General Regulations on Cash Payments
In Spain, there are strict regulations on the use of cash, aimed at combating tax fraud and money laundering. Law 7/2012 and the Beneficial Ownership Act establish controls to ensure the traceability of transactions and the identification of the beneficial owners of funds.
Legal Limit for Cash Transactions
Since 2012, the maximum limit allowed for cash payments is €1,000 when one of the parties is a company or self-employed person. This threshold has been lowered from the previous €2,500, in line with European Union recommendations. Payments above this limit must be made electronically (cards, transfers) to ensure the transaction is recorded.
Consequences of Non-Compliance
- Making cash payments above the limit may result in severe penalties:
- A 25% fine on the amount exceeding the permitted limit.
- Joint liability: both the payer and the recipient may be penalized, unless one reports the transaction to the Tax Agency within three months.
Exceptions and Special Cases
1. Payments between individuals:
The €1,000 limit does not apply if both parties are individuals and the transaction does not involve business or professional activity. Example: the sale of secondhand goods between individuals. Note: These transactions may be subject to taxes such as the Property Transfer Tax (ITP).
2. International Transactions:
For the entry or exit of cash exceeding €10,000 to or from other countries, it is mandatory to declare it to customs authorities. The limits may vary depending on the legislation of the destination country.
3. Regions with special regulations:
The Canary Islands, Ceuta, and Melilla have specific rules due to their differentiated tax regimes.
4. Exceptional situations:
In cases of emergency or in areas without access to electronic systems (for example, rural areas without banking infrastructure), specific exceptions may be allowed.
Impact on the Economy and Business Activity
- These restrictions seek to reduce the underground economy and increase transparency in economic activity.
- The use of electronic payment methods facilitates oversight by authorities and contributes to a safer business environment aligned with international best practices.
Recommendations for Businesses and Professionals
- Prioritize the use of electronic payments for all transactions over €1,000.
- Keep clear records of all transactions.
- Consult a tax advisor if you have questions about applicable regulations or possible exceptions.
- Remember that regulatory compliance is key to avoiding penalties and strengthening your business reputation.
Reporting to the Tax Agency
- Anyone can file a report with the Tax Agency if they detect payments that exceed the legal limit.
- This process encourages collaboration between citizens, businesses, and the administration to identify potential violations.
- It is essential to provide specific information:
- Date of the transaction
- Exact amount
- Parties involved
Specific Regulations in Autonomous Communities
Some regions, such as the Canary Islands, Ceuta, and Melilla, have special tax regimes. In these territories, the limits or general rules can be adapted to their particular economic and geographical conditions. Exceptions are intended to facilitate regulatory compliance without losing sight of the traceability of transactions.
Certificate of Beneficial Ownership: Control Tool
The Certificate of Beneficial Ownership identifies the ultimate owners of companies and assets.
- This instrument is essential for:
- Preventing the use of complex business structures to hide illicit funds
- Facilitating traceability in payments and transactions
- Businesses and financial institutions are required to keep this information up-to-date.
Anti-Money Laundering Control Measures
Money laundering is one of the main threats to the economy. Limitations on the use of cash hinder the circulation of funds from illegal sources.
- Complementary actions:
- Promoting electronic payment methods, which are easier to trace and audit
- Strengthening the early detection of suspicious transactions
- The Bank of Spain and other authorities promote these measures to protect financial integrity.
Restrictions on cash payments in Spain are part of a comprehensive strategy to ensure transparency and combat fraud. It is essential that businesses and citizens know and comply with these regulations to avoid sanctions and contribute to a fair economic environment.