Cash payment limitations
The digitalization, and the financial technologies, – the so-called area of FinTech (Financial Technology) – enable us to make financial matters easier and easier to use in our everyday lives. With this level of digitalization, there is still a need to regulate cash payments for the sake of transparency. In today’s post, we talk about the legal background of paying with cash based on three aspects.
1. Rules of cash payment
If a taxpayer who is required to open a cash flow account makes a cash payment to another taxpayer who is also required to open a cash flow account as part of his taxable activity,
the amount may not exceed one and a half million forints.
Payments made between each other in one calendar month must be included in the value limit. Based on the value of the service or product sale specified in the contract plus VAT.
Payments made to the same taxpayer as a result of several contracts concluded between the same parties shall be considered as cash services performed on the basis of one contract. If it can be established beyond doubt that the purpose of defining the legal transaction between the parties in several contracts is to circumvent the principle of exercise of rights.
In case of violation of the provisions of the law, the payer and, if the irregular payment is accepted; the payee as well, shall pay a default fine of 20% for the part of the cash service exceeding one and a half million forints.
According to the Act on Taxation, only payments with bank notes and coins are considered cash payments.
If the product sale or provision of services is subject to VAT, then, based on the provisions of the law, the consideration shall be calculated together with the VAT.
It is important to note. If the amount is credited or debited to the bank account of at least one party, it is no longer considered a cash payment transaction.
2. Rules for importing cash and reporting in the EU
If we enter or leave the European Union by plane, ship, train or road and we have a value of 10,000 euros or more
- in cash (banknotes and coins),
- a named check without a payee, or
- certain gold items (gold coins with at least 90% gold content and gold bars, gold nuggets or gold grains with at least 99.5% gold content),
then we have to submit a cash declaration for them at customs. If there are indications of a penal act, the authorities can act even in the case of lower amounts. The authorities can also demand a report from us if we send cash of 10,000 EUR. Or more by post, as part of cargo or by courier.
3. Reporting rules for cash payments under the Act of Anti-Money Laundering
The scope of the law extends to a merchant with a registered office, branch, or location in Hungary. If he accepts cash payments of HUF three million or more in the course of his activities. In the case of a commodity trader; he must apply customer due diligence when fulfilling a transaction order in cash for an amount of HUF three million or more.
By submitting its internal regulations to the commercial authority, the merchant undertakes to fulfill the obligations under this law. The commercial authority registers the service provider at the same time as the internal regulations are approved.
Only the commodity trader listed in the register can accept cash payments of HUF three million or more.
It should also be emphasized here. If the amount is credited or debited to the bank account of at least one party; it is no longer considered a cash payment transaction.
- A Nemzeti Adó- és Vámhivatal által kiadott 3002/2019. útmutató a pénzforgalmi számlanyitásra kötelezett adózók közötti másfél millió forintot meghaladó készpénzfizetés korlátozásáról
- 2017. évi CL. törvény az adózás rendjéről
- Készpénz az EU külső határain – információk https://nav.gov.hu/kiadvanyok/utastaj/informaciok-az-eu-hatarain-kivul-es-belul/keszpenz-az-eu-kulso-hatarain-informaciok
- 2017. évi LIII. törvény a pénzmosás és a terrorizmus finanszírozása megelőzéséről és megakadályozásáról