A further reduction on the use of cash has recently been introduced in Italy.

Under earlier legislation the overall permitted amount for cash payments, originally  was Euro 12,500 (Read article). This overall limit was  reduced to Euro 5,000 in May 2010, and then to Euro 2,500 in August 2011.

With the December 2011 Budget (Manovra Monti) the amount of cash (Contanti ) which can be used in Italy for any given, individual transaction has now been reduced to Euro 1,000. Any payment over and above this amount should now be effected either with a cheque (Assegno) or by bank transfers (Bonifico Bancario).

SPECIAL RULESLegislation introduced in April 2012 increases the limit to which cash can be used to buy goods or services related to tourism to Euro 15,000 if the buyer is not Italian nor a national of the European Union

Where a cheque is issued in Italy for an amount in    excess of Euro 1,000, it must bear the “account       payee only” clause (Clausola della non transferabilita`).    It is still possible to issue “bearer” cheques in Italy      below the overall limit of Euro 1,000.

In case of breach of this new legislation, fines       ranging between 1% and 40% of the cash payment       in excess of Euro 1,000 will be levied.

However, as far as bearer bank deposit passbooks       are concerned (Libretti di deposito bancari o postali )      the restrictions and penalties are only applicable from the 31st March 2012 as a further period of “grace“ has been granted to allow any required adjustments. It may now turn out to be expensive to use cash in Italy.

This further restriction is aimed at combating money laundering, and tax evasion, the same legislation introduces new property and other taxes in Italy. It also puts to rest the “old” Italian Lira, as the Bank of Italy will no longer convert old “Italian Lira” banknotes into Euro. Italian banks will have to report on bank balances periodically,  to Italian authorities. The Italian Revenue already acquires further extensive powers to access full details of taxpayers` bank accounts.

As for the earlier legislation, this restriction on the use of cash will also apply to artificially fragmented individual transactions. This legislation (on artificial fragmentation of commercial transactions) will not apply to ordinary contracts which normally require periodical payments such as rental or employment contracts etc., where each periodical payment is considered as an individual transaction for the purposes of the legislation.

These new provisions were included in a raft of new, urgent legislation introduced by the Italian Government on 06.12.2011, and later confirmed by the Italian Parliament. This legislation also provides that all payments by Italian public authorities in excess of Euro 1,000  will be effected electronically, this includes salaries, pensions, professional fees and also any other periodical payments.

In order to promote the use of electronic payments and bank transfers and to replace the use of cash (which is still very frequent in Italy), this new legislation provides that Italian banks will soon make available to consumers “basic bank accounts ” (Conto corrente di base ), which will subject to reduced taxation, and reduced bank charges.

It will still be, legally possible, to draw out of one`s bank account cash in excess of the said limit of Euro 1,000. However, any such drawing as any other transaction with Italian bank accounts will be reported by the bank to the authorities.

Legal tender will now turn out to be illegal in Italy, for any cash payment over and above Euro 1,000.

Avv. Claudio Del Giudice

Copyrights reserved 31.12.2011