[Direct answer]In the Beijing area, it should be viewed separately: for low-priced contracts used for transfer of ownership and filing, the clauses that falsely report prices are invalid due to false expressions of intention, and the hidden true transaction intentions shall be handled in accordance with the actual agreement. According to Article 146 of the Civil Code of the People's Republic of China (effective January 1, 2021), civil legal acts implemented by the parties with false expressions of intention are invalid, and the validity of civil legal acts hidden by false expressions of intention shall be handled in accordance with relevant legal provisions. That is to say, the true sales relationship between the parties is usually still protected, but the clauses that falsely report prices are not protected and cannot be used as the basis for determining the price and taxes. In terms of risks, those who evade taxes will be subject to assessed collection, surcharges for overdue payments, and fines by tax authorities. In serious cases, they may be suspected of tax evasion under Article 201 of the Criminal Law of the People's Republic of China. In the event of disputes, both parties will have to bear high costs of proving which contract is the true one. Action guidance: Do not sign "yin-yang contracts". For those that have already been signed, the true agreements should be taken as the basis and the risk of tax supplementation should be evaluated.

1. Problem background and typical scenarios

In the transaction of existing houses in Beijing, in order to pay less personal income tax and value-added tax, buyers and sellers often sign two contracts: one based on the actual transaction price, and the other based on a significantly lower price for online signing and transfer of ownership, commonly known as "yin-yang contracts". When the market is declining or there are changes in the transaction, the two parties often have different opinions on the price, breach of contract, and termination of the contract, and which one should prevail becomes the focus of litigation. Such arrangements may also involve disputes over the contractual validity of the seller's spouse and the determination of bona fide acquisition.

II. Key points of dispute

First, how to evaluate the relationship between the false price terms and the actual transaction separately. Second, the allocation of the burden of proof when two contracts coexist. Third, the consequences of making up for the unpaid taxes and penalties. Fourth, the impact of the dispute over the validity of the contract on the bona fide acquisition and the transfer registration.

III. Professional analysis by Henglue Lawyers

From effectiveness to risks, let's analyze it in four layers. **First layer: Effectiveness evaluation** The typical structure of a "hidden contract" is "a real agreement plus a false declared price". Article 146 of the Civil Code handles the two separately—the false declared price is deemed invalid, while the hidden real agreement is recognized as valid according to relevant regulations. Therefore, the common conclusion in practice is that "the entire contract is not invalidated, but the low-price clause is invalid". The price shall be based on the actual transaction price, and taxes shall be calculated based on the actual transaction amount. **Second layer: Evidence and determination** The court determines which is the real agreement by considering payment records, loan amounts, intermediary communication records, house appraisal prices, and transaction practices. In a housing sales contract dispute handled by Henglue Lawyers, the buyer defended against the seller's claims based on "registered as separate ownership, the buyer's good faith, reasonable price, and lack of evidence of collusion". The court ultimately ruled that the seller's spouse failed to prove malicious collusion and rejected the request to invalidate the contract. This case shows that whether the price is significantly low and whether the funding path is abnormal are often the key points for the court to identify hidden contracts. Both parties should retain complete payment and communication evidence. **Third layer: Tax and criminal risks** Evading taxes by declaring a false price allows tax authorities to assess and collect taxes with penalties and fines. The Tax Administration Law of the People's Republic of China stipulates corresponding responsibilities for tax evasion. For cases involving large amounts and serious circumstances, they may fall under Article 201 of the Criminal Law. **Fourth layer: Impact on transaction order** Hidden contracts result in price discrepancies between the actual transaction and registration. Once one party reneges on the contract, the other party lacks clear price basis to claim breach of contract damages. In disputes involving bona fide acquisition, spouse objections, mortgage rights, and seizures, abnormal prices further undermine transaction credibility and increase the risk of losing the case. Beijing has strict regulations on the online signing and tax verification of existing housing transactions, and abnormally low prices are easily flagged by the system.

