Restrictions on the maximum cash payment
The maximum amount for cash payment maximum cash payment limits the transactions that can be carried out with currency or physical banknotes between two individuals. This limits the maximum credit in this system for the payment of a good or service.
Why is there a limit on cash payments?
The imposition of a maximum cash payment amount aims to put an end to tax evasion. In other words, this regulation promoted by the Tax Agency seeks to minimise the circulation of what is known as black money in the business sector, which often consists of.
In practice, this means using cash for everyday domestic economy transactions. For larger-scale operations, it will be necessary to use other payment methods such as transfers, cheques or bank cards, as we inform our clients at the notary office in Barcelona.
Spain is not the only country to set a maximum cash payment amount. It is a fairly standardised regulation aimed at ending tax fraud and money laundering. Both criminal activities represent a very high cost for society as a whole.
What is the cash payment limit?
The first Spanish regulation that governed this practice appeared in 2012 (Law 7/2012 of 29 October). As we know, the Notaries in Barcelona, the law established a maximum amount of 2500 euros when one of the parties was a professional or business. In the case of payments between private individuals, there was no limit.
This regulation underwent a new modification in 2021 with Law 11/2021 of 9 July, which established new limits on this payment method. In response to the question of how much money can be paid in cash, the answer depends on who carries out the transaction.
If a professional or business is involved, the limit is set at 1000 euros. In the case of a transaction between private individuals, there is still no limit.
A special mention should be made of transactions where the payer is a private individual without a tax residence in Spain. In this case, the cash payment limit rises to 10,000 euros regardless of who the recipient is.
Non-compliance with the maximum amount for cash payment
In case of breaching the regulation on the maximum amount for cash payment, the Tax Agency can take action against both parties involved in the transaction. The fine is 25% of the transaction amount. Additionally, the payer must justify the origin of the money.
That said, there are a number of options to reduce the amount such as early payment or agreement. Finally, it is important to note that when one of the parties reports the other within less than three months, they are exempt from the fine.
In conclusion, the establishment of a maximum amount for cash payment aims to eliminate tax fraud and money laundering. It is a measure by the Tax Agency that affects transactions involving at least one professional or business. The limit is set at 1000 euros with some exceptions.
We hope this article has provided you with relevant legal information. For more information on this matter, do not hesitate to contact us to resolve your queries related to notarial services in Barcelona, whether it is to process an inheritance in Barcelona, a power of attorney, a swearing of Spanish nationality, a sale, or any other service.
You can contact us by email at bcn@jlanotarios.com, by filling in the contact form on our website or by calling 93 159 17 62. At JLA Notarios – Notary Barcelona we will be happy to assist you.
Other questions related to the cash payment limit
Indeed, it is possible to pay the Notary in cash as long as the price of the service provided does not exceed the amount of €1000 mentioned above.
It will depend on whether the type of transaction takes place between individuals or involves a company and on the total amount of the transaction.
Between private individuals, when there is no company or developer involved, the maximum amount for payment is €99,999 and it is essential that the transaction takes place before a Notary. From €100,000 onwards, it must be reported to the Commission for the Prevention of Money Laundering using form S1. Private individuals without a Spanish tax residence may contribute up to €10,000.
When a businessperson is involved, the maximum amount is €1,000.
The answer to this question is negative. It is very unlikely that the deposit for a flat amounts to more than €1000, as it represents the total percentage of 15% of the property.
JLA Notaries, Notarial Services in Barcelona
We hope that this article about the maximum cash payment restrictions has provided you with relevant legal information. For more information on this matter, do not hesitate to contact us to resolve your queries related to notarial services in Barcelona, whether it is to process an inheritance in Barcelona, a power of attorney, a swearing of Spanish nationality, a sale, or any other service.
You can contact us by email at bcn@jlanotarios.com, by filling in the contact form on our website or by calling 93 159 17 62. At JLA Notarios – Notaría Barcelona we will be happy to assist you.
