Cash will soon no longer be king, at least when it comes to spending large amounts of it. According to a proposal by the ruling-Socialists, which is set to come into force in January if approved by the leftist majority, it will become illegal to conduct a financial transaction worth more than 3,000 euros in cash.
Doing so will result in a fine of 25 percent of the value. This figure rises to 15,000 euros for non-residents. The bill is part of a law decree proposal presented to Parliament and is set to be tabled for discussion in the coming days. The intention of the three-page proposal is to be combined with existing legislation and other reforms that came as a direct result of the Panama Papers scandal, which involved dozens of Portuguese companies and individuals.
According to the document, as from 1 January 2017 “cash payments in excess of 3,000 euros will be prohibited” while this amount is increased to 15,000 euros “whenever a cash payment is made by non-residents who are not conducting business or trading.” Similarly, transactions in foreign currencies will also be covered by the law.
Paying off a debt falls under the same law, and will take into account all cash instalments. People who fail to comply with the new law will be fined 25 percent of the value of the cash transactions, while an additional fine of five percent will be levied in the event of tax evasion.
The proposal also makes reference to the fact that similar practices are already in place in a number of European Union states, with the government listing Spain, France, Greece and Italy as examples. The intention is not only to avoid monetary exchanges where both parties seek to avoid declaring the amounts for tax purposes, but also to increase electronic payments which are easily traceable by the taxman in the event of suspicions of fiscal fraud or tax evasion.
The proposal falls in line with current limitations in France, and are slightly more favorable than Spain, where the limit is currently €2,500 while it drops to €1,500 in Greece. Similar plans in Germany, where the proposal will be €5,000, have been met with fierce resistance. Currently, around 80 percent of all transactions in the country are in cash. Berlin is also looking to ban the use of €500 notes.
German Green MP Konstantin von Notz tweeted earlier this year that “cash allows people to remain anonymous during day-to-day transactions. In a constitutional democracy, that is a freedom that has to be defended.” German newspapers have also since published editorials condemning what they term the government’s attempts to increase control over citizens. While the proposal in Portugal is still in its infancy, no major political party or movement has come out in opposition of the legislation.
SOURCE: THE PORTUGAL NEWS. BY: BRENDAN DE BEER 08-06-2016