EN ECB -PUBLIC  
 
 OPINION OF THE EUROPEAN CENTRAL BANK  
of 20  November 2019  
on tax disincentives  for the use of cash  
(CON/20 19/39) 
 
Introduction and legal basis  
On 19 November 2019 the European Central Bank (ECB) received a request from the Greek Ministry of 
Finance for an opinion on certain draft amendments to the Greek Income Tax Law1 seeking to  further 
expand  already existing tax disincentives for  the use of cash  (hereinafter the ‘draft amendments’).   
The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty and the 
second indent of Article  2(1) of Council Decision 98/415/EC2, as the draft  amendments relate  to means of 
payment . In accordance with the first sentence of Article  17.5 of the Rules of Procedure of the European 
Central Bank, the Governing Council has adopted this opinion.  
 
1. Purpose of the draft amendments  
1.1 According to the explanatory report accompanying the draft amen dments, t he objective of the draft 
amendments is to incentivise electronic transactions when purchasing goods and services, with the 
aim to (i) reduce tax evasion and (ii) broaden  the tax base, for reasons of public interest . 
1.2 The draft amendments build on already existing legislati ve measures  adopted in 2016  that promot e 
the broader use of electronic payment  instruments  in Greece . One such legislative measures which 
was adopted in 2016 and remains in force3 provides that the eligibility of taxpayers to avai l of 
existing income tax credit s for income earned from employment  and pensions is conditioned on 
compliance with an obligation to pay a certain amount of expenses by means of electronic 
payments according to a minimum quota  of a taxpayer’s annual income. If the minimum quota of e -
payments is not reached, an additional 22% tax is charged on the difference4, and taxpayers are 
                                                 
1  Law 4172/2013 on taxation of income, urgent measures for implementing laws 4046/2012, 4093/2012, 4127/2013 
and other provisions (Government Gazette A 167/23.7.2013).  
2  Council Decision 98/415/EC of 29  June 1998 on the consultation of the European Central Bank by natio nal 
authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42).  
3  Article 16 of the Greek Income Tax Law.  
4  This tax is an additional ‘penalty’ tax which will is payable on top of the other types of income tax applicable to the 
respe ctive taxpayer.   
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2 no longer eligible to benefit from currently applicable income tax credits5. The minimum quotas of 
e-payments currently increase progressive ly on the basis of income bracket s, as follows: for 
income between EUR 1 -10 000, the minimum e -payments threshold is  10 %; for income between 
EUR 10  001-30 000, the minimum e -payments thresho ld is 15 %; and for income exceeding EUR 
30 001, the minimum e -payments threshold is  20 % with however a lower ceiling of EUR 30  0006. 
1.3 Another already -existing  legislative measure which was adopted in 2016 and remains in force 
provides  that any single cash payment for the acquisition of goods and services exceeding 
EUR  500 for consumer -to-business transactions  is prohibited and that such payment may only be 
made via electronic means7.  
1.4 The draft amendments propose to  increase the minimum threshold for e -payments that must be 
reached by taxpayers to 30 % and to make it  applicable to all income brackets uniformly with a 
ceiling of EUR 20  0008. The 22  % additional tax on the difference between the increased minimum 
e-payments threshold and the income  actually spent via e -payment s remains unaltered. The 
definition of e -payments or of expenses realised through electronic means of payments for the 
purposes of the draft amendments remains unaltered . This definition  comprises expen diture which 
is incurred by the taxpayer for the acquisition of goods and services in Greece or Member States of 
the European Union or the E uropean Economic Area via electronic means of payments, such as  
credit and debit cards, bank wire transfers, e-wallets, and payment accounts held with a payment 
service provider9. The expenditure that may be counted towards  the minimum e -payment threshold 
remains unaltered . It comprises expenditure for the acquisition of goods and services which belong 
to the twelve categories of the consumer price index of the Hellenic Statistical Authority10.  
1.5 The draft amendments also provide that the required minimum e -payments threshold is 20  % of 
real income  in cases where e -payments of income and property tax, rents and loans to credit 
institutions have been made and amount to 60  % or more  of real income11.  
1.6 The draft amendments propose to lower existing income tax credit s12, but provide that taxpayers 
will continue to benefit from such lower income tax credit s even if they do not meet the  revised 
                                                 
