Payments in cash are part of everyday life for many self-employed individuals. However the law establishes limits to these payments. Learning the rules can save us of a having a fine.
Latest update: 30/12/2021
The limitation of cash payments in respect of transactions in which one of the intervening parties acts as a businessperson or professional is regulated in Article 7 of Law 7/2012 of 29 October.
Previous limits (until 10 July)
Until 10 July 2021, the aforementioned precept contained the following limits for these transactions:
- 2,500€ or its equivalent in foreign currency, as a general rule.
- 15,000€ or its equivalent in foreign currency, when the payer was a natural person who could prove that he was not resident for tax purposes in Spain and was not acting in his capacity as a businessman or professional.
Current limits (from 11 July)
However, these limits have been modified by Law 11/2021, of 9 July, on measures to prevent and combat tax fraud, with effect from 11 July 2021, so that they are set at the following amounts:
- 1,000€ or its equivalent in foreign currency, as a general rule.
- 10,000€ or its equivalent in foreign currency, when the payer is a natural person who can prove that he is not resident for tax purposes in Spain and is not acting in his capacity as a businessman or professional.
It is important to note that these new limits will apply to all payments made on or after 11 July 2021, even if they relate to previously agreed transactions.
Penalties for non-compliance
Failure to comply with these limits constitutes a serious administrative infringement, and both the payer and the collector will be jointly and severally liable to the Tax Administration.
As for the amount of the penalty, it will be 25% of the amount unduly paid in cash.
However, a 50 percent reduction is provided for when the following two requirements are met:
- Voluntary payment by the alleged offender, once the proposed decision has been notified and at any time prior to notification of the decision.
- Waiver of the right to make allegations.
Complaint by one of the intervening parties
Finally, it should be noted that if one of the parties to the transaction in which these limits have been breached denounces the other party, the denouncer will be exempted from liability. For this to be the case, the complaint must be made within 3 months of the date of the payment and must specify the transaction carried out, its amount and the identity of the other party involved.