Not more than 2500€ in cash
Posted on Jul 05, 2012
Not more than 2500€ in cash
The Spanish government has announced plans to ban all cash transactions of more than 2,500 euros, in an effort to clamp down on the rampant black economy and tax evasion in Spain.
The Vice-President of the Government, Soraya Sáenz de Santamaría, asserted that the aim of the Draft Bill to combat tax evasion and the black economy is "for there to be equality among all citizens when paying their taxes and to prevent citizens from evading the payment of their tax obligations".
The plan, which was announced by the Government on 13 April, attacks tax fraud loopholes and strengthens legal security and the capacity of the tax authorities to prevent that "once tax fraud has been detected, the tax evader gets away scot-free as a result of hiding away assets so that they cannot be subject to seizure", according to the Vice-President of the Government.
The text approved on Friday incorporates certain expert recommendations. Soraya Sáenz de Santamaría highlighted that "both the European Central Bank and the Bank of Spain have backed this plan".
Those who breach this limit face fines of 25% of the value of the cash payment. Furthermore, both the payer and the recipient shall be jointly liable for said breach, although the party reporting the breach may escape tax penalties.
All taxpayers must notify the tax authorities of accounts, securities and real estate assets held overseas. Soraya Sáenz de Santamaría underlined that undeclared capital gains will not be statute-barred and will be allocated to the financial year in which they are detected.
The Vice-President of the Government clarified that in this case taxpayers will face a minimum fine of 10,000 euros that "will be increased by 5,000 euros for each item that is not notified".
The text also includes the exclusion of the module system for those entrepreneurs that invoice less than 50% of their operations to private individuals and those that obtain returns of more than 225,000 euros from other entrepreneurs or self-employed professionals.
The Vice-President of the Government highlighted that, to prevent taxpayers from evading their tax obligations, if the tax authorities believe that specific behaviour may constitute a criminal offence then they may adopt precautionary measures to prevent "the alleged tax offender from disposing of assets" and, if finally found guilty, from not having funds to pay the tax authorities.
Furthermore, penalties for citizens that do not collaborate or hinder the actions of the tax inspectorate shall range between 1,000 euros and 100,000 euros should they not carry on economic activities, and between 3,000 euros and 600,000 euros in the event that they do.
In order to avoid fraudulent VAT returns in real estate transactions, the purchaser may only deduct input VAT if they can substantiate that they have deposited the output VAT.
Soraya Sáenz de Santamaría underlined that "Spain needs to do away with the 'with VAT' and 'without VAT' mentality". 'Without VAT' is harmful to us all, to those who pay, to those who meet their tax obligations and to the tax authorities themselves. Added to which, the tax authorities work for the benefit of all, for our public services, our education and our healthcare system. And those who go about with the "'without VAT' mentality are defrauding society as a whole.