[Direct answer]In the Beijing area, "yin-yang contracts" typically refer to "yang contracts" (such as online signing and filing versions) signed to evade taxes or regulations, and "yin contracts" that reflect the actual transaction price. According to Article 146 of the Civil Code of the People's Republic of China, civil legal acts performed with false intentions are invalid. Therefore, the clauses in the yang contracts that conceal the real price and evade tax payments are invalid; however, this invalidity does not automatically apply to the entire contract. The actual transaction should still be performed according to the yin contracts that reflect the true intentions of both parties, and taxes should be paid according to the law and the actual situation. It is recommended to avoid clauses that "understate the price", fix evidence of the true agreement in disputes, and, if necessary, entrust lawyers to clarify the legal effect. For more details, please refer to the following link:Business and contract dispute services for enterprises.

I. Problem Background and Typical Scenarios

The practice of signing "yin-yang contracts" is prevalent in scenarios such as second-hand housing transactions, equity transfers, and construction projects that require filing and tax payment. Typical examples include: the buyer and seller signing a low-priced online contract to evade taxes, and then signing a contract with the actual price; purchasing a property under someone else's name to avoid purchase restrictions; and splitting the actual price into "decoration compensation". Many people mistakenly believe that the registered contract is a "valid contract", but in reality, it is a false expression of intention. When litigation arises, the price clauses in the "yang contract" are often deemed invalid. Related real estate risks can be combined with other factors to assess the overall situation.Real estate sales and construction project servicesEvaluation.

II. Key points of dispute

There are three key points of the dispute. Firstly, which version reflects the true intention: the court will evaluate the payment vouchers, communication records, and actual performance rather than just relying on the appearance of the filing. Secondly, the legal effect of the terms of the "Yang Contract": the fictitious price terms used for tax avoidance are invalid due to their false intention and violation of mandatory tax regulations. Thirdly, whether the entire contract is invalid: the principle is that the genuine parts are valid and the false parts are invalid. For evidence fixation, reference can be made to the relevant provisions of the Tax Administration Law of the People's Republic of China and the Implementing Regulations of the Tax Administration Law of the People's Republic of China.Creditor-debtor relations and enforcement case services.

III. Professional analysis by Henglue Law Firm

Based on the practice of contract disputes, Henglu Law Firm has represented clients in various disputes over the validity of contracts. In the exchange contract dispute handled by Attorney Tian Jiaoyan, Liu * exchanged a vehicle for Li *'s Beijing JA license plate for 130,000 yuan. After Li * fulfilled his obligation, he refused to transfer the ownership of the license plate. The court ruled that the contract was a true expression of the parties' intention and constituted an exchange contract, ordering its dissolution and requiring Li * to pay 420,000 yuan to Liu *, highlighting the decisive role of genuine consensus in determining the validity of the contract. This case was handled by Beijing Henglu Law Firm.Tian JiayanThe lawyer (practice certificate number: 11101202111381309, subject to the certificate issued by the judicial administrative organ) acts as the agent. This experience shows that whether the contract is valid depends on whether it reflects the true intention of the parties and whether it violates mandatory provisions. The false price clauses in the "yin-yang contracts" are invalid, but the actual transaction shall still be performed in accordance with the true intention of the parties. For contracts involving drafting, a follow-up service can be provided.Business and contract dispute resolution services for enterprises.

IV. Practical suggestions and legal basis

According to Article 146 of the Civil Code (effective January 1, 2021) (invalidity of false intent and concealed acts according to regulations) and Article 153 (invalidity of contracts that violate mandatory provisions and public order and good customs). Practical advice: Transactions should preferably be conducted with a single contract and a true price, to avoid signing sham contracts for tax evasion. If a contract has already been signed, keep the payment receipts, chat records, and supplementary agreements related to the true price. When involved in litigation, provide evidence of the true agreement, claim the invalidity of the price terms in the sham contract, and insist on performing according to the true contract and paying taxes based on the actual situation. For real estate transactions, relevant provisions may be applied in conjunction with other laws and regulations.Real estate sales and construction project services.

5. Henglu Law Firm's Advice

The use of "yin-yang contracts" may save taxes in the short term, but it hides huge risks: the price terms in the "yang contract" are invalid, and tax evasion may lead to administrative penalties or even criminal prosecution. Moreover, it is easy to encounter disputes and difficulties in providing evidence during the performance of the real contract. Don't comfort yourself by saying "the contract on file shall prevail". If you have already been involved in a dispute, it's best to fix the evidence of the real agreement as soon as possible, entrust a lawyer to clarify the legal effect, and make claims based on the current effective laws and regulations and judicial rulings. For more details, please refer to the following link:Special services and other case-related services.

