MADRID – The Spanish Tax Authorities (Agencia Tributaria) pay special attention to cash transactions in their fight against fraud and tax evasion. But how do they do that?
Despite the rise of credit cards, platforms such as Bizum, and contactless payment methods, cash remains a commonly used payment method in Spain. Many still keep some banknotes on hand for unforeseen situations where paying by card is not possible, such as a defective datáfono (PIN machine) or an empty battery of your mobile phone. In addition, there are many shops and establishments where virtual payments are not allowed and only cash payments are accepted.
Tax authorities are looking for cash
The difficulty in tracing the origins and movements of cash makes this payment method a concern for the tax authorities. This government agency must keep a register of each citizen’s income. That is why the Tax Authorities have developed their own methods to know when someone is using cash outside the limits of the law, a task for which it works closely with banking institutions.
Role of banks in supervision
Banks are obliged to immediately report certain transactions to the tax authorities. This means that the department immediately knows who may be carrying out activities outside the current legal margins and can start an investigation into their accounts.
This is explained in Article 93 of the General Tax Code, which states that all entities “must provide to the tax authorities all types of data, reports, backgrounds and justifications that are tax relevant and relate to the compliance with their own tax obligations or arise from their economic, professional or financial relationships with other persons”.
Is keeping cash at home illegal in Spain?
Keeping cash at home is not illegal. Moreover, there is currently no limit set. Many people choose these savings or custody methods due to a lack of confidence in the banking system. Additionally, it makes them able to deal with everyday unforeseen events. However, there are limits on the transactions you can make with cash. Some of these transactions could arouse the suspicion of the tax authorities. In such cases, it is essential to be able to prove the origin of the money in the event of an inspection.
Transactions that set alarm bells ringing
Among the suspicious transactions that banks ‘betray’ the tax authorities are the withdrawal or deposit of more than €3,000. This may lead them to suspect that you have a lot of cash. Every transaction using a €500 note is also scrutinised. This may lead to the department monitoring your accounts and movements. Additionally, there is a limit based on the maximum amount of cash someone can carry or move around the country. The maximum amount of cash that can be transported in Spain is €100,000.
The movements Hacienda typically looks at involve current accounts, savings, and term deposits. Furthermore, they focus upon loan and credit accounts, and other active and passive transactions.
Also read: Bank limits for cash withdrawals in Spain