Dual Pricing for tax purposes- a practical example!!

We don't like them but we gotta pay them! How does it work in Bulgaria?

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Chris7
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Postby Chris7 » Sat Jan 21, 2006 4:54 pm

I agree - on mine I'm declaring the full price on the title deeds.

Better to pay 20% now than under declare and have to pay 40% on a far higher price (assuming the property goes up in value before I sell) :wink:

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Postby YirMan » Sat Jan 21, 2006 5:51 pm

Chris7 wrote:Better to pay 20% now than under declare and have to pay 40% on a far higher price (assuming the property goes up in value before I sell) :wink:


Chris, I'm in 100% agreement with all of your comments on this thread and I too have made sure the full value will be declared on the Notarised deeds - and I haven't lost a night's sleep worrying about potential tax implications either!!

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Postby KPAX » Sun Jan 29, 2006 6:45 pm

We are buying a 1 bed at garden of Eden for E77,700. We are currently being offered an Advance Notary Deed deal, which would get our property notarised at E66045, which is 85% of purchase price, allowing for 15% payment to the master broker. 2 Questions:
People on this forum say they have got the full purchase price in their deed - is this 85% or full 100%?
We are told by Eden that if we do not sign until the end, Vamik Enterprises intend to put a figure of 50-65% on the Notary Deeds. Is there anyone out there who has challenged Eden/Vamik yet, (and won!)?

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Postby finny » Sun Jan 29, 2006 8:51 pm

If you dont have the full price on the deed, when and if you sell you will be hit with a CGtax bill for profit you dont make. (You are paying the developers VAT bill). Bulgarian law is changing as what allows builders to do this is an evaluation law from communist times. THIS IS CURRENTLY BEEN CHANGED-SO BEWARE!. There are plenty of developments that pay full VAT to choose from and at the same price as the others. Try platinum developments www.pdi.ie (All full VAT) or the complex advertised on the right of this page (UK developer) Laguna beach complex Sozopol (full VAT).

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Postby roly16 » Mon Jan 30, 2006 5:33 pm

Anybody considering under-declaring should read the article entitled 'Beware of false price in Deeds' in 'Quest Bulgaria ' magazine, January 2006 issue, by Roumen Petrov, GPNG Law Firm, Sofia.
This article is not easy to understand in its entirety by non-lawyers like me but states quite clearly that if under-declaration is done [1] in civil law some of these deals could be considered invalid, [2] you will have a higher tax obligation when you sell and [3] you are committing a criminal offence under Article 313 para 3 of the criminal code. You can get up to three years and a fine of up to BGN3000. If that's not enough of a deterrent, third parties or creditors of the parties involved can in some circumstances obtain rights over the property. Is it still worth it?

www.questbulgaria.com 00359 2 851 9065

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Postby Nickolo » Mon Jan 30, 2006 5:48 pm

If you read the legal code you will see this is a big over exaggeration and the only way you would go to prison is if you didn't pay your fine, which translates to a fine of up to 1500 Euros. If you check the difference between the VAT on the underdeclared value you will see this will amount to a lot over 1500 Euros, therefore IF you did get fined you would still not be out of pocket.

If your lawyer does his job properly and checks the property for debts there is no way that anyone can hold any type of claim over the property, this is a preposterous statement.

I am not condoning the practice, however I also do not condone the scare tactics that go on here. Ask your lawyers the FACTS and the risks involved and make your mind up rather than listening to bar room gossip by people who cannot fully grasp the intricacies of the Bulgarian legal system.

There is simple equation FULL DECLARATION = HIGHER PRICES, The choice is yours.

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Postby Nickolo » Mon Jan 30, 2006 5:51 pm

Oh and "in civil law some of these deals could be considered invalid". How can this be true, as you have signed the deal and the property is yours i.e. the infraction is only committed AFTER you have signed the deal and not before. Total rubbish!

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Chris7
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Postby Chris7 » Mon Jan 30, 2006 6:01 pm

Nickolo - I'm not getting into the other points, but

"the infraction is only committed AFTER you have signed the deal and not before."

You're wrong - For any transaction of property to be valid in BG, it must be notarised.

If you lie to the notary (about the price or anything else) then the transaction is not notarised correctly and your title to the property could be challenged.

OK that raises the issue of WHO could challenge it, and the only other party to the deal is the seller who has no more interest in challenging things than you do.

What I could forsee )but it would take a change in the law) is for the authoraties to be given power to challenge the transaction as "a person affected"

As the under declaration of price would result in lower taxes, the fraud has in effect caused the Revenue to suffer loss. On that basis they could challenge your ownership on that basis.

Next Question, is WOULD THEY? - probably not - it would be easier to seize the property under "proceeds of crime" legislation, once they had proven the fraud.

Finally, look at it politically - how would WE feel if Tony Blair said he was going to clamp down on fraud by people who live overseas, come to the UK, and avoid paying tax. - A sure vote winner :wink:

For that reason - it will come

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Postby roly16 » Mon Jan 30, 2006 6:45 pm

I hope you're right Nickolo; perhaps you are a lawyer and have an understanding of the legal implications of this. I was merely passing on a very brief precis of what a complex article written by a solicitor in a good-quality magazine appears to state very clearly. I would be happy to email it to you if you want to read it. Whether the views expressed in it are preposterous/total rubbish is not for me to say, but to dismiss it or my interpretation of some of it it as bar-room gossip is not, in my view , doing people a service. Everybody has to make up their own mind, but for me to have known about the article and not to have passed this knowledge on in the forum would, in my opinion, not have been in anybody's interest.
If anybody wants to read it please pm me.

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Postby Nickolo » Mon Jan 30, 2006 7:07 pm

Sorry Roly, I didn't mean the bar-room gossip to be directed towards you, it is a general statement aimed towards the absolutely ridiculous quotes of the Bulgarian law I have seen posted by people who do not have a clue and end up scaring a lot of people.

I do not doubt that the article you quote said what it said, however the problem is that when writing a biased article to one side of a point, people sometimes leave out very salient points that make the situation not look as bad as it does without them.

But that is journalism nowadays, total alarmism with the whole bias towards shocking and worrying people. What ever happened to balanced impartial views?

All I am saying is that people should be asking their lawyers these kinds of questions and not other people who are not qualified to answer them and putting themselves under undue stress and worry.

You were right to quote the article as it is pertinent to this thread, but I do not feel that the article is fair and balanced, therefore I wished to stress that point. Also there are some factual discrepancies, which if double checked will be verified to be incorrect.


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