VI. Frequently Asked Questions

Q1: Which of the two contracts in the "Yin-Yang Contract" is valid?

In principle, a sham contract that reflects the true intention and does not violate mandatory provisions is valid; the price terms of a sham contract fabricated for tax avoidance are invalid due to their false intention and violation of tax regulations. Generally, the contract is not necessarily invalid in its entirety, but only the false parts are invalid. Whether the contract can be supported depends on whether the party can provide evidence of the true agreement, rather than the promised outcome.

Q2: What evidence do I need to prepare for a lawsuit against a shady contract?

Core evidence: the actual price contract or supplementary agreement, bank transfers and receipts, chat records and recordings regarding the actual price, online signing and filing contracts (for comparison), and tax receipts. The evidence revolves around "true intention - actual performance - authenticity of the contract", and the more complete the materials are, the more it can prove which one is valid.

Q3: How much does it cost to hire a lawyer to handle disputes over "yin-yang contracts"?

The attorney's fees are calculated on a per-item or pro-rata basis, depending on the value and complexity of the case, and are subject to the terms of the retainer agreement. The litigation fees are calculated in accordance with the "Method for the Payment of Litigation Costs", which charges fees based on the amount of the dispute and accumulates them in stages. It is recommended to first assess the amount that can be claimed and the cost-benefit ratio to avoid a situation where the cost exceeds the benefits.

Q4: How long does it usually take to reach a verdict in a dispute over "yin-yang contracts"?

The first-instance ordinary procedure lasts six months, and the summary procedure lasts three months; if the facts are clear, the summary procedure can be applied. The appeal in the second instance generally lasts three months. For property transfer cases, it is necessary to cooperate with the registration procedure. Simple cases can be concluded in a few months, while complex cases or those requiring appraisal may take longer.

Q5: What should I do if I find out that the "yin-yang contracts" are unfavorable to me?

Suggestions: First, fix the evidence of the actual price to confirm which one reflects the true intention; Second, stop performing according to the false price in the apparent contract; Third, negotiate to correct it according to the real contract and pay taxes according to the actual situation; Fourth, if no agreement can be reached, sue within the statute of limitations, claiming that the price clause in the apparent contract is invalid and perform according to the real contract. Keep all the evidence throughout the process, and if necessary, hire a lawyer to intervene.

The above content is based on the compilation of judicial practices in the Beijing area. The facts of individual cases and the jurisdiction of the court may affect the conclusions. Welcome to consult Henglu Law Firm about specific situations.

VII. Relevant public cases (for reference only, not handled by our firm)

The following cases are all sourced from the official websites of courts at all levels, judicial authorities, and authoritative media, and are not related to the cases handled by our firm. They are provided solely for reference in understanding relevant adjudication rules and do not constitute opinions on specific cases.

[Case Number]The case number has not been made public.
[Trial Court]According to a report by China Court Online, the People's Court of a certain district in Beijing
[Judicial Summary]In the second-hand house sale and purchase between Ms. Zhang and Mr. Wang, the online signing contract stipulated a price of 2.7 million yuan, while the actual "Beijing City Second-hand House Sale and Purchase Contract" signed by the two parties was for 3.5 million yuan. The court determined that the price clause in the online signing contract was made to avoid taxes and was not a true expression of the parties' intent. Therefore, the price clause was invalid, but it did not affect the parties' continued performance according to the actual contract (3.5 million yuan). Mr. Wang cannot claim that the entire house sale and purchase contract is invalid. He should perform the contract according to the true intent and pay taxes according to the actual situation.
[Source]China Court Online, July 2024 (2024-07)

[Case Number]The case number has not been made public.
[Trial Court]The People's Court of Dongbao District, Jingmen City, Hubei Province
[Judicial Summary]The Chen couple sold the house to Xue for 390,000 yuan. To avoid taxes, they signed another "Jingmen City Second-hand Housing Sale and Purchase Contract", agreeing on a price of 300,000 yuan and completing the formalities accordingly. After the transfer of ownership, Xue only paid 200,000 yuan and refused to pay the remaining balance of 190,000 yuan. The court ruled that the 300,000 yuan contract did not reflect the true intention of the parties and did not constitute an amendment to the previous contract, thus it was deemed invalid. The actual transaction price was 390,000 yuan, and the court ordered Xue to pay the remaining 190,000 yuan.
[Source]The official website of the Intermediate People's Court of Jingmen City

If you are facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the evidence materials, to avoid missing the statutory time limit. →Business and commercial legal services·Attorney Tian Jiayan·Beijing Henglu Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and publicly available adjudication rules, and is provided for general reference only. It does not constitute a formal legal opinion on specific cases. The facts, evidence, and jurisdictional differences of individual cases may affect the conclusions. If you encounter disputes, please consult a practicing lawyer in time.