2,712 homes paid for in notes, writes Expresso
Since 2017 cash payments over the sum of €3,000 have been ‘prohibited by law’ – but that hasn’t stopped €38 million in property purchases getting in ‘under the wire’, writes Expresso.
According to data passed to the paper by the Institute of Public Markets, Real Estate and Construction (IMPIC), “the years when people were able to shell out €100,000 or even €200,000 in cash are long gone (at least as far as anyone can see). The number of property deals involving hard cash has reduced, but even so they are still done, bypassing the law that since 2017 has prohibited them”.
IMPIC receives regular reports on all property transactions that take place in Portugal, the paper continues. “Between 2018 and 2021 real estate mediators communicated 2,712 deals in which €38 million had changed hands in cash. In average terms, this translates into each buyer paying roughly 15% of the purchase price (€16,600) with bank notes.
“In 2021, the number of operations reduced substantially, but even so it is not insignificant in a sector considered to be of high risk for money-laundering: 257 buildings were sold, of which, on average, for each one €10,000 was paid in cash”.
HOW CAN THIS HAPPEN?
“The law is clear, but these are the facts”, IMPIC’s president Fernando Batista explains.
IMPIC reports all these situations to the AT tax authority, and due to considering them “relevant” passes the information “informally” to PJ judicial police, he adds.
The 2017 law came in after “a long period of debate in parliament”, establishing various limits on cash payments: businesses for example can only accept €1,000 in cash (when dealing with other companies with ‘organised accounting’), €3000 (for most cases) and €10,000 (when payments are made by foreigners), says Expresso.
Once IMPIC passes the data it receives on cash transactions to the relevant authorities “it has no idea” what they do with the information.
The paper explains there is “no mention of this matter”, for instance, in “reports on the combat of fraud and/ or tax evasion”.
Equally unclear is what the PJ’s unit of financial information (UIF) or even investigation (DIAP) do with the data.
“Thus it is not possible to know if cash payments configure a form of crime or if they have simply been made due to legislative failings”, says Expresso.
In 2019, in interview with the paper, Jorge Batista da Silva, president of the Notaries Order, said “it is relatively easy to bypass the prohibition on cash payments”. All that is required is for both parties to declare on the deeds (escritura) that the property was paid for before the law came into force…
“The absence of public information is a chronic problem”, Expresso concludes. “In its last evaluation on Portugal, GAFI – the intergovernmental organ that promotes strategies against money-laundering – criticised statistical deficiencies, lamenting that it is not possible to obtain comprehensive and totally reliable data in this area”.