1,000€ limit in cash payments in Spain

The Spanish Tax Authorities want to limit cash payments to 1,000€ This is a measure aimed at fighting black economy and unpaid taxes. It will force big companies to send invoices of the VAT tax in real time in order to limit the possibilities of fraud and non payment. This will be mandatory for a group of more than 62,000 taxpayers.

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The Government’s intention is to implement next year a system called Immediate Supply of Information (Suministro Inmediato de Información or SII in Spanish). This system consists of the electronic sending in real time of all the operations that must be included in a company’s VAT registration books.

With the entry into force of the plan, the companies must submit all the details of their operations to be entered in their VAT registration books in the period of four days. The details must include the total amount of the transactions, the type of invoice, fiscal identification, object and recipient. In this way, the Tax Agency, through the analysis and crossing of all information, will significantly reduce tax fraud and submerged economy, which are some of the hurdles of the Spanish tax system.

The new limit is included in the royal decree of tax measures approved by the Executive, and won’t come into force on January 1st, 2017 as the Government had planned. It will become effective later during the year and intends to collect an additional 1,000 million euros for the Spanish Tax Authorities.

Fines for cash payments over the stipulated limits in Spain

As we have previously stated, the Spanish Tax Authorities want to reduced the cash payment limit from 2,500€ to the amount of 1,000€ with the purpose of fighting against tax fraud and black economy. There is an exception for this rule when the payer is a natural person who justifies that they aren’t Spanish fiscal residents and don’t act as a professional or entrepreneur. In this case, the limit for cash payments is 15,000€.

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Although the limit is now lower, the Spanish Tax Authorities maintain the sanction established in Law 7/2012 for cash payments over the limit. The fine will be 25% of the amount paid in cash. This administrative offence will expire after five years, the period beginning from the day the administrative offense was committed. The sanction derived from the commission of the infraction will expire after five year, counting from the next day of the sanction resolution.

It is important to note that this sanction is for all cash payments, regardless of whether the transaction is fraudulent or not. If the transaction conceals some kind of tax infraction, there would be an added penalty for tax offense. Offenders shall be persons or entities that pay or those that receive total or partial amounts in cash over the established limit of 1,000€. The measure also provides that the taxpayer who voluntarily reports the cash payment to the Spanish Tax Authorities within three months after the administrative offense, will be exempted from the penalty.

If you have trouble with understanding these measures or finding an accountant, don’t hesitate to ask us for help. If you live in the area of The Axarquia and are looking for an accountant in Velez-Malaga, Periana, La Vinuela or Torre del Mar, you are in the right place. Leave your tax affairs in the hands of an expert professional.

The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.

Author: Rosana Tejada

Biographical Info: Rosana Tejada Crespo is a tax advisor holding a Master’s Degree in International Taxation. She specialises in companies and freelancers, tax regulations concerning foreign employees (Beckham Law), non-resident tax, inheritance tax and Spanish income tax. She is one of the founders of Tejada Solicitors, which comprises a group of English speaking solicitors, economists and architects

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