Cash-in-hand among businesses and professionals to be curbed

SPAIN One of many measures aimed at increasing government income is a plan that will directly affect professional people such as doctors and lawyers, among others, as well as the self-employed in general. The law proposed at the Council of Ministers last April is being dubbed the 'Cash-in-hand Law' and will limit the amount of cash -i.e. unregistered- paid for any payment made to a business or professional to €2,500. This limit, however, does not apply to cash paid into a bank account or other financial entity. It will also be necessary to keep receipts and/or bills for at least five years in order to prove that a payment was made in ways other than in cash, should the tax authorities (Hacienda) so require. Fines for not meeting the requirements of the law will be PLEASE BE AWARE THAT ITEMS SUCH AS THIS MAY BE SUBJECT TO SUBSCRIPTION IN THE FUTURE but you can make a donation NOW, too! Please click here for more information on how to help us continue.>>>

25% of the total value of the cash payment, and both payer and payee will be responsible equally for the infraction, which will allow the tax authorities to take action against either party.

In addition, public servants and authorities will be obliged to report transactions that take place over the stipulated amount, should they be aware of it.

If the 'denouncer' is one of the parties involved in an illegal transaction and reports it within three months after the payment is made, Hacienda will take no action against them.

Non-residents get better deal
The amount allowed to non-residents, however, will be set at €15,000 in cash, and the measure does not affect transactions between private parties.

Fiscal measures such as this have been enacted in other countries such as Germany, France, Italy and the USA, among others, and all are aimed at preventing tax evasion in commercial operations, as well as eliminating the emission of false bills.

The proposed law has been met with approval by most organizations representing the self-employed, though many have made proposals for changes. One of these is that the law should include private individuals, so that tax cannot be evaded by simply hiding a transaction by declaring it as private. Another proposal from the self-employed is that bank commissions should be lowered so that the law does not mean a further increase in financial costs.

It could take another three months or more for the law to be enacted.