EN ECB-PUBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 10 May 2012  
on limitations on cash payments 
(CON/2012/37) 
 
Introduction and legal basis  
On 17 April 2012 the European Central Bank (ECB) received a request from the Danish Ministry for 
Economic Affairs and the Interior on behalf of the Ministry of Taxation for an opinion on a Law 
amending the Law on tax assessment and various other laws (measures aimed at tax evasion)1 (hereinafter 
the ‘draft law’).  
The ECB’s competence to deliver an opinion is based on  Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the second inde nt of Article 2(1) of Council Decision 98/415/EC 
of 29 June 1998 on the consultation of the European  Central Bank by national authorities regarding draft 
legislative provisions2, as the draft law relates to means of payment. In accordance with the first sentence 
of Article 17.5 of the Rules of Procedure of th e European Central Bank, the Governing Council has 
adopted this opinion. 
 1.  Purpose of the draft law 
1.1 The draft law implements a number of measur es aimed at combating tax evasion. One of the 
measures is the tightening of the rules on cash pa yments in order to ensure  greater traceability of 
payments. The draft law proposes the following tw o requirements on which the ECB is consulted. 
1.2 The first requirement proposed is that any pu rchase of services or goods in connection with 
services above an amount of DKK 10 000
3 by an individual is to be made by electronic payment. 
The individual may be held jointly and severally liabl e with the provider of the services for any tax 
and/or VAT which the provider has evaded4 if the individual chooses to make a cash payment. The 
aim of the requirement to make electronic payments is to create a transaction trail of the payments 
                                                 
1  The Law on tax assessment, see Consolidated law No 1017 of 28 October 2011 with later amendments, Law no 1333 of 
19 December 2008 on the recovery of public debt with later amendments, Law No 403 of 8 May 2006 on an income 
register, Law on taxation according to source of income, see Consolidated law no 1403 of 7 December 2010 with later 
amendments, Law on the collection of tax and charges, see Consolidated law No. 1402 of 7 December 2010 with later 
amendments, Law on the registry of vehicles, see Consolidated law No 580 of 7 June 2011, Law on controlling taxes, see 
Consolidated law No 819 of 27 June 2011 with later amendments, the Law on value added tax, see Consolidated law No 
287 of 28 March 2011 with later amendments and Law No 521 of 12 June 2009 amending the Law on taxation according 
to source of income.  
2  OJ L 189, 3.7.1998, p. 42.  
3  Approximately EUR 1 330. 
4  The proposal gives rise to liability for the purchaser only if the provider fails to declare the payment for tax purposes or 
fails to report the VAT on the payment. See p. 12 of the Explanatory Memorandum. 
ECB-PUBLIC 
2 in order to identify the payer and the payee. The pr oposal also attempts to reduce the turnover of 
cash in order to reduce the black market for purchases of goods and services.  
 The draft law also proposes that individuals who,  in particular instances, are not able to pay 
electronically have the option to avoid liability for the failure of th e provider to declare taxes and 
VAT. This option is conditional upon the individu al notifying SKAT, the Danish tax authority, 
about the purchase made and the payment thereof via SKAT’s website.  
1.3 The second requirement proposed is that any transaction between companies above an amount of 
DKK 10 0005 shall be made electronically. If such payments are not made electronically, the 
companies will be denied any relevant tax deducti ons which they may be entitled to and they will 
be held jointly and severally liable6 under the VAT rules7.  
 The direct joint and several liability in the ar ea of VAT means that the tax authority, when 
recovering an outstanding tax and VAT balance, ma y seek to have the sum paid either by the 
purchaser or the provider in the order that the tax authority chooses. Whether the tax authority 
chooses to collect the sum due from the provider or  the purchaser has no e ffect on the liability. The 
liability, in such cases, will follow the genera l rules governing joint and several liability. 
 The introduction of joint and several liability in  relation to VAT payments mentioned above aims 
to combat tax evasion and make it easier to detect  transactions which have the evasion of VAT and 
other taxes as their purpose. Given that a transactio n trail is created, it is anticipated that this will 
have a positive and crime-preventing effect on unr eported employment, chain fraud and fictitious 
invoices used for the purposes of tax and VAT evasion. Furthermore, it is anticipated that unregistered firms will have trading difficulties, as purchasers will need to obtain documentation 
for incurred expenditure.  
1.4 The two legislative requirements set out above under paragraphs 1.2 and 1.3 introduce joint and 
several liability for any individual purchasing se rvices and for business-to -business transactions. 
Although this does not constitute a legal prohibiti on on cash payments, it will, in practice, limit the 
practical opportunity for a customer or a company to make cash payments above DKK 10 000. 
 
2. Specific observations  2.1 The ECB notes that Union law only regulates restrictions on cash payments in euro
8. However, for 
consistency reasons, the ECB considers it appropriat e to assess the draft law’s provisions against 
the relevant Eurosystem practices. 
                                                 
5  The proposed threshold of DKK 10 000 mirrors the limit for the individual who chooses to pay cash when purchasing a 
service. 
6  The proposal gives rise to liability for companies only if the provider fails to report the VAT on the purchase. See 
page 13 of the Explanatory Memorandum. 
7  Article 205 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax,  
(OJ L 347, 11.12.2006, p. 1) sets out the legal basis for joint and several liability for the purchaser. Under page 25 of the Explanatory Memorandum, the joint and several liability is thus in accordance with the Directive. 
8  See recital 19 of Council Regulation (EC) No 974/98 of 3 May 1998 on the introduction of the euro (OJ L 139, 
11.5.1998, p. 1). 
ECB-PUBLIC 
3 2.2 The ECB notes that the draft law is in compliance with Union law9, and in particular with recital 19 
of Council Regulation (EC) No 974/98, which states that ‘limitations on payments in notes and coins, established by Member States for public re asons, are not incompatible with the status of 
legal tender of euro banknotes and coins, provide d that other lawful means for the settlement of 
monetary debts are available’. The ECB acknowledges that: (i) such other lawful means for the settlement of monetary debts, other than cash, ar e available in Denmark; and (ii) the draft law’s 
objective of combating tax evasion qualifies as a public reason outweighing the impact of the 
limitations on cash payments.  
2.3 The ECB further notes that the draft law’s provisions on joint and several liability in relation to 
cash payments exceeding DKK 10 000 do not affect the legal tender status of Danish krone banknotes
10. 
2.4 However, the effects of these provisions contai ning practical limitations on the possibility for a 
customer or an undertaking to make cash paymen ts above DKK 10 000 should be proportionate to 
the general objective of combating tax evasion an d should not go beyond what is necessary to 
achieve this objective. Any impact of the proposed provisions should be carefully weighed against 
the public benefits expected to be derived from th em. Also in view of the fact that the measures 
may affect relatively low value payments, the comp etent authorities should 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.   
 
Done at Frankfurt am Main, 10 May 2012. 
 
[signed] 
 
The President of the ECB 
Mario DRAGHI 
                                                 
9  See paragraph 5 of Opinion CON/2002/24, reiterated in paragraph 2.3.2 of Opinion CON/2010/36 and paragraph 2.2 of 
Opinion CON/2010/79. All ECB opinions are published on the ECB’s website at www.ecb.europa.eu. 
10  The legal tender status of Danish kroner is set out in Article 8 of the Law on Danmarks Nationalbank (Law No 116 of 7 
April 1936 with later amendments).