MADRID – Paying with cash is still a widespread practice in Spain. Even though the government has tried to limit it more and more over the years. Companies from certain sectors are monitored by the tax authorities more closely than others.
As a result of the government’s desire to eliminate blind spots in its debt collection function and reduce black money flows, the use of cash is becoming more and more restricted. Consequently, it is now more and more controlled by the relevant tax authorities. The authorities also want to limit the financing of terrorism in this way.
Limit on cash payments
That is why it was introduced in the summer of 2021 that cash payments between professionals should not exceed €1,000. Before that, that amount was still €2,500.
With the new regulations on cash payments, professional groups were also mentioned where the practice is most common. After all, it is often the small businesses and the self-employed that provide products and services that often involve cash payments.
At the beginning of the year, the Tax and Customs Administration drew up its Annual Tax and Customs Control Plan (available via this link in the Government Gazette). In it, Hacienda emphasised the need to distinguish the “sectors and business models where the risk of an underground economy is high”.
The Treasury indicates that on this basis it will pay extra attention to the intensive use of cash as the sole means of payment or if payments exceed the legally established amounts. The sectors and industries followed are not detailed in this plan, but the portal Self-employed and Entrepreneurs has published a list of activities that are closely monitored by the Tax and Customs Administration. These are as follows;
- hotel and restaurant sector
- reform sector
- commercial sector
- real estate sector
- construction industry
- fruit picking sector
Sanctions for improper use of cash
All these activities are closely related to the use of cash. Buying in a store, paying the bill for lunch or dinner, paying for a renovation at home… these are all actions that occur every day, but in certain cases, the money rules can easily be violated.
As stated in Law 11/2021 of 9 July on the fight against tax fraud, non-compliance with the regulations on the use of cash leads to fines of 25% of the amounts paid that have exceeded the allowed cash limit.