The Administration has been fighting for a long time to bring to the surface what we have been calling the underground economy. On 10 July, the Official State Gazette (BOE) published Law 11/2021 on the prevention and fight against tax fraud, which came into force on 11/07/2021. There are several new features of this new law that we will be analysing, including the limitation of cash payments.
Let us now focus on one of the most likely to affect day-to-day business traffic: the limitation of cash payments.
The maximum limit for cash payments is reduced from the current 1,500 euros to 1,000 euros in transactions where one of the parties is a professional or entrepreneur, e.g. payroll payments.
while for individuals the limit is 2,500 euros. Beware that means of payment in cash, for the purposes of the Law, is not only the payment in legal tender, it is also the bank cheque and any other means, including electronic ones, to bearer.
In addition, the limit for individuals, not entrepreneurs, with tax domicile outside Spain is reduced from 15,000 to 10,000 euros.
Well, is it simply a matter of splitting payments?
Well, no! It would have been very easy to get around the rule. Let's bear in mind that splitting the payment of the same service or purchase does not comply with the rule. For the purposes of calculating the limit, the amounts of all the operations or payments in which it has been possible to split them up must be added together.
The Tax Agency may request, for a period of 5 years from the payment made, supporting documents verifying that the rule has been complied with, both in terms of the amounts and the means used.
For the time being, only payments made to credit institutions are exempt from this rule, as these are also obliged by law to identify both payer and collector, and therefore the fund is also carrying out delegated tax control functions.
Is there a sanctioning regime?
In case the rule still did not make its purpose clear, it establishes that both the payer and the debt collector are jointly and severally liable.
The Tax Agency may impose a serious administrative sanction on one of the two or, if it considers it appropriate, on both, which will consist of 25% of the amount paid in cash in excess of 1000 euros, without the payment of this sanction precluding the initiation of other types of action if it is detected that there are indications of money laundering.
To make a further contribution to civic conviviality,
if one of the parties involved, payer or collector, reports the transaction no later than 3 months after it happened, clearly identifying the amount and the other party, it will be exempted from liability.
rendering ineffective a subsequent complaint by the other party. Therefore, beware that, depending on the type of business relationship, this can be a double-edged sword. Clearly, if both are denounced simultaneously, the liability remains for both parties without the possibility of being exempted from it under any circumstances.
At Confialia, we recommend that, even if you have invoices issued/received prior to the publication of the regulation (over 1,000 euros), your payment should be made by bank if it is after 11/07.