EDITION: December 2012 - February 2013

The beginning of the end of black money

Fuente: Agencia Tributaria (artículo 7 de la ley 7/2012) Texto: Sultan Cheema (Doornbos & Cheema)

Spain has ratified a new law (article 7 de la ley 7/2012) prohibiting cash payments for professional services of over €2,500.
All businesses are affected and the measures under the new law are:
• Prohibition on cash payments greater than €2,500 involving business deals by entrepreneurs and freelancers.
• Non-resident payers can make cash payments of up to €15,000.
• Upon infringement of this limit, both the payer and payee can be held liable.
• The restrictions apply to individuals or enterprise businesses but NOT on private transactions.

The plan has been finalized by the government as an anti-fraud measure and in order to alleviate the public deficit by raising tax revenues. Payments will have to be made by credit card or bank transfer. According to President Mariano Rajoy’s statement in congress, violators will face a fine of 25% of the amount paid illegally.
There are additional obligations; to communicate all foreign “accounts, securities, bonds, annuities or real estate.” Those who fail to submit their foreign assets will be fined a minimum of €10,000.
The government aims to collect €8.2 billion in tax that would otherwise have not been paid in 2012.
On the related subject of amnesty, the President also qualified that he would not bring about a total amnesty but rather in which parties which brought money to the surface would pay an 8% penalty for businesses or a 10% penalty for individuals. However sources within the inspectors’ organization stated that once the fraud is discovered and the fine paid, the corresponding taxes would also be charged while the money is regularized.

‘Restricting cash operations is always a good measure in the fight against fraud’, said Valentin Pitch of the registrar of tax advisors (REAF). This is the first time that limits on cash payments have been established in Spain. Until now the fight against black money had been concentrated on the controversial €500 note, which makes up 70% of the cash in circulation. Current estimates suggest that as much as 30% of the Spanish economy is fueled by the black market.
The law came into effect on 19th November 2012. Contact your asesoría for further details. •