Consequences of hide the rent payment

The word 'consequences' suggests a punitive approach towards the reader. However, it is not our intention to prejudge anyone's hypothetical actions.

In the article first part, we explain the way to rent legally. While, in the second part, we will describe the implications of hide a rental to tax authorities.

First part: steps to renting a real estate product legally

When it comes to rent a real estate product legally, the interested person has to accomplish the following steps:

- Show the documents that the real estate agency asks for: check here without wasting any more time what we require at Finques Feliu,

- Negotiate the price and conditions of the rent: tenant and owner, with our intermediation, negotiate the contract under which the rent will be paid monthly for the stipulated period of time.

- The tenant pays a rental deposit to INCASOL and an additional deposit to the landlord. This amount will be returned one month after the handover of the keys.

The rental deposit return will be:

a) Total: when there has been no damage to the property.
b) Partial: when, on the contrary, when it suffer a damage. 

Once these steps have been taken, the rent negotiated by the parties will come into effect.

Second part: not declaring the rent to avoid the tax authorities

Paying without declare is: illegal, immoral, moreover, it harms both tenant and landlord. The reason is simple: there is no legally signed contract and the guarantees that derive from it, for instance, the tenant loses protection against rent increases and the landlord cannot benefit from the 60% tax deduction for the rental income.

What is the logic behind this illegality? To avoid paying IRPF tax on "income from movable capital".  

2.1. Are there penalties for paying and not declare? Which ones?

Yes, in Law, a behavior without penalty is not illegal as long as it is not classified as a criminal offence.

The penalties are according with @idealista these ones:

a) For amounts defrauded of less than 3,000 euros: return the money received for the rent plus a fine of 50% of this amount.

b) For amounts over 3,000 euros: the undeclared money will have to be returned plus interest of between 50% and 100% depending on the amount.

c) When the undeclared income is more than 50% of sanction base: Proportional fine of 100% to 150%, which will be graduated according to the criteria of repeated commission of tax offences and economic damage to the Treasury.

Other consequences:

It is worth insisting: Unprotection of the parties as there is no contract the landlord cannot prove what has been unpaid while the tenant cannot prove how much money the established rent represented.

In conclusion, to hide payments is not legal and moreover never pays off because the risks are much higher than the alleged "benefits".