Cash limits when paying for property in Spain

The rule in the text

Article 7.Uno.1 of Ley 7/2012 reads: operations “in which any of the parties acts as a businessperson or professional” with an amount “equal to or above €1,000, or its equivalent in foreign currency” cannot be paid in cash. The next sentence sets €10,000 where the payer is an individual who “justifies that they do not have their tax domicile in Spain” and who does not act as a business or professional.

Four details matter to a buyer:

• The professional trigger. The limit applies when at least one side is a business or professional: a developer selling a new home, an estate agent collecting a fee, a builder, a furniture shop. A private sale from one individual to another, where neither acts in a professional capacity, is outside the wording of this article.
• Adding up. Article 7.Uno.2 says that when delivery of goods or a service has been split into parts, “the amounts of all the operations or payments” are added together. Paying €6,000 in cash twice to the same developer does not avoid the limit.
• What counts as cash. Cash means the means of payment defined in article 34.2 of Law 10/2010 on money laundering; that article was not read for this guide.
• Banks. The limit does not apply to payments and deposits made in credit institutions (article 7.Uno.5).

Both sides must keep payment receipts for five years to show that the payment was made by a means other than cash, and must supply them to the Tax Agency on request (article 7.Uno.4).

Who is fined, and how much

The infringement is serious. Both the payer and the recipient are liable, jointly, and the Tax Agency can pursue either or both (article 7.Dos.2). The fine is 25% of the amount paid in cash in operations at or above the threshold (article 7.Dos.4 and 5); in a calculation, not a forecast: if a non-resident paid a developer €12,000 in cash, which is above €10,000, the base is €12,000 and the fine €3,000. There is a reduction for some cases, set out in article 7.Tres.5, which this guide did not read in detail. A party who reports the operation to the Tax Agency within three months of the payment, giving the amount and the other party’s identity, is not liable for the infringement; the later report by the other party is treated as not made, and simultaneous reports do not exonerate either (article 7.Dos.6). The infringement and the sanction both expire after five years.

”Tax domicile”: who counts as a non-resident payer?

The €10,000 allowance depends on the payer justifying that their tax domicile is not in Spain. On the income tax test, a person who stays in Spain more than 183 days in the calendar year, or whose main base of economic interests is here, is resident; see tax residency in Spain. The law speaks of “tax domicile” (domicilio fiscal) and the sources read do not define it further; a buyer who lives in Spain is unlikely to qualify for the higher limit, whatever the passport, and the notary can say how the payer’s status is evidenced.

The deed must say how you paid

Separately from Ley 7/2012, article 24 of the Notarial Law requires that in deeds transferring or creating real rights over real estate for consideration, “when the consideration consists in whole or in part of money”, the notary identify the means of payment used by the parties: whether the price was received before or at the signing, the amount, and whether it was paid in cash, by cheque (bank or not, nominative or bearer), another payment order or bank transfer. The Notarial Regulation (article 177) adds rules: the parties state the sums paid in cash, which are recorded in the deed; a copy of cheques handed over at the signing is attached; and for transfers the parties state the debit and credit account codes. The notary must also add the prior declaration of movement of means of payment where the anti-money-laundering rules require it, and where this was not provided, he records that in the deed and tells the notarial council.

If the parties refuse to identify the means of payment, the notary records it, the Council of Notaries reports it to the Tax Agency, and the Land Registry will not register the deed until it is corrected: article 254.3 of the Mortgage Law says no entry is made if the deed records a refusal to identify, and 254.4 treats the defect as curable by a new deed that identifies all means of payment. So a private sale paid in cash is not forbidden by article 7, but it is disclosed in the deed and reported to the tax authorities.

Bringing cash into Spain

The UK Foreign Office advises travellers to declare cash or travellers’ cheques of €10,000 or more on entering Spain and to get a certified declaration; otherwise, the money could be seized when leaving. This is a customs rule distinct from the limit on payments. The amounts needed for a purchase will almost always travel by bank transfer, which also leaves the account codes for the deed.

Which professional to consult

The notary who will sign the deed explains what must be declared; a lawyer registered with a Spanish bar association (colegio de abogados) can review the payment schedule with a developer. See property lawyers. For costs, see the purchase costs calculator.