Limitations on Cash Payments: Practical Key Considerations for Companies and Professionals.

Spanish legislation limits cash payments to €1,000 where a businessperson or professional is involved in the transaction and the payer has their tax residence in Spain. This limit is increased to €10,000 when the payer is a non-resident individual acting as an end consumer and can properly prove their tax residence abroad. In addition, both the Spanish Tax Agency and the courts have confirmed that it is not permissible to split a single transaction into several smaller payments in order to circumvent these limits.

This alert examines the main interpretative criteria adopted by the tax authorities and case law, as well as the practical implications for economic operators. In particular, it highlights the importance of retaining supporting documentation for transactions, especially where the higher limit for non-residents applies, since non-compliance may result in penalties of up to 25% of the amount paid in cash. It also notes that the European Union will introduce a general €10,000 limit on cash payments from July 2027, without prejudice to Spain maintaining stricter restrictions.

Access the full alert via the following link.