ᐅ Realtor Fraud or Tax Evasion?

Hello everyone,

We are currently buying a house, and something very strange happened that I’m not sure how to handle.
A bit of background: after a long search and countless viewings, we finally managed to get a house.
The viewing had to be arranged at very short notice, and there was no time for my partner to join. (Luckily, I recorded everything on video.)
My partner never saw the house from the inside but was still convinced by the videos and the location, so we signed the purchase contract.

Now to the situation:
We met the real estate agent (almost) for the first time when signing the purchase contract; before that, there were only a few phone calls where he requested the financing confirmation and informed us about the notary appointment.
All other contact and the viewing were conducted with the neighbor, who is a friend of the owner.
Shortly before the notary appointment, the agent wanted to meet again. He then offered me to pay the €20,000 (about $21,500) commission in cash right after the notary appointment to avoid taxes, which could save us almost €3,000 (about $3,200).
(I have to admit, at the time I thought he meant we could save the 3% VAT, so I said it probably shouldn’t be that much.)
I declined the offer, which obviously didn’t please him...
Later, after talking to someone else, I realized that he was actually suggesting an undeclared cash payment, completely without paying 16% or 19% VAT.
A quick calculation confirmed that we would have paid about €17,000 (about $18,300) in total.
Still, I was glad to refuse because we included the commission in our financing and would have had no proof of payment.

Now here’s the strange part:
We have just received an invoice for the full €20,000 (about $21,500), which states that no VAT is due due to the small business regulation (Kleinunternehmerregelung).
This confuses me a lot. If he doesn’t have to charge VAT, how could he make the previous offer?
The company looks well-established, offers many services, and according to the website has been around for 20 years. (In theory, it could still be possible that he qualifies as a small business under VAT rules.)
I don’t understand any of this.
At the same time, he seems to be a very close friend of the owner, and we don’t want to upset him since we haven’t taken possession of the house yet.
The payment deadline on the invoice is the day after tomorrow.

I would appreciate any advice.
Best regards

A real estate agent who is classified as a small business owner? Do they only handle two transactions per year or what? With those amounts, you quickly exceed the small business status. It’s a bit strange. Such a commission is already quite high, but in this case, with so little work and so much criminal energy involved, it’s almost absurd. But well, unfortunately, you just have to accept the commission.

Well, first of all, this is always subject to tax as a service, so I am not aware of any regulation that simply waives this. However, the amount of the commission is also stated in the notarized contract. If the sum is not mentioned there, or a different amount is demanded, both cases constitute formal tax fraud.

Secondly, the real estate agent’s fee is only due once the transaction is completed, at the earliest upon the notarized confirmation of the purchase price payment for the tax office regarding the property transfer tax. Substantively, this may not concern you since you have signed the contract and have not suffered any financial loss.

Informally, this is common practice among many agents and sometimes owners as well. Often, you might not even get a chance if you do not accept these conditions. This, as so often, confirms the bad reputation of real estate agents. (Apologies to the honest agents, but you seem to be in the minority.)

The small business regulation applies only up to 22,000 per year.
This is a case of tax evasion. If you want to go down that route, you should consider the following: VAT is a pass-through item, so while the buyer benefits, the broker does not suffer a disadvantage. However, there are still about 40% additional taxes for the broker afterwards. Fairness among fraudsters would mean an invoice amount net minus 20%. Then, of course, a short statement from the broker confirming that they make no claims against you.

Schelli schrieb:

The small business regulation only applies up to 22,000 per year.

Assuming, as a buyer, I receive an invoice as shown above for 20,000€ (approximately $22,000). In this case, the invoice amount is below that threshold (which a non-business buyer might not even be aware of). How is a buyer supposed to know if this is legally correct? I only know the agent from this one transaction. I would generally assume that the agent knows how to issue their invoice properly, pays the 20k, and forwards the invoice to the bank—at least if they hadn’t made me such an offer beforehand.

Nina343434 schrieb:

We saw the real estate agent (almost) for the first time when signing the purchase contract; otherwise, there were only a few phone calls where he requested the financing confirmation and informed us about the notary appointment.

Did you even sign a brokerage agreement including a cancellation policy? How is it structured?

Nina343434 schrieb:

that no tax is due based on the small business regulation.

If he writes it like that, I would accept it. It’s not your responsibility to examine or advise him on tax matters.

Marco180 schrieb:

Secondly, the broker’s fee only becomes due once the deal is completed, at the earliest with the notarized confirmation of the purchase price payment to the tax office regarding property transfer tax. In substance, it might not matter to you, since you have signed the contract and have no financial loss.

No. It is a brokerage contract (usually, see Section 652 of the German Civil Code). Due and payable after the purchase contract is concluded.

P.S. A broker is not obligated to perform any particular activities. Especially that would seriously harm the brokerage profession.