We are in negotiations for a property in France, asking price €200,000. We’re not that far apart between asking price and offer. The seller ( english) has suggested we pay half in sterling and half through the notaire in euros, which could make the difference. However, what are the implications of this, and how much would we save in reality ?
Also, on paper, will it appear we have only paid €100,000 for the property, and, if we sell in the future at the market price, will it appear we have made a huge, taxable profit ?
We had to pay to the Notaire’s account so it had to be euros.
Off the top of my head… and without deep deliberations… I would say NO to what the Seller is suggesting.
The price paid for the property should be clear to all concerned… in times gone by… “money might change hands, under the table” without the Notaire’s knowledge… but it’s not legal.
If there is some way the Price is paid in 2 currencies with the Notaire’s approval… that is different… but the Price is the Price and must be clearly stated on all documents.
Hi Charlie and welcome to SF
There be dragons…
if this is not handled carefully by the Notaire, there could be issues concerning money laundering to which you would be contributing.
The question must be asked, with so many Fintechs available these days, why the whole amount cannot be paid in Euro (as would be the expectation) and then the seller converts what he requires to Sterling. thereafter.
Beyond doubt, that is the safest option to protect all interests.
I realise that with the current rate of exchange, you will not get so much in exchanging Sterling for Euro just now but with a significant amount to exchange, someone like TorFX would be a much safer bet and they will do the due diligence for you in respect of compliance with ML regulations.
What the seller does later is a matter for him and not your concern.
Totally agree, Don’t put yourself at risk.
Just DONT even consider it.
Such a suggestion would make me very wary of other “dodgy” practices that have been done on renovations.
Yes potentially at a very high rate of around 36%.
and that’s not including any money you then spend on improvements to the property for which you may not be in a position to justify against the consequential uplift in value.
Hmmm… actually… @Mat_Davies raises a good point… after the suggested payment “wriggle”…I’d be double-checking everything to do with the property concerned…
and make sure you do understand every word of anything you are signing/agreeing to… don’t just take the Seller’s word that “blah blah blah” means “xyz”… check and double check… take your time to follow things carefully.
I don’t know either.
If you both sign a compromis for 100 000 € in front of a notaire, the seller is legally committed to sell you the property for that amount.
An unrecorded sterling transaction on the side? I don’t know what he’s talking about. We agreed a selling price of 100 000 euros, here is the signed contract.
Thank you for all your thoughts. I like Sandcastle’s suggestion
Don’t buy from a crook, what other dodgy things may they have done?
Can’t even believe someone suggesting the idea - begs many many questions about the seller don’t do it, as you will expose yourself to many issues in future, as chickens always come home to roost! Tempting as it may be to close a deal, strictly not worth the risk of getting into ‘hot water’ with the authorities.
Like others my reaction is
The notaire is a public official responsible for collecting the taxes. To do this job properly the money must go through his/her account. So bypassing this stage suggests the seller is not being honest with the notaire about the price, and as well as lying to a public official you could potentially be defrauding the French government.
The only possible way this could be done is with the full knowledge and written agreement of the notaire. Otherwise don’t touch it!
A friend of mine did exactly that, purchase price agreed in GBP between buyer and seller (it was a ruin so only about 20k) and notaires fees in euros based on the exchange rate on the day. All above board with notaire, tax etc…
I didn’t word my post very well. I don’t get the impression he was not intending to go through the notaire. However, not sure why he suggested half sterling , half euros. Anyway, I think I will give the suggestion a wide birth ! Thank you all for clarifying.
Now I am confused. If the notaire agrees to it, there is no problem.
But you said
which makes it sound as if only the euro half would be going through the notaire
If it all goes through the notaire and the paperwork shows the total payment made, why would it appear you have only paid 1k.?
I would give this monetry deal a miss, a notaire will know the price the property was sold to the existing owner, if the building should at some time suffer a fire, subsidence or an Earthquake it will be difficult justifying its value in any case sous la table is illegal
PS If you plan to enter or leave the EU with EUR 10 000 euros or more in cash (or the equivalent in other currencies) you must declare it to the customs authorities. Failure to do so could result in your cash being retained by the customs authorities, and you may receive a fine.
That’s why I said I didn’t word it very well. So far the seller has only suggested paying half sterling and half euros. No details of how this would be done practically. I just wanted to know the implications and legalities. It seems it can be done as long as the notaire agrees, and then yes, all paperwork would be in order. It still seems like an added complication to me .
I don’t think à Notaire will entertain a transaction half euros / half sterling.
If it is all above board there is no reason not to do the transaction in euros - there would be no benefit in doing it in sterling.
If however the suggestion of half sterling is to reduce the price that the Notaire thinks the house is selling for then the amount of fees/taxes would be reduced which whilst being beneficial to you financially in the short term is wrong and something that you would regret in the future.
This sounds like an attempt to avoid capital gains?