New cash payment limit

On July 11, 2021, in accordance with the new prevention and fight against tax fraud, a new limit of cash payments came into force when any of the parties involved is a businessperson or professional. Until then, cash payments could not reach 2,500 €. This limit has now been reduced to 1,000 €.

This means that sales transactions between entrepreneurs or between an entrepreneur and an individual cannot be paid in cash, provided that the total of the sale and purchase transaction is equal to or greater than 1,000, even if payments are divided into amounts of less than 1,000 €. The only exception, basically intended for tourists, will be for sale and purchase transactions with non-resident individuals. In this case the limit will be up to 10,000 €.

Cash shall be understood as the following means of payments:

• Paper money and metallic currency, national or foreign.

• Bearer bank checks denominated in any currency.

• Any other physical means, including electronic ones, designed to be used as a bearer payment method.

The regulations foresee, in case of infringement, penalties of up to 25% of the amount paid in cash to the two intervening parties. But if one of the parties reported it to the Tax Agency within three months, the reporting party would be exonerated from the penalty. The sanction will not be applicable to any of the parties if it has prescribed, that is, if more than five years have passed since the date of the cash payment.

A good solution in the case of finding a sale that is equal to or greater than 1,000 € and the client only wants to pay it in cash, is for the client to deposit the cash in a checking account of a credit institution. In this way, you avoid losing a sale or having to report your client.