The majority of Portuguese citizens prefer using cash and advocate for a law ensuring its acceptance, as per a survey released on Tuesday. However, certain restrictions apply to cash payments. Are you aware of them?
The Bank of Portugal (BdP) clarifies that in Portugal, “legal restrictions exist on cash payments under the General Tax Law (LGT).”
In the LGT’s Article 63-E (amended by Law No. 92/2017, dated August 22), it is generally stated that:
- Payments in cash are prohibited for any transactions of 3,000 euros or more, or the equivalent in foreign currency. For individuals non-resident in Portugal who are not acting as entrepreneurs or traders, the limit extends to 10,000 euros.
- For corporate income tax (IRC) taxpayers, as well as personal income tax (IRS) taxpayers required or opting for organized accounting, payments of 1,000 euros or more, or their equivalent in foreign currency, must be made through a means that identifies the recipient.
- Paying cash for taxes exceeding 500 euros is prohibited.
However, “these restrictions do not apply to financial entities accepting deposits, providing payment services, issuing electronic money, or conducting manual currency exchange operations,” and “they also do not apply to payments resulting from judicial decisions or special legal provisions.”
Generally, retailers cannot refuse cash payments, but some do. What is the position of the Bank of Portugal?
“Additionally, Article 40 of the LGT (in its current wording, amended by Law No. 82/2023, dated December 29) states, in section 2, that ‘payments by corporate bodies of tax liabilities and any other credits collected by the Tax and Customs Authority are exclusively made by electronic means of payment, regardless of whether specific payment methods are provided for in special tax legislation,'” further informed the banking supervisor.
The BdP notes, however, that “this information does not replace consulting the regulations governing these matters.”
And what if these limits are not adhered to?
According to the Food and Economic Safety Authority (ASAE), “breaching the cash usage limits constitutes a particularly serious offense,” as per Article 10 and point a) of Article 169-A of Law No. 83/2017.
