The tax evasion fight is all-out. It also goes through the control of payment systems. The use of cash is one of the most used systems for tax evasion. In fact, payments by payment card or by bank transfer necessarily leave a trace of the transaction. However, making or receiving a cash payment does not necessarily leave a trace. This is why the government has long launched the war on tax evasion also through the limitation of cash payments.
Currently, the cash transaction amount limit is € 2,000. Cash payments up to € 1,999 can be made or received until December 31st.
This rule has been in effect since July last year and has been introduced since law decree n. 124/2019. In case of violation, heavy penalties are applied. For example, they snap very high fines if you donate or lend 2000 euros in cash today. But in January next year, this limit will drop further. Our Experts talk about the new limits in this article: “Let’s get ready to pay this way if we don’t want to have trouble with the tax authorities”.
Beware of too many cash payments because tax checks are triggered for monthly withdrawals beyond this amount
The decree n. 124/2019 introduces payment limits and penalties for those who violate these limits, but checks on cash movements are not limited to these amounts.
Banks, post offices and financial intermediaries from 2 July 2019 are obliged to make a monthly communication to the FIU, Financial Intelligence Unit. Financial intermediaries must notify the FIU of any cash movement when this exceeds a total of 10,000 euros per month. This information is called objective communication.
Let’s take an example to better understand. Let’s imagine that a person deposits or withdraws cash for a total amount of € 10,000 per month, while remaining within the limits set. The financial intermediary will be obliged to communicate to the FIU all the movements that that person will carry out in the month beyond the limit of 10,000 euros. This obligation is indicated in art. 3 of the UIF decree of 28 March 2019.
The undersecretary of the MEF (Ministry of Economy and Finance) Federico Freni reiterated this obligation in a recent hearing in the Chamber. Freni also reiterated that objective communication does not constitute an additional limit to the payment of cash. Anyone can carry out cash transactions within the limits, even exceeding the total monthly 10,000 euros.
We reiterate that cash withdrawals or payments for a monthly amount exceeding 10,000 euros are lawful. However, once this amount has been exceeded, all transactions will be monitored by the FIU and verified those at greatest risk. So beware of too many cash payments because tax checks are triggered for monthly withdrawals beyond this amount.
Deepening
Beware of the looming risk for many of paying much more taxes for this unsuspected reason
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