Law 11/2021 on measures to prevent and combat tax fraud was approved on July 9 and published by the BOE July 10. This new law sets a new limit on operations paid in cash. Operations in which any of the intervening parties act as an entrepreneur or professional, with an amount equal to or greater than 1.000 euros or its equivalent in foreign currency, may not be paid in cash.
The objective of this new law is to try to minimize tax fraud, control money movements and obtain traceability of all operations. However, when the payer is a natural person who justifies that he does not have his tax domicile in Spain and does not act as an entrepreneur or professional, the amount of 1.000 euros will become 10.000 euros or its equivalent in foreign currency.
An entrepreneur or professional is any natural or legal person that develops an economic activity consisting of the acquisition, delivery or provision of goods and services. With this, any purchase that a Spanish tax resident makes in an establishment, if it exceeds the amount of 1.000 euros, will not be able to pay in cash. The same occurs in the payment of professional or business fees for the provision of services if they exceed this threshold.
In case of non-compliance, the penalty is 25% of the total amount that exceeds these limits.
What modifications are made to Law 7/2012, of October 29, regarding the limitation of cash payments?
- The control of cash operations was included in article 7 of Law 7/2012, of which the following are modified: point 1 of section One, points 4 and 5 of section Two, point 1 of section Three and added one more point to section Three. With this new law, point 1 of section One regarding the scope of application is worded as follows:
“Operations in which any of the intervening parties act as an entrepreneur or professional, with an amount equal to or greater than 1.000 euros or its equivalent in foreign currency, cannot be paid in cash. However, the aforementioned amount will be 10.000 euros or its equivalent in foreign currency when the payer is a natural person who justifies that he does not have his tax domicile in Spain and does not act as an entrepreneur or professional ”.
- The new wording of section One of article 7 of Law 7/2012 will apply to all payments made from the entry into force of the rule, even if they refer to operations arranged prior to the establishment of the limitation.
- Although non-compliance with the rule continues to be classified as serious and administrative, when the limits are modified, the wording of point 4 of section Two changes, which is defined as follows:
"The basis of the sanction will be the amount paid in cash in operations of an amount equal to or greater than 1.000 euros or 10.000 euros, or its equivalent in foreign currency, depending on each of the cases referred to in number 1 of section One, respectively ”.
- It also changes point 5 of said section by adding explicit cases of reduction of the sanction, so that it is as follows:
"The sanction will consist of a proportional pecuniary fine of 25 percent of the base of the sanction provided for in the previous number, unless there is a case of reduction of the sanction referred to in number 5 of section Three of this article".
Regarding the denunciation of cash payments, there are no modifications in Law 7/2012. Therefore, if one of the parties that participates in a commercial operation, whose cash outlay exceeds the limit of 1.000 euros, denounces the other party, it will be exempt from liability, provided that the complaint is made within the following three months to the date of the payment made.