New Portuguese legislation on limits for cash payments

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On August 23, 2017, Law 92/2017 (of August 22, 2017) entered into force. This new law regulates the use of cash as a means of payment, as follows:

a) It is prohibited to pay or receive any cash payment equal to or greater than EUR 3,000 (or its equivalent in foreign currency). This amount is increased to 10,000 EUR (or its equivalent in foreign currency) in the case of natural persons not residing in Portugal and not acting as entrepreneurs or traders;

b) Payments made by Portuguese taxpayers of corporate income tax and Portuguese taxpayers of personal income tax who have (or must have) organized accounts, equal to or greater than EUR 1,000 (or its equivalent in foreign currency), must be made by means of payment allowing the identification of the beneficiary, namely bank transfer, check or direct debit; and

c) It is forbidden to pay taxes in cash exceeding 500 EUR.

For the purposes of calculating the aforementioned limits, all payments associated with the sale of goods or services are considered in aggregate form, even if they do not exceed this limit if they are considered in a fractional manner.

The above-mentioned limits on the use of cash do not apply to transactions with financial entities whose legal scope includes: (i) receipt of deposits; (ii) the provision of payment services, (iii) the issuance of electronic money or; (iv) the execution of manual foreign exchange transactions, in payments resulting from judicial decisions or orders as well as in particular situations governed by a special law.

There are currently doubts as to whether free transmissions, such as donations, are also covered by the scope of this law, with some believing that they are not and others claiming the opposite.

Cash payments exceeding the legal limits referred to above are punishable by a fine ranging from 180 euros to 4,500 euros for individuals and from 360 euros to 9,000 euros for legal persons.

Given the small amount of fines and the fact that many covered transactions can be executed by private acts, it will likely be difficult to enforce this law.


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