Cash payments

Ask Afpop
In this new monthly column, afpop, Portugal’s largest foreign residents’ association, aims to answer some of the most frequently-asked questions by members.

Question: We are buying a new kitchen and asked if we could pay for it in cash and were told no, it had to be by cheque or bank transfer. Is this correct and, if so, why?

afpop answers:
You don’t indicate the amount, but it would appear from the reply you were given that the kitchen cost over €3,000. In accordance with Decree Law 92/2017 (addition to the General Tax Law – Lei Geral Tributária), there is a limit on the amounts payable in cash as part of the government’s package of measures to combat money laundering.

A resident in Portugal cannot make or receive payments in cash of €3,000 or more, or the equivalent in foreign currency (please note that if you are a non-resident, the value can raise to €10,000). This means that the limit of €3,000 (or €10,000 if non-resident) relates to all cash payments for goods or services, even if the amount is divided and each instalment falls below that limit. For example, it is not permissible to pay in cash for an item valued €5,000, even if the payment is made in two instalments of €2,500 each. In such situations there is still an obligation to make payments without using cash.

Payments higher than the values stipulated by this law must be made by means of payment that allows the identification of the payer and recipient (bank transfer, check or direct debit).

Whilst the law is intended to combat money laundering and false reporting, it doesn’t discriminate between the various kinds of transactions – for example selling vehicles and other personal goods privately.

When registering the sale of a vehicle, the law states that the value of the vehicle should be recorded on the form ‘Requerimento Registo Automóvel’ in the Conservatória. In most cases, this is not recorded but it may become a requirement of the registration of the sale, so you should be aware when selling items with a value higher than €3,000 privately that, in the future, this may also affect the way payment is made.

Cash transactions with values above legal limits are subject to fines ranging from €180 to €4,500.

For more information about the benefits of membership of afpop, the largest association for foreign residents in Portugal, you can visit their website; email them direct on [email protected] or call the afpop office on 282 458 509 or 938 252 100. Please remember to quote the Algarve Resident when contacting them.