Can I purchase a property in cash?

Can I purchase a property in cash?

Since January 1, 2014, it is prohibited to purchase a building plot, apartment or house in cash. 

It is prohibited to pay both the deposit and the purchase price of the property in cash. The payment must be made by bank transfer or check and it is mandatory to include in the compromise the account number and the holder of the account from which the transaction will be made. There is only an exception for e.g. notary fees, for which you may pay up to 3000 euros in cash (since it concerns a payment of services).

Less black money and tax evasion

With this measure, the government wanted to tackle tax evasion and money laundering. The advantage for the government is also that it is no longer possible to include a lower sales price in the deed and therefore VAT and registration fees calculated on the sales price can be charged in full. In other words, the government will be able to receive more taxes.

Reporting suspicious transactions

At the same time as the cash prohibition, real estate agents and notaries are obliged to inform cell for suspicious transactions (such as someone who wants to buy a property without first visiting it)

Protection buyer/seller

The cash ban protects both buyer and seller because in the past it was more common to make a cash payment without recording it in the contract and it was then much more difficult to prove whether someone had paid or not. Now everything is normally contractually recorded and by means of a bank transfer there is also proof of payment. 

Penalties

If you do pay cash and this is discovered, you risk a fine or imprisonment and the sales contract can be declared null and void. This applies not only to buyer/seller but also to the real estate agent and notary.