5  The currently applicable income tax credit is: (a) for taxable income not exceeding EUR 20,000: (i) EUR 1  900 for a 
taxpayer without dependent children; (ii) EUR 1  950 for a taxpayer with one dependent child; (iii) EUR 2  000 for a 
taxpayer with two dependent children; and (iv) EUR 2  100 for a taxpayer with three dependent children; (b) for 
taxable  income exceeding EUR 20  000 the tax credit under (a) above is reduced by EUR 10 for every EUR 1  000 of 
taxable income earned from employment and pensions (paragraphs 1 and 2 of Article 16 of the Greek Income Tax 
Law).  
6  Paragraph 3 of Article 16 of the Greek Income Tax Law.  
7  Article 20 paragraph 3 of law 3842/2010 as amended by 69 of law 4446/2016.   
8  Article 7 para 1 of the draft amendments amending Article 15 of the Greek Income Tax Law.  
9  For this purpose, the terms ‘payment account’ and ‘payment service provider’ are as defined in Directive 2015/2366 
of the European Parliament and of the Council o n payment services in the inter nal market, amending 
Directives  2002/65/EC, 2009/110/EC and 2013/36/EU and Regulation (EU) No 109 3/2010, and repealing 
Directive  2007/64/EC (OJ L 337, 23.12.2015, p. 35).  
10  These are as follows: Group 1: food and non -alcoho lic beverages; Group 2: alcohol ic beverages and tobacco; 
Group  3: clothing and footwear; Group 4: housing, with the exception of expenditure for rent; Group 5: household 
equipment and services; Group 6: health; Group 7: transport, with the exception of expenditure for circulation tolls 
and for the purchase of vehicles  except bicycles; Group 8: communications; Group 9: recreation and cultural 
activities with the exception of expenditure for the purchase of yachts, airplanes and aircrafts; Group 10: education; 
Group 11: hotels, cafés and restaurants; Group 12: miscellane ous goods and services  
11  Article 7 para 1 of the draft amendments amending Article 15 of the Greek Income Tax Law.  
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3 minimum e -payments threshold13. The draft amendments also propose  to lower the introductory 
income tax rates for taxable income earned from employment and pensions14 and maintain largely 
unaltered the current list of taxpayers who are exempted from the obligation to meet the revised 
minimum e -payments threshold .  
1.7 The draft amendments propose to extend the obligation to meet the minimum e -payments 
threshold  to income earned from real estate15. In accordance with the draft amendments, f ailure to 
meet the threshold would result in the taxpayer  being liable  to pay an additional 22 % tax on the 
difference up unto the threshold  for this category of income as well.  
1.8 The draft amendments exclude the following from the  deductible business expenditure : (i) all 
expenses related to the acquisition of goods or services of a value exceeding EUR 300 which have 
not been paid via electronic means of payment or a payment service provider ; and (ii) expenses for 
rent which have not been paid via electronic means of payment or a payment service provider16.  
1.9 The draft amendments provide that certain tax deductions arising out of expenses for the 
acquisition of services related to the energy, functional and aesthetical upgrade of buildings will 
only be available if the relevant payments  have been made via electronic means of payment17. 
1.10 It is underst ood that t he draft amendments are intended to apply for income earned after 
1 January  2020 .  
 
2. General observations   
2.1 The ECB recalls that it was not consulted by the Greek authorities pursuant to Articles 127(4) and 
282(5) of the Treaty on the existing provisions of the Income Tax Law which were adopted in 2016 
in order to  promot e the broader use of electronic payment  instruments in Greece . 
2.2 Under the Treaty, the European System of Central Banks (ESCB) is required to act, inter alia, in  
accordance with the principle of an open market economy with free competition, favouring an  
                                                                                                                                                             
