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Limit on cash payments

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Already mentioned in our previous newsletter, we want to emphasize this measure included in the new anti-fraud law published in the Official State Gazette on 30 October.

The legislative experience gained in such neighboring countries as France and Italy was taken into account when developing this new measure in Spain. It will no longer be possible for cash payments to be used in transactions equal to or higher than 2.500 euros when at least one of the parties involved is a business owner or a professional. In other words, it will also affect transactions between a private individual and a business owner. However, it will not be applied to payments and deposits made with credit institutions.

In order not to damage activities associated with the tourism sector, the limitation on the use of cash is raised to 15.000 euros when the payer is a non-resident private individual.

The parties involved in such transactions (above 2.500 € – or 15.000 € for non-resident payers-that cannot be paid in cash) must keep hold of the proof of payment for a period of five years following the date thereof in order to demonstrate that the payment was made using a method other than cash. The parties will be required to present such proof of payment upon request by the Spanish Tax Office.

Anyone failing to comply with this limit will face fines of 25% of the value of the cash payment. Both the payer and the recipient of the payment will be jointly liable for any such breach, meaning that the Spanish Tax Authorities may require either of them to pay 100% of the fine.

Non reported alterations on Real Estate. 

The governing political party, PP (Partido Popular), has conceived a measure consisting of a process of regularization of Urban and Rustic Real Estate which are currently not registered correctly in the Town Hall Tax Registries (Catastro). The aim of such measure is to achieve that all Real Estate properties are properly recorded in the competent Town Hall Registries by payment of a fixed charge of 60 Euros and without any penalties for non compliance.

The measure has been included in an Amendment that the PP has suggested to the Draft Tax Bill approved together with the National Budget for 2013.

The process of regularization would be initiated by the competent local authorities and would be in force by group of municipalities between a period running from 2013 to 2016, with possibility to extend such duration.

The commencement of the process would be communicated to the holders of Real Estate who will have a period of 15 days for arguing against the same.

The PP justifies this measure in the fact that, in practice, there are numerous Real Estate and alterations to the same, such as refurbishments, etc. that have not been properly declared by the owners and that therefore do not pay taxes in concept of Local Council Tax (IBI) or Non Resident Income Tax or Income Tax (IRNR or IRPF). This measure would enable the competent tax authorities to regularize the taxes for the past 4 years on such Real Estate or alterations to the same.

The spokesman of the political party at the opposition: PSOE (Partido Socialista) has declared that this is a new “fiscal amnesty” created by the government.

We would have to wait and see whether such Amendment and the Draft Tax Bill are definitively approved, but being a measure which would result in an increase of the government revenue, the chances, under the current economic scenario, are high.

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