EXPLAINED: What are Spain’s new rules and limits on cash payments?

Spain has recently lowered the limit on cash payments people can make down to only €1,000. Here are the new rules, who it will affect the most and the penalties you need to know about.

EXPLAINED: What are Spain's new rules and limits on cash payments?
Austria has been sending out climate bonus payments to millions of people (including some deceased). Image: moerschy / Pixabay

What are the new rules and are there any exceptions?

The Spanish government recently introduced a new Anti-Fraud Law, which establishes a limit on the amount you’re allowed to pay in cash.

The previous limit was €2,500, but now this has been reduced to only €1,000. This means all amounts above €1,000 will have to be paid by card. 

Spain’s official state bulletin states: “Operations in which any of the intervening parties act as an entrepreneur or professional, with an amount equal to or greater than €1,000 or its equivalent in a foreign currency, cannot be paid in cash.”

The measure affects Spanish companies and the amount you can pay in shops or for professional services. For payments between individuals residing in Spain, the limit remains at €2,500.

For tourists, a cash limit of €10,000 on transactions remains in force.

Who is it aimed at and who will it affect?

The new legislation seeks to limit cash payments of large amounts of money, to make it harder for people to work without declaring their income and to stop money laundering.

It is primarily aimed at the self-employed and small businesses that are not required to present an income balance and where cash flow is continuous and hard to keep track of. It aims to flush out those who are not declaring cash payments and are trying to create an underground economy. 

What are the consequences for cash payments greater than €1,000?

Failure to comply with the new rules is considered serious, and fines will be imposed. 

The government has established a penalty of 25 percent of the payment for both parties – the payer and recipient. But, in the event that one of the two parties denounces this, they will not have to pay the penalty. In addition, a 50 percent reduction will be offered for paying the fine in a timely manner without claims.

What is the EU limit on cash payments and is it the same?

On June 3rd, 2021, the European Union brought in a new rule to say that all travellers who enter or leave with €10,000 or more in cash will be obliged to declare it. New elements have also been added to the definition of cash to include gold coins and other gold products.

Mairead McGuinness, EU Commissioner for Financial Services, stated that the €10,000 limit is “high enough not to call into question the euro as legal tender or affect financial inclusion” and “low enough to make it harder for criminals to launder large sums of cash”. 

Later on July 20th, the European Commission proposed the creation of a new body to fight money laundering. The new proposal also establishes stricter regulations on cryptocurrencies and a ban on cash transactions exceeding €10,000.

Currently, there is no established EU-wide limit on cash payments. Previously in 2018, the European Commission agreed not to impose limits on cash payments because it said that “limiting cash would not prevent the financing of terrorism and would be considered a violation of the personal freedom of Europeans. Although it could be useful to fight against black money, its effectiveness would not be accurately quantified”.  

What are the cash limits in other EU countries?

Spain now has one of the lowest cash payment limits within the EU, but other countries have also established similar limits.

In 2020 Italy set the limit at €2,000 and will reduce it to a cash limit of €1,000 in 2022. In France, there has been a limit of €1,000 for residents since 2015 and €15,000 for non-residents. In Belgium, there has been a limit of €3,000 since 2014, and in Greece the limit is €1,500.

In Germany, there is no limit, but consumers who want to pay more than €10,000 are required to declare the transaction.

READ ALSO – Coronavirus: How safe is it to pay in cash in Spain?

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Can British people in Spain claim the UK’s winter fuel payment?

In the UK, there are various benefits available to help eligible people through the cold winter months – one of which is the winter fuel payment. But can Britons living in Spain claim this benefit to cover the cost of heating their Spanish homes?

Can British people in Spain claim the UK's winter fuel payment?

Energy costs are on the up in Spain, and with the winter fast approaching the added cost of paying for heating when the mercury drops can result in some very high bills.

Not all of Spain has freezing winters but there are often cold spells and many houses in the country tend to get even colder than it is outside.

READ MORE: Why are Spanish homes so cold?

The average winter temperature across Spain is 8C (1981 to 2010 average). That’s higher than the average in other European countries, but in Spain’s interior and mountainous areas it can be truly chilly from November to March.  

That means that overall, there’s a chance you’ll need to use a radiator or the central heating to keep your Spanish home warm.

So are some of the 400,000+ UK nationals who reside in Spain eligible for winter fuel financial support from the UK?

What is the UK’s winter fuel payment?

The UK’s winter fuel payment is a tax-free payment to help older people with heating costs during the cold winter months.

Those eligible must have been born before September 26th 1956, according to the UK government website.

How much people receive depends on their age and whether anyone else in the household is also eligible, but the amount is usually between £250 and £600.

I’m a UK national living in Spain. Can I claim the winter fuel payment?

The UK government states that those living abroad can benefit from the winter fuel payment if:

  • You moved to an eligible country before 1st January 2021
  • You were born before September 26th 1956
  • You have a genuine and sufficient link to the UK – this can include having lived or worked in the UK, and having family in the UK

While many EU nations are on the list of eligible countries, such as Austria, Germany, Sweden, and Italy, unfortunately Spain is not on the list.

This means that if you live in Spain, you will not be able to claim the winter fuel payment at all, even if you meet the age conditions.

Why isn’t Spain on the eligible list of countries?

The UK government services website nidirect states that “you cannot get the payment if you live in Cyprus, France, Gibraltar, Greece, Malta, Portugal or Spain because the average winter temperature is higher than the warmest region of the UK”.

This is despite the fact that some parts of Spain are a lot colder than the average UK winter temperatures. This includes cities, towns and villages near mountain ranges such as the Pyrenees or Sierra Nevada, or regions in the interior like Castilla-La Mancha, Aragón​​ and Castilla y León.

According to the British government, during winter the average temperature is between 2 and 7 C in the UK.

READ ALSO: Where are the coldest places in Spain?

Foreigners in Spain used to be able to claim this financial benefit, but it was scrapped in 2015 after many UK taxpayers were angry that UK winter fuel payments were going to help people that lived in countries that were generally warmer than the UK.

READ ALSO: Which UK benefits can Brits keep if they move to Spain?