Cash Management: Cash Limits Increased, But Not for Those with Debts

Business entities conduct most of their monetary transactions through bank accounts and are increasingly using less cash. Many trading companies and institutions no longer maintain a cash register, leading to a decline in the share of cash in total business payments; however, cash management persists in activities that deal with end consumers and those who often need to make smaller payments for various purposes.

Business entities are allowed to collect their receivables in cash, in banknotes and coins, up to a maximum of 10,000 euros. This limitation applies to cash collection and payments, as prescribed by the Law on the Prevention of Money Laundering and Terrorist Financing, and obliges all entities conducting registered activities. The prescribed limit of 10,000 euros applies to the collection and payment for goods and services, sold real estate, receiving loans, selling securities, etc. The limitation also applies when multiple interrelated transactions are conducted.

According to Tax Status

Cash payments between entrepreneurs are regulated by the Law on Fiscalization in cash transactions, which obliges legal and natural persons who are profit tax payers and natural persons who are income tax payers from self-employment. According to this regulation, cash payment is considered a direct handover of cash between participants in the payment, cash deposits into accounts, and cash withdrawals from accounts.

Fiscalization subjects are allowed to pay for the procurement of goods and services received from other fiscalization subjects in cash, but up to a maximum of 700 euros per invoice. A fiscalization subject can pay an unlimited number of individual invoices in cash, provided that no invoice exceeds the amount of 700 euros. Cash payments between fiscalization subjects for the needs of currency exchange offices are not limited.

Cash payments to citizens and craftsmen are limited by the Income Tax Act. Receipts from salaries, other income, income from property, income from capital, and some non-taxable receipts must be deposited into the recipients’ bank accounts, while only certain receipts, explicitly listed in Article 92 of the Income Tax Regulation, can be paid in cash. It is permissible to pay transportation costs, expenses for business trips, and other non-taxable receipts of employees in cash. It is not allowed to pay flat-rate allowances for meals and monetary rewards for work results in cash. Craftsmen and other natural persons engaged in self-employment are allowed to pay for purchased goods and services in cash up to 700 euros per invoice.

How Much and Who Can Have in the Cash Register

Fiscalization subjects may keep cash in the cash register up to the cash maximum between two working days. The cash maximum depends on the size of the entrepreneur and can amount to up to 2,000 euros for micro-entrepreneurs and natural persons, up to 7,000 euros for small ones, and up to 12,000 euros for medium-sized ones. The criteria for determining the size of a business entity are applied according to the Law on Promoting the Development of Small Enterprises (number of employees, independence in business, and annual income or assets or fixed assets above the prescribed amount). For business entities that exceed the criteria for determining small enterprises and for entrepreneurs engaged in currency exchange, the cash maximum is up to 15,000 euros. Legal and natural persons subject to the application of the Law on Fiscalization must decide on their cash maximum. The prescribed limitation applies to the business entity as a whole, and the entrepreneur can determine the cash maximum for organizational parts within that limitation. When deciding on the amount of the cash maximum, attention should be paid to the needs for cash (e.g., the need for small denominations for customer refunds, small purchases of materials, advances, and expenses for business trips, etc.) and the conditions for storing cash.

Depositing in the Bank and Penalties

Everything that a business entity collects during the working day must be deposited into the account at the business bank on the same day or at the latest the next working day. They may only keep cash up to the cash maximum in the cash register. If the daily collection is less than the cash maximum, they do not have to deposit cash into the account every day; they can keep it in the cash register until the total amount exceeds the cash maximum. A legal entity subject to fiscalization that does not deposit cash into the account above the cash maximum is subject to a possible fine ranging from 3,980 to 66,360 euros, and for the responsible person in the legal entity, the penalty ranges from 660 to 6,630 euros.

A trading company or other entrepreneur with recorded unpaid obligations in their bank accounts is not allowed to make cash payments and must not keep cash in the cash register even up to the cash maximum. Enforcement is carried out on their accounts, and they are required to deposit all cash transactions into their bank account.