in the contract.
It is also a good
idea to ask for a receipt each time you make a payment.
Property in Spain