Breaking news from Latvia: cash will no longer be legal in real estate transactions

In May 2019, amendments to the Law on Taxes and Duties will enter force prohibiting cash payments in real estate transactions. The amendments aim to reduce the grey economy and restrict cash circulation, undercut potentially fraudulent transactions and money laundering. These amendments complement the existing legislation, which limits cash transactions above EUR 7200 threshold. This amendment applies not only to companies, but also to private persons buying / selling real estate. It should therefore be noted that, regardless of the value of the real estate and the purpose of the use, the payment of the whole amount of the real estate transaction will have to be made through a bank transfer. Ii must be noted that transactions concluded prior to 1 May 2019 can be performed according to the contract, however no cash payments shall take place from 1 January 2020. Liability for non-compliance with restrictions on the use of cash in transactions above EUR 7200 has already been determined in the Latvian Administrative Violations Code and provides for a fine of 15% of the amount of the transaction. In the near future, this provision is expected to be clarified by imposing a fine also on the carrying out of unauthorized cash payments in real estate transactions, regardless of the amount of the transaction. Payment arrangements are just one of the important aspects to be taken into account in real estate disposals, so it is necessary to make an assessment of all the circumstances of the case to avoid unpleasant and often financially painful surprises. Therefore, TRINITI team will gladly provide all the legal assistance needed to defend your interests in dealing with real estate.