Approved! The anti-fraud law enters into force. Cash payment limit reduced from €2,500 to €1,000.

The Congress of Deputies has definitively approved the law on the prevention of and fight against tax fraud, which includes measures such as limiting cash payments to €1,000 (previously €2,500) and prohibiting tax amnesties.

Below is a summary of the most relevant measures:

Cash payments above €1,000

Cash payments above €1,000 or the equivalent value in foreign currency are prohibited. The maximum limit permitted until now, which was €2,500, is therefore reduced.

As of July 11, 2021, cash payments may not be made where one of the parties is acting as a business owner or professional.

Private individuals with their tax domicile outside Spain will also be subject to limits, with the cash payment limit reduced from the current €15,000 to €10,000, provided they are not acting as a business owner or professional.

For transactions between private individuals, the cash transaction limit remains at €2,500.

Obligation to report cryptocurrencies

An obligation is introduced to report the holding of, and transactions involving, virtual currencies, whether located in Spain or abroad, where Spanish taxpayers are concerned.

Accordingly, information will be required on balances and holders of the currencies, as well as on all types of transactions carried out with them. Holdings of cryptocurrencies abroad must be reported on Form 720 (return on assets and rights held abroad).

The Cadastre's reference value will become the tax base for property-related taxes

The text provides for a reform under which the reference value set by the Cadastre will serve as the benchmark for the tax base of property-related taxes on real estate. This would affect the following taxes:

• Wealth Tax (IP) on real estate whose tax base has been the Cadastre's reference value.
• Transfer Tax (TPO).
• Inheritance and Gift Tax (ISD).
• Stamp Duty (AJD).

Under the new Law, the new reference value could not exceed market value.

During the first 20 days of December, the Directorate General for the Cadastre will publish in the Official State Gazette (BOE) the reference values of each property, which may be consulted on the Cadastre's electronic office (Sede Electrónica del Catastro). Where there is no reference value or it cannot be certified by the Cadastre, the tax base will be the higher of the following: the value declared by the taxpayer or the market value.

Taxation of SOCIMIs (Spanish REITs) and SICAVs

For real estate investment companies (SOCIMIs), a tax rate of 15% is established.

In addition, with regard to variable capital investment companies (SICAVs), oversight is tightened through a minimum investment requirement of €2,500, or €12,500 in the case of an umbrella company (sociedad por compartimentos), for shareholders, of whom there must be at least one hundred.

Tax amnesties

This is because they are considered to discriminate against taxpayers who comply with their tax obligations. Tax amnesties allow undeclared assets to be regularized on more favorable terms than if they had been taxed in the usual and normal way.

List of debtors to the tax authorities

The list is expanded by lowering the debt threshold that triggers a debtor's inclusion on it, from €1,000,000 to just €600,000. In addition, the law provides that the list must include not only principal debtors but also those declared jointly and severally liable for the debt as a result of their actions or omissions.

Prohibition on the use and possession of software used to conceal sales

The law prohibits the production, possession, or use of accounting management systems and software applications capable of manipulating and falsifying companies' accounting records, with the aim of concealing part of their turnover from the tax authorities and thereby reducing their tax bill.

The law requires the electronic systems used in accounting or business management to meet requirements that guarantee the integrity, preservation, traceability, and unalterability of transaction records.

List of tax havens

Another measure included is the review of the jurisdictions on the list of tax havens. The shift from the concept of a tax haven to that of a non-cooperative jurisdiction in the international forums of the OECD and the Council of the European Union makes it necessary to apply more demanding and internationally coordinated rules.

What penalties do companies face for breaching the cash payment limit?

The penalty will consist of a proportional fine of 25% of the amount paid in cash.

Reporting cash payments

With regard to the reporting of cash payments, if one of the parties to a commercial transaction whose cash payment exceeds the €1,000 limit reports the other party, it will be exempt from liability, provided that it files the report within three months following the date of the payment.

• The report must specify the transaction carried out, its amount, and the identity of the other party involved.

• Any report that the other party involved may subsequently file will be deemed not to have been filed.

• Simultaneous filing of a report by both parties involved will not exempt either of them from liability.