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.
Law 10/2010, April 28th about prevention of money Landry and finance of terrorism states which are considered payments in cash: the use of notes and coin, of any country, bank cheques any other physical mean conceived to pay nameless.
Law 7/2012, October 29th, limits to 2500€ the amount of a transaction in which one of the parties is a business, that can be paid in cash.
The same law includes a procedure by which the supplier ( the one receiving the money ) can let Hacienda know of the ilegal act, with the incentive that, if he reports within three months after the payment he will be exempt of any responsibility.
It is important to note that what determines the prohibition is the total of the operation , not the amount actually paid in cash. In other words, if you received an invoice for 3000€ it would not be acceptable to pay 1000€ by wire transfer and the rest in cash.
However in a case like the one mentions, what constitute the base amount to calculate the fine is 2000€, the amount actually paid in cash.
The fine is 20% of the amount paid in cash.