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Wednesday 21 November 2012

New Tax News for Canary Islands & Spain

The latest conditions for cash payments above 2,500 euros were announced on the19th November 2012 for Companies, Individuals and Professionals in Canary Islands, Spain.

The provision which is included in the new anti-fraud law published in the Official newspapers on the 30th October specifies that the amount is the limit payable in cash, taking effect 20 days after publication in the BOE.

For the development of this measure the legislative experience of EU countries such as France and Italy were taken into consideration. The limit is applicable to individuals, companies and professionals but does not apply to payments made to banks. There is also a provision for individual non-residents limiting the amount to 15,000 euros so as not to damage linked tourism activities.

The participants in the operation should keep documentary evidence of payment for five years from the date of payment, to prove that it was made through one of the means of payment other than cash. They will be required to provide these documents at the request of the tax authority.

Those who violate this restriction will face fines of 25% of the value of the payment made in cash. Both the payer and the payee jointly and severally liable for such infringement, so that the tax may be brought against any of them to collect 100% of the penalty.

The taxpayer who was involved in one of these transactions will be exempted from punishment if they voluntarily reported the incident to the administration provided that three months have elapsed since the payment in cash. The Tax Office has set up a procedure for handling complaints telematics from tomorrow, referring exclusively to cash payments in excess of €2.500.

The Act also expressly provides a rule against splitting operations, the calculation of the limit of €2.500 legally established. In addition, the standard introduces reporting requirements for any authority or officer in the performance of his duties, becomes aware of any breach of the legal limit.
The Tax Office has clarified that if an operation exceeds cash paid €2.500 but you pay in several times splitting the payment of amounts below the legal limit, is also breaking the limitation is effective now. That is, if an operation of €4.000 is payable in cash in two installments of €2.000 each, the penalty would be 25% above €4.000 and thus €1.000 in total.


The use of bulk cash is directly related to transactions to evade taxes. Limiting cash reinforces the control that keeps the tax in the fight against fraud. This line includes the special plan on the use of high denomination notes (€200 and €500), started four years ago and which is continued by the Administration.

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