12  These are proposed to be reduced to the following: (a) (i) EUR 777 for a taxpayer w ithout dependent children; 
(ii) EUR 810 for a taxpaye r with one dependent child; (iii) EUR 900 for a taxpayer wi th two dependent children; 
(iv) EUR 1  120 for a taxpayer with three dependent children; and (v) EUR 1340 for a taxpayer with four dependent 
children; for every additional dependent child the tax cr edit is increased by EUR 220 per child; (b) for taxable income 
exceeding EUR 1 2 000, the tax credit under (a)  above is reduced by EUR 20 for every EUR 1  000 of taxable income 
earned from employment and pensions up to the amount of the tax credit under (a),  provided however that the 
reductions in the tax credit under (b) do not apply to taxpayers with five (5) or more dependent children (Article 9 of 
the draft amendments amending Article 16 of the Greek Income Tax Law ).  
13  Article 7 para 1 of the draft amendments amending Article 15 of the Greek Income Tax Law, read together with 
Article 9 of the draft amendments amending Article 16 of the Greek Income Tax Law.  
14  These are proposed to be reduced to the following: from 22  % currently to 9  % for income be tween EUR 0 – EUR  10 
000; for income between EUR 10  001 – EUR 20  000 the tax rate remains unaltered at 22  %; from 29  % to 28  % for 
income between EUR 20  001 - EUR 30  000; from 37  % to 36  % for income between EUR 30  001 - EUR 40  000; 
from 45  % to 44  % for income exceeding EUR 40  001 (Article 6 of the draft amendments amending Article 15 of the 
Greek Income Tax Law).  
15  Article 7 para 2 of the draft amendments amending Article 40 of the Greek Income Tax Law. According to 
paragraph  4 of Article 40 of the Gre ek Income Tax Law as it currently stands, income earned from real estate is 
taxable separately according to the following scale: income between EUR 0 – EUR 12  000 is taxed with a 15  % rate; 
income between EUR 12  001 – EUR 35  000 is taxed with a 35  % rate; and income exceeding EUR 35  001 is taxed 
with a 45  % rate.  
16  Article 13 of the draft amendments amending Article 23 of the Greek Income Tax Law.  
17  Article 16 of the draft amendments amending Article 39A of the Greek Income Tax Law.  
ECB -PUBLIC  
4 efficient allocation of resources18. The ESCB has the basic task of promoting the smooth operation  
of payment systems19, and the ECB has the exclusive right to authorise the issue of euro  
banknotes  within the Union20. The euro banknotes issued by the ECB and the national central  
banks of the  euro area shall be the only banknotes to have the status of legal tender status within 
the euro  area21. 
2.3 Commission Recommendation 2010/191/EU  (hereinafter the ‘Commission Recommendation’)22 
states that the acceptance of paym ents in cash should be the rule, but acknowledges that cash 
may be refused for reasons related to the ‘good faith principle’, without this constituting a breach of 
the legal tender status of cash. Neither Union law nor the Commission Recommendation explici tly 
addresses whether, nor to what extent, it may be permissible to introduce a more general limitation 
to the obligation to accept euro cash payments. Therefore, Union law must be interpreted in order 
to ascertain the conditions that a limitation on payme nts in euro notes and coins should fulfil, 
including the conditions that should be fulfilled to comply with the legal tender status of euro 
banknotes and coins when general limitations to the obligation to accept cash payments are 
introduced23. 
2.4 The draft amendments  must comply with Union law; in particular, any limitation to cash payments 
needs to comply with the legal tender status of euro banknotes24. In this context, recital 19 of 
Council Regulation (EC) No 974/9825, which states that ‘limitations on paym ents in notes and coins, 
established by Member States for public reasons, are not incompatible with the status of legal 
tender of euro banknotes and coins, provided that other lawful means for the settlement of 
monetary debts are available’26, has been take n into account in previous ECB opinions considering 
the introduction of cash limitations under draft national laws. While the ECB  acknowledges that 
lawful means for the settlement of monetary debts other than cash  payments , are generally 
available in Greece27, their availability  across  all parts of society, at comparable costs to cash  
payments , should be closely verified by the Greek authorit ies. This is because  these other means 
may have different characteristics compared to cash payments and hence may  not be fully 
equivalent alternatives . 
                                                 
