To avoid problems with the Tax Agency (Hacienda), it is essential to correctly declare cash in the Income Tax Return.

Although the pandemic has driven the use of electronic payments, cash remains common, with many people keeping money at home for emergencies. While this is legal, it must be declared properly, specifying its source, whether from economic activities, labor income, or assets.

The Tax Agency does not tax cash, but it requires justification of its origin. If it cannot be justified, taxes such as unexplained capital gains may apply.

Hacienda is increasingly vigilant about cash transactions, especially those involving significant amounts, such as withdrawals of high-denomination bills or amounts exceeding 3,000 euros.

The government has also reduced the cash payment limit to 1,000 euros for transactions involving professionals.