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Cash transactions – everyday routine or risk!?

In practice, it has been observed that, particularly as a result of the economic crisis caused by COVID-19, a large number of businesses are engaged in cash movements in the course of their business, without considering the limitations and consequences of such recklessness.

Section 30 of the RL Law “On Taxes and Duties” provides limitations on the circulation of cash; Part One of the said Section provides as follows:

 Taxpayers, except for natural persons which are not individual merchants shall, by 15th day of each month in accordance with procedures stipulated by the Cabinet, report all cash transactions with their counterparties (irrespective of whether the transaction involves a single operation or several operations) the amount of which exceeds EUR 1500. The taxpayers, except for natural persons who are not individual merchants, shall not be eligible to engage in cash transactions the value of which exceeds EUR 7200 (irrespective of whether the transaction involves a single operation or several operations).

In practice, non-compliance with these restrictions entails significant administrative liability and is a significant risk in the area of ​​AML.

The most significant economic operations when the regulation of cash circulation is not observed or leads to non-observance due to causation also in connection with AML issues are the following:

  • Receipt of loans from participants in cash;
  • Repayment of loans to participants in cash;
  • Payment of dividends to participants in cash;
  • Significant purchases through cash advance payments in cash;
  • Increase of share capital with cash deposit;

In order to reduce the risks, we encourage entrepreneurs to arrange their economic activities in such a way as to minimize the circulation of cash, unless it is a daily activity of the business – for example related to the retail sale of goods in a store.

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