Question: I have been offered to pay a purchase price portion cash which would save me 10% VAT. Can we settle such payment on completion?
Answer: Certain owners/vendors and Italian suppliers encourage buyers to pay cash without a formal payment receipt.
Sometimes this reduces their taxable amount for income tax purposes, or it is needed to settle middleman credits for their help with the transaction. Typically it also results in a lower immediate transaction cost for the buyer. Paying under the counter or under declaring a price is not legal in Italy.
Under declaring can cause a criminal charge and tax fines for both the buyer and the seller. Also, given that cash payments are typically requested to avoid payment evidence, payments under the counter are not typically covered by civil and financial law guarantees and are not allowed to be claimed for capital gain tax deduction purposes.
Our lawyers cannot execute illegal payments on behalf of clients.
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