Cash payments for goods and services to be capped at €1,000

500-notesPAYMENTS for goods or services in cash may not be more than €1,000 in the government’s latest drive to fight against tax fraud.

At present, cash can be handed over up to €2,500 without penalty, but this means a high amount of IVA evasion – the most common type of fiscal fraud – is going undetected.

Real-time information about IVA declarations via mandatory technology for the 62,000 taxpayers who have to file their returns monthly rather than quarterly will also be launched next year.

Postponed IVA payments will also be tightened up on, and a concerted effort to claw back the tax which remained unpaid by those evaders who took advantage of the PP’s ‘fiscal amnesty’ will be made.

Some 30,000 amnesty beneficiaries are still on file and Montoro has confirmed their tax obligations will not expire under the statute of limitations, meaning however long it takes to resolve their cases, they will not escape having to pay up.

At present, with all commercial transactions conducted by all self-employed persons subject to IVA on every cent, mostly at 21%, traders have every incentive to deal in cash to keep the cost down to the end consumer and retain business – but although the cumulative total of all business people who do this runs into millions, it is mainly the major players, such as larger companies, which often turn out to be the most likely to avoid their IVA obligations.

Centre-right party Ciudadanos’ conditions for backing president Mariano Rajoy after the last elections included changing payment rules so that all consumers have the right to use a credit or debit card for any payment over €10, but as yet this has not been introduced.

However, practically all supermarkets accept card payments for any amount whatsoever.

Published Think Spain02 December 2016

Return to Daily News