What you need to know about cash payments in Spain

Accountant in Marbella informing on how to deal with cash payments in Spain. In connection with the fight against tax fraud, the unregistered economy and money laundering in Spain, tax offices are increasingly emphasising limits on cash transactions.

‘Cash payments’ not only include Spanish or foreign coins and banknotes, but also bearer cheques in any currency and any physical method of payment, including electronic methods of payment that may be used, such as payments payable to the bearer.

What is the limit of cash payments in Spain?

In 2012, a series of tax reforms were introduced to prevent and fight tax fraud. These reforms limit cash payments and certain transaction to the sum of 2,500€ or more, or their equivalent sum in foreign currency, provided that one of the parties is a professional businessperson.

Nevertheless, it has been predicted that measures will soon be approved to limit cash payments to 1,000 €, although it is not known when the limit will be diminished to this sum.

This limit might be adjusted up to 15,000 €, or its equivalent sum after conversion, provided that the payer is non-resident and we are not dealing with a professional transaction. In other words, a payer might be requested to prove he is not acting as a businessperson or a self-employed entity, and to prove that his tax residency is abroad. It has not been guaranteed that this limit will also be lowered.

The non-fulfilment of these obligations may involve penalties equalling up to 25% of the cash payment.

Must cash payments be justified?

In a case of exceeding certain sums in payments or transfers, the Spanish tax office might be vigilant and require you to accredit the origin of the cash payment.

It is recommended that all parties involved in the transaction keep receipts, payment documents and invoices that accredit all payments made in cash for a period of at least five years after the date of the transaction.

Welex Lawyers & Accountants
C/ Ramón Gómez de la Serna 23, Local 7, Marbella Tel. (+34) 952 775 521 · info@welex.es · www.welex.es