Cash Payments made in any method on amounts greater than or equal to 3,000.00 euros are illegal
It was published on 22th August Law no. 92/2017, which requires the use of specific payment method in transactions involving amounts greater than or equal to 3,000 euros, the amendment of the General Tax Law and the General Infringements Tax Law. With the publication of this law, was added to the General Tax Law a new Article 63o E.
Effects of the new law approval
The new law shall prohibit the following:
- • To pay or to receive in cash of any transaction of any nature that involves amounts equal to or greater than € 3.000, or its equivalent in foreign currency.
- • Payments to be paid at the tax department for taxes due on a cash method cannot exceed 500 euros.
It should be noted the expression “transactions of any nature” which reflects a more extended understanding of the new standard, not restricting it only to commercial transactions.
The first limits indicated above is 10,000 euros, or its equivalent in foreign currency, where payment are made by individuals not resident in Portuguese territory on condition that they do not act as entrepreneurs or commercial.
For the purposes of calculating the limits referred to the law, it is included the aggregation forms of all payments related to the sale or supply of services, even if they do not exceed that limit it may not be fractioned. With this specification, the legislature intended to clarify that aggregated payments may not be split to make it under the amounts stipulated by law.
Payment of Invoices or Equivalent Documents
With the amendment of this law a new Article 63oE was introduced to the General Tax Law, revoking no3 of the Article 63oC of the same law. The goal was not only to concentrate on the same article all the rules relating to cash payments, as well as improve the previous understanding of the law.
Thus, the payments made in cash by the corporate structures, as well as sole traders/ self-employment Individuals that have or should have profit and loss accounting structures relating to invoices or equivalent documents the amounts are equal to or greater than 1,000 euros, or its equivalent in foreign currency, must be made through, payment method that allows the identification of the respective recipient, such as bank transfer, cheques or direct debt.
The new rules are not applicable in operations with financial entities whose legal object understands the acceptance of deposits, the provision of the payment service, e-money transfers or the currency exchange and the payments arising from court orders decisions and in similar situations.
The payment of cash transactions which exceed the limits stipulated by law shall be punitive with a fine that may be between 180 and 4,500 euros.
As we have already alerted, the purpose of the application of the new law Article 63 - C of the General Tax Law, in our opinion that the penalties may be applies as well as the application of the indirect methods in some situations.
Therefore, we recommend the application of these requirements with the maximum cautions.
The new law is active on the following day from its publication. The payment of the new rules is applied after the law was approved 23 August 2017, even though the transaction itself are dated before this date.
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