18  See Article 127(1 ) of the Treaty and Article 2 of the Statute of the European System of Central Banks and of the 
European Central Bank (hereinafter the ‘Statute of the ESCB’).  
19  Article 127(2) of the Treaty and Article 3.1 of the Statute of the ESCB.  
20  Article 128(1), fi rst sentence of the Treaty and Article 16, first sentence of the Statute of the ESCB.  
21  Article 128(1), third sentence and Article 282 (3), second sentence of the Treaty and Article 16, third sentence of the 
Statute of the ESCB.  
22 Commission Recommendatio n 2010/191/EU of 22 March 2010 on the scope and effects of legal tender of euro 
banknotes and coins (OJ L 83, 30.3.2010, p 70).   
23  See paragraph 2.1 of Opinion CON/2017/18, paragraph 3.1 of Opinion CON/20 17/20, paragraph 2.3 of 
Opinion  CON/2017/27, paragraph 2.2 of Opinion CON/2017/40, paragraph 2.2 of Opinion CON/2019/04.   
24  See also paragraph 2.4 of Opinion CON/2017/18, paragraph 2.5 of Opinion CON/2017/40 and paragraph 2.3 of 
Opinion CON/2019/04.   
25  Council Regulation (EC) No 974/ 98 of 3 May 1998 on the introduction of the euro (OJ L 139, 11.5.1998, p. 1).   
26  See, for example, Opinions CON/2013/18, CON/2014/4 and CON/2014/37.  
27  See paragraph 2.1 of Opinion CON/2012/33 and paragraph 3.1 of Opinion CON/2010/36.   
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5 2.5 In this respect, t he ECB notes that Directive 2014/92/EU of the European Parliament and of the 
Council28 has made it easier for Union consumers to obtain payment accounts and related 
electronic payment services as alternatives to cash29. In Greece, Directive 2014/92/EU has been 
transposed by Law 4465/2017 , which establishes the legal framework for the creatio n of the 
conditions for making a minimum set of banking services accessible to all consumers. However, 
such banking services and electronic payment services offered by commercial entities  may be 
subject to charges . 
2.6 The ECB acknowledges that the draft amend ments’  objective s of (i) combating tax evasion and 
(ii) broadening the tax bas e, while maintaining fiscal balance after the decreases in corporate 
income tax and personal income tax may, in general, constitute ‘public reason s’ justifying the dis-
incentivisation through taxation of, and the resulting limitation on,  the use of cash payments.  
However,  any such limitation needs to comply with the legal tender status of euro banknotes  
enshrined in Art icles 128(1) and 282(3) of the Treaty . Therefore, it  would need to be demonstrated 
that the proposed cash payment limitations affecting  the legal tender status of euro banknotes 
would be effective as  regards the achievement of the public objectives that are being legitimately 
pursued by the  limitations. Hen ce, there should be clear evidence that such limitations are likely, in 
fact, to achieve  the stated public goal of combating tax evasion.   
2.7 Direct or indirect  limitations on cash payments should  also be proportionate to the objectives 
pursued and should not go beyond what is necessary to achieve such objectives,  especially in view 
of the fact that the measures set out in the draft amendments affect transactions made by 
taxpayers who are natural persons and that they build on already existing legislati ve meas ures 
adopted in 2016 that impose  direct limitations on cash by prohibiting all cash payments exceeding 
EUR  500 for consumer -to-business transactions30. Any adverse impact of the proposed limitations 
should therefore be carefully weighed against the anticipated public benefits. When considering 
whether a limitation is proportionate, the adverse impact of the limitation in question should always 
be considered, as well as whether alternative measures could be adopted that would fulfil the 
relevant objec tive and have a less adverse impact31.  
2.8 Furthermore, it should be borne in mind that the ability to pay in cash remains particularly important 
for certain groups in society that, for various legitimate reasons, prefer to use cash rather than 
                                                 
