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I. – Introduction
Law 7/2012 of 29th of December on the modification of the tax and national budget regulations and on the adaptation of financial regulations in order to increase actions to prevent and fight tax fraud (hereinafter the “Act”), is aimed at establishing a series of measures to prevent and fight against tax fraud. Restrictions on cash payment are one of the measures set forth by the Act.
According to this Act, it is prohibited to pay more than 2,500 Euro or its counter value in a foreign currency in cash in operations where either party acts as a business owner or professional. However, in the case where the payer is an individual person who can justify that s/he does not have any domicile in Spain and does not act as a business owner or professional, the limit shall be 15,000 Euro or its counter value in a foreign currency.
In the calculation of said amount, all amounts of the operations or payments which may be executed separately shall be added up.
III-. Infringement and penalties
The breach of the said limitations shall constitute a severe infringement.
Both payers and receivers of total or partial amounts in cash breaching such limit shall be deemed as offenders. Likewise, both are jointly and severally responsible for the breach committed, which will prescribe in 5 years as from its commitment.
The base of the penalty shall be the amount paid in cash in the operation of the value equal or superior to 2.500 or 15.000 Euro, and the proportional penalty of 25% shall be applied. The penalty shall prescribe in 5 years as from the day after the resolution imposing the sanction becomes absolute.
If one of the parties who participates in the operation reports the infringement, the Spanish Tax Authority will not apply any penalty to this party if it voluntarily informs the Spanish Tax Agency within 3 months as from the payment.
The limitations on payment in cash came into effect as of 19th of November 2012, and it applies to all payments executed after that date, including payments in operations agreed by the parties prior to the establishment of this limitation.
For more information please contact:
Mika OTOMO: email@example.com/en