IV. Practical suggestions and legal basis

First, adhere to a genuine contract, with the price, payment milestones, and transfer arrangements corresponding one by one. Second, make payments through bank transactions and retain the relevant receipts, while keeping complete records of the communication with the intermediary. Third, address the risks of tax evasion and penalties arising from signing a "yin-yang contract", and proactively communicate with the tax authorities to rectify the situation. Fourth, when disputes arise, assert rights based on the actual transaction and organize evidence around the price and payment terms. Main legal basis: Articles 146, 153, and 509 of the Civil Code of the People's Republic of China (effective January 1, 2021); relevant provisions of the Tax Administration Law of the People's Republic of China; Article 201 of the Criminal Law of the People's Republic of China; specific applications shall be subject to the currently effective regulations.

5. Henglue Law Firm's Reminder

There are three key points regarding the "yin-yang contracts": the low-price clauses are invalid, but the real agreements are still enforceable, though they cannot protect against fraudulent declarations; while saving on minor taxes, you may end up paying penalty fees, fines, and the cost of providing evidence; and a genuine contract with complete payment records is the foundation of transaction security. For matters involving the validity of housing sales contracts, you can seek legal assistance through the following channels:Property sales and construction projectsThe service obtains an overall solution, which can be combined with malicious collusion and contract revocationBusiness and contract disputes in enterprisesFor tax and asset arrangement, you may refer to the following sections for reference:Financial capital and cross-border transactions involving foreign countriesFor any questions regarding litigation preservation and enforcement, please feel free to consult us.Creditor's rights and debts, and enforcementTeam.

VI. Frequently Asked Questions

Q1: If I sign a "yin-yang contract", can I claim that the entire contract is invalid based on this?

Generally, it is not possible to claim that the entire transaction is invalid. According to Article 146 of the Civil Code, the provisions of a false declared price are invalid, but the hidden true transaction relationship is usually still valid. Therefore, it is often difficult to obtain support for overturning the entire transaction on the grounds of "dual contracts". What is really affected is the determination of the price, the calculation of taxes and fees, and the basis for calculating the damages for breach of contract.

Q2: What evidence is needed to prove which one is the real contract?

The key lies in two aspects: funding and communication. These include bank transfer records and loan approval amounts, intermediary communication records, chat or written confirmations regarding the actual price between the two parties, and reference to the transaction prices of similar properties in the same neighborhood during the same period. If the payment amount significantly deviates from the declared price, the court usually determines the actual agreement based on this evidence. The more complete the evidence is, the more favorable it will be for the claimant.

Q3: How much will it cost if the tax authority finds out that I've underpaid taxes?

It usually includes making up for the unpaid taxes, daily surcharges for late payment, and fines, the specific multiples of which are determined by the Tax Administration Law and the circumstances of the investigation; those whose circumstances are serious enough to meet the criminal standards will bear criminal responsibility. In addition to the tax costs, they may also be at a disadvantage in civil litigation due to abnormal prices, and the actual total cost is far higher than the initial tax savings.

Q4: How long does it take from filing a lawsuit to obtaining a verdict in such disputes?

The first-instance ordinary procedure for disputes over housing sales contracts generally lasts three to six months. If appraisals, evaluations, or the addition of parties are involved, the duration will be extended accordingly. For disputes involving issues such as spousal co-owners and bona fide acquisitions, the trial period will be even longer. The party with well-prepared evidence can significantly shorten the dispute resolution time and facilitate mediation.

Q5: What should I do if I've been sued by the other party for using a "yin-yang contract"?

First, secure the evidence of the actual transaction: payment records, loan contracts, intermediary records, and communication chat logs. Organize a defense based on the actual transaction price and good faith, distinguishing between false price clauses and genuine transaction relationships. Simultaneously, assess tax risks and consider making improvements. If necessary, apply for an evaluation of the transaction price to support your claims with objective data.

The above answer is based on the judicial practice in the Beijing area. The judicial interpretation in other provinces and cities may vary. For specific cases, please refer to the local rules and evidence situation.

If you are currently facing similar problems, it is recommended that you consult a professional lawyer as soon as possible with the relevant evidence, to avoid missing the statutory time limit. →Legal services for the purchase and sale of real estate·Beijing Henglue Law Firm

Disclaimer: This article is compiled based on the current effective laws and regulations and open adjudication rules, and is 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 a dispute arises, please consult a practicing lawyer in time.