28  Directive 2014/92/EU of the European Parliament and of the Council of 23 July 2014 on the comparability of fees 
related to payment accounts, payment account switching and access to payment a ccounts with basic features 
(OJ L 257, 28.8.2014, p. 214).  
29  Within the fra mework previously created by Directive 2007/64/EC of the European Parliament and of the Council of 
13 November 2007 on payment services in the internal market amending Directives 97/7/EC, 2002/65/EC, 
2005/60/EC and 2006/48/EC and repealing Directive 97/5/E C (OJ L 319, 5.12.2007, p. 1), which introduced the legal 
basis for the creation of an internal market for payments within the Union and allowed for the creation of the Single 
Euro Payments Area (SEPA) (the Payment Services Directive 1). The Payment Servic es Directive 1 has been since 
replaced by Directive 2015/2366 of the European Parliament and of the Council of 25 November 2015 on payment 
services in the internal market, amending Directives 2002/65/EC, 2009/110/EC and 2013/36/EU and 
Regulation  (EU) No 10 93/2010, and repealing Directive 2007/64/EC (OJ L 337, 23.12.2015, p. 35) (the Payment 
Services Directive 2).  
30  See paragraph 1.2 above.  
31  See, for example, paragraph 2.3 of Opinion CON/2014/4, paragraph 2.3 of Opinion CON/2014/37, paragraphs 2.6 
and 2. 7 of Opinion CON/2017/8, paragraphs 2.5 and 2.6 of Opinion CON/2017/18, paragrap h 3.3 of 
Opinion  CON/2017/20, paragraph 2.7 of Opinion CON/2017/27, paragraph 2.6 of Opinion CON/2017/40 and 
paragraph 2.5 of Opinion CON/2019/04.   
ECB -PUBLIC  
6 other payment i nstruments. Cash is generally also appreciated as a payment instrument because it 
is, as legal tender,  widely accepted, fast and facilitates control over the payer’s spending. 
Moreover, it is a means of payment that allows citizens to instantly settle a tr ansaction and is the 
only method of settlement in central bank money and  at face value which does not carry the legal 
possibility of imposing a fee for the use there of. Also, cash payments do not require a functional 
technical infrastructure and related in vestment, and are always available; this is of particular 
relevance in the case of outage of electronic payments. Additionally, cash payments facilitate the 
inclusion of the entire population in the economy by allowing it to settle any kind of financial 
transaction in this way32. 
2.9 It should be noted  that Directive (EU) 2015/849 of the European Parliament and of the Council33, 
while confirming the vulnerability of large cash payments to money laundering and terrorist 
financing, requires that persons trading in goods, who are otherwise not obliged entities under that 
Directive, be classified as obliged entities and apply customer due diligence measures only to the 
extent that payments are made or received in cash in amounts of EUR 10 000 or more. This 
implies tha t the draft law should establish a proportionate threshold for limits on cash payments, 
taking into account the objectives of such limits34. 
2.10 Against this background , the ECB considers that the existing limit on cash payments of EUR 500 
for consumer -to-busin ess transactions , and the new tax incentives discouraging companies from 
spending cash in excess of EUR 300, are  disproportionate  in light of the potentially adverse impact 
on the cash payment system. In cas e the legislator wishes to preserv e cash payment limitations , 
higher threshold s should be chosen and a degree of flexibility should be introduced in the draft 
amendments . Cash transactions above the defined thresholds should be permitted  as long as the 
parties are able to ensure that the payment is trace able by identifying the amount, the reason for 
the transaction and the parties involved.  In addition, competent authorities  are invited to assess 
whether the remaining  restrictions on cash payments  are proportionate and compatible with the 
legal tender status  of euro banknotes35, in order to ensure that the effects of these measures do 
not go beyond what is necessary for achieving the objective of combating tax evasion .  
 
This opinion will be published on the ECB’s website.  
 
 
                                                 
32  See paragraph 2.6 of Opi nion CON/2017/18, paragraph 3.4 of Opinion CON/2017/20, paragraph 2.8 of 
Opinion  CON/2017/27, paragraph 2.7 of Opinion CON/2017/40, paragraph 2.6 of Opinion CON/2019/04.   
33  Directive (EU) 2015/849 of the European Parliament and of the Council of 29 May 2015 on the prevention of the use 
of the financial system for the purposes of money laundering or terrorist financi ng, amending Regulation (EU) 
No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European 
Parliament and of the Council and Commission Directive 2006/70/EC (OJ L 141, 5.6.2015, p. 73).  
34  See, for example, paragraph 3.2 of Opinion CON/2017/18, paragraph 2.10 of Opinion CON/2017/27  and 
paragraph  3.2 of Opinion CON/2019/04 .   
35  See also paragraphs  2.2 and 2.3 of Opinion CON/2015/55.  
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7 Done at Frankfurt am Main , 20 November  2019. 
 
[signed]  
 
The President of the ECB  
Christine  LAGARDE