Say goodbye to reckless cash use as limits tighten across Europe
Cash payments still appear in everyday life, but for large sums they are often not justified. To curb tax evasion, authorities warn of penalties when cash is used beyond set thresholds, with fines reaching up to 2,500 euros.
That is why the treasury has cautioned about keeping large amounts in safes. The rules have evolved in recent years to reduce the use of cash for sizeable transactions.
Two years ago, Spain implemented a cap on cash payments. A maximum of 1,000 euros is allowed for cash transactions under Law 11/2021, aimed at preventing tax evasion. For payments that exceed this limit, other methods such as bank transfers must be used.
When using transfers, the applicable framework includes Law 7/2012 on tax regulations, which sets a transfer limit at 10,000 euros. This ceiling also covers other activities like cash withdrawals from ATMs, emphasizing why many transactions must be traceable.
Reporting thresholds and investigations for higher incomes
For income scrutiny, the treasury can review all transactions above 3,000 euros or those made with promissory notes of 500 euros. This cash limit is not universal; foreign individuals visiting Spain are subject to a higher threshold, set at 10,000 euros.
Beyond Spain, several EU countries have adopted cash limits with varying figures. In France, the limit has dropped to 1,000 euros. Italy’s limit sits at 3,000 euros, while Germany is debating a higher ceiling with discussions around 5,000 euros where no limit might apply. The European Commission is examining potential harmonization of these restrictions at the community level [European Commission].
These measures reflect a broader trend to increase financial transparency and reduce anonymous cash transactions within the EU, encouraging digital alternatives and formal record keeping.
Fines for cash payments that breach the limit
Professionals handling payments at or above the established cash limit of 1,000 euros can face penalties issued by the treasury. The sanction applies to both the recipient and the payer and is calculated as 25 percent of the cash amount, resulting in fines ranging from 250 to 2,500 euros. The intent is to discourage informal cash exchanges and promote traceable payments.