Cash Loans: the sequence of events
Eligijus Masiulis, the former chairman of the Liberal Movement, incriminated for accepting a bribe declared that money the officers found were the loan from Raimondas Kurlianskis, the vice-president of the Concern “MG Baltic”. Former politician acknowledged that the transaction was not notarized, therefore, it was null and void in legal terms.
E. Masiulis wrote in a letter released: “Yes, I borrowed 90,000 EUR on 10th May from R. Kurlianskis for a period of one year. I planned to invest this loan in real property in Lithuanian Seaside. We have acknowledged the receipt of the loan by two copies of a loan agreement. We did not notarize the loan agreement. And now, it becomes obvious it was a huge mistake putting both Raimondas and I in this situation of uncertainty. A simple question why we did not refer to a notary? There is no simple answer to this. We trusted each other. Hectic rush of everyday life.”
Marius Stračkaitis, the president of Lithuanian Chamber of Notaries, notary of Klaipeda, explained that agreements concerning cash loans exceeding 3,000 euro must be concluded using notarial form. “Upon concluding the transaction parties to the loan agreement must have and provide valid identity documents. The parties must agree on the time of the appointment with the notary for the verification of the agreement, and such appointment shall last for as long as necessary to ascertain the will of persons, meaning of notarial action, and the consequences”, – the president commented. Notarial fee for the verification of loan agreement may vary from 0.2 to 0.4 per cent from loan amount, but may not be less than 14.48 EUR or exceed the amount of 5,792.10 EUR. The client is also obliged to compensate notarial expenses related to verification of significant documents. According to the interviewee, failure to comply with the notarial form shall make the transaction null and void. Thus, if according to E. Masiulis, he borrowed 90,000 EUR from R. Kurlianskis, but the transaction was not notarized, this transaction is not considered to be a loan in legal terms. In other words, the transaction may be defined in any way publicly, but the court and state institutions will not regard it as a loan. “It is important to know that in cases of cash loans, money transfer and conclusion of the agreement must take place simultaneously or money must be transferred before the verification of the agreement. The agreement to transfer money in the future is not possible (except in cases loans are granted by credit institutions)”, – M. Strackaitis argued. Darius Buta, the head of Communications of State Tax Inspectorate (STI), explained that in accordance with legislation, the loan in the amount of 90,000 EUR must be notarized. Bailiffs and notaries provide information to STI about legal facts that may result in an obligation to pay taxes, also any other information necessary in order to perform the functions of tax administrator. Notaries must inform STI about verified loan agreements concluded by natural persons in three days. According to Law on Tax Administration, the residents must notify STI about transactions meeting the following conditions: 1) the resident receives funds (including borrowed funds) from natural or foreign legal entities; 2) the amount that a person paid the resident within one calendar year in cash according to one transaction or several transactions concluded with the same person exceeds 15,000 euro; 3) transactions are not notarized; 4) the resident does not receive income according to the transactions that are declared to the tax administrator according to the procedure stipulated in other tax laws. If a resident failed to submit such information about transactions, such transactions shall not be used to substantiate the sources of acquisition of property and receipt of income. “If person’s expenses exceed income received, STI shall initiate tax inspections during which taxes and interests will be calculated from income received from unidentified income sources, fines will be imposed. If a person acquires property he/she is unable to substantiate by taxable income under procedure provided for in legislation and acquisition of property by criminal means is determined, information shall be conveyed to law enforcement authorities”, – D. Buta commented. E. Masiulis, as a member of the Seimas, also had to declare the loan transaction by amending declaration on private interests accordingly. E. Masiulis failed to declare such transaction in private interest declaration published by Chief Official Ethics Commission.