ECONOMY

Bill to tackle evasion of property transaction tax

The Finance Ministry is planning changes to the law regarding real estate transactions to secure revenues from the property transaction tax and value-added tax. It will therefore render accountable not just the buyer and the seller, but also banks, notaries and lawyers in case of tax evasion.

The bill that is being prepared will provide for fines for anyone involved in property tax fraud, and for the electronic submission of property contracts from 2013, to allow for cross-checking. New contracts will have to include the signatures of all of the above parties, resulting in the full monitoring of mortgage loans as well.

The difference between the so-called ?objective value? of a property sold and its commercial price means lost revenues for the state, as buyers pay a reduced transaction tax, while a considerable amount remains undeclared and therefore untaxed.

For instance, for the acquisition of a property worth 200,000 euros, a bank would issue a mortgage based on the commercial value, but the price stated in the contract would be as little as 60,000 euros. The rest of the loan above the objective value would be issued as a construction loan instead. This reduced the tax that the buyer paid, while if this concerned his main house, he would likely be exempt from the real estate transaction tax altogether.