Many Spanish are at present sitting on vast tracts of property acquired as investment. A survey in El Pais last year found that 90% of people over 50 had invested in land of some sort with a staggering proportion owning out right one to five properties. For most Spanish families this was guard against inflation and worries about the future. However for them to realise these assets they must overcome the rules that put a large capital gains tax up to 35% plus other taxes on the house.

The current method of doing so has been to pay for a large part of the property under the table using cash. The larger the denomination the easier to handle and count. This is why Spain is the largest depository of 500 euro notes in the world.

It is not a bad thing that the Spanish own so much of their own land. However it is unfortunate that many of them are encouraged into illegality by the overburden on taxes.

It is also very unfortunate for those who come after them when in the future a government changes the system so that correct property prices have to be shown on deeds. Then the buyers who have bought under-the-table will pay the previous owners capital gains.*

But it must happen. The encouragement of under-the table money has lead to a reduction in income for the government from TVA Value added tax. With taxation become a lottery of who can get away with what without being caught, the government must change the system.

The first thing they must do is to remove the 500 euros from circulation. Then second reduce capital gains and increase VAT on houses so that the buyer and seller pay equal. The lottery of unfairness is such something must be done.

 * If a seller sells a property correctly valued at 100,000 for 50,000 and takes the other 50,000 as cash then he is liable for only 50,000 times 35% capital gains. However when the new owner comes to sell unless he can under-the-table too he will be liable for the whole 100,000* 35% capital gains effectively paying the previous owners capital gains.