Opinion of the European Central Bank of 10 May 2012 on restrictions of settlements in cash (CON/2012/36)
Date: 2012-05-10
Institutions: European Central Bank
Subjects: Lithuania, fight against crime, money, national law, payment system, tax evasion, taxpayer

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 10 May 2012  

on restrictions of settlements in cash 

(CON/2012/36) 

Introduction and legal basis 

On 18 April 2012 the European Central Bank (ECB) received a request from the Lithuanian Ministry of 

Finance  for  an  opinion  on  a  draft  law  amending  the  Law  on  Tax  Administration  (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 indent 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 provisions1, 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  the  European  Central  Bank,  the  Governing  Council  has 

adopted this opinion. 

1.  

Purpose of the draft