Ask a lawyer on the topic of Tax law

Part of the rent in cash without involving the tax office.

May 15, 2014 | 65,00 EUR | answered by Jan Wilking

Dear legal counsel,

I am currently facing a behavioral issue of purely legal nature. I have already inquired about the issue here, but was unable to find an appropriate answer in relation to the correct behavior in my situation. Here is the situation:

I have had a rental agreement for 6 months. The rent is paid by the social welfare office (Arge) due to ALG2 and early retirement (living as a couple, no children). The original rent (cold) was 315 euros. However, the Arge only approves up to 275 euros for cold rent. The landlord suggested writing 274 euros in the rental agreement and certificate for the Arge - not only for the Arge to approve (there seems to be a difference between APPROVE and AGREE, related to the costs of heating and so on) but also so that the landlord does not have to declare as much to the tax office.

We then paid the additional amount of 41 euros in cash to the landlord, without any proof or receipts. Her statement was that the tax office does not need to know everything, especially since she seems to have a sort of conflict with them for other reasons. However, we have now become uneasy about the situation. We have informed the Arge accordingly - they are still deciding (we have not gained any financial advantage from the false information) and also informed the tax office - with all conceivable facts and the fact that we may have made ourselves complicit in tax fraud.

Now, the questions are:

1) There is no evidence of these 41 euros paid in cash monthly. In case of need, the landlord could claim that it was never paid or that she was unaware of it. Although my partner and I can testify to it. And: We had to reduce the rent due to certain circumstances - the reduction was ALWAYS based on the assumed 315 euros cold rent and can be proven with bank transfers and even a response from the landlord to the reduction.

2) If she claims as in point 1: do we not theoretically have the right to say: Wait, madam, then we will also only pay from now on what is stated in the rental agreement and nothing extra!?

3) How do we behave correctly in the future? We do not want to make these cash payments anymore, as we would still be aiding possible tax fraud. But the verbal agreement with the landlord is still valid somewhere. Can we now demand that the landlord revises the rental agreement? What if she does not do so because it would incriminate her as well? And what about the 41 euros paid monthly so far? Are they even legal retroactively?

I hope you understand the situation. How should we now behave correctly and appropriately to avoid further burdening ourselves but at the same time ensure that the landlord cannot accuse us of anything (if she even does, as she would incriminate herself).

Thank you in advance...

Jan Wilking

Dear advice seeker,

I am happy to answer your inquiry taking into account the facts you have provided and your efforts as follows:

Regarding 1:

Even if it would ultimately be a case of your word against the landlord's, you have the upper hand: Firstly, there are two statements here (yours and your partner's) against one statement (the landlord's), and secondly, there is evidence of the reduction based on the higher rent. Lastly, it would also be crucial that the claim of a higher rent would not benefit you (only bring disadvantages), which would further support the credibility of your statements.

Regarding 2:

That is correct. If the landlord disputes a rent agreement that deviates from the written lease, you could rely on this lease and the rent agreed upon in it. The landlord would not be able to successfully claim the excess amount, as this would be contradictory behavior.

Regarding 3:

In my opinion, you have already taken the most important step, which is to "clear the air" and report everything properly.

In general, as a tenant, you do not have a right to a written lease (unlike in employment law). However, at least out of good faith (§ 242 BGB) or as a contractual ancillary obligation, I do see an obligation on the part of the landlord to confirm the agreed higher rent in writing to you. This would be particularly relevant if the landlord continues to insist on cash payment (which can be agreed upon in principle and cannot be unilaterally changed to a bank transfer).
In any case, according to § 368 BGB, you have the right to demand a written receipt (receipt) from the landlord for every cash payment.

You should also check the lease for a clause regarding written form, such as "Changes and additions to the lease are only valid if agreed in writing" or similar. This would make it difficult for the landlord to rely on an oral agreement. If such an agreement is denied or cannot be proven, there would of course be the possibility of reclaiming the overpaid rent, but then you would be burdened with proving these (cash) payments.

I hope this has provided you with a helpful initial orientation. If you have any further questions, please use the free follow-up function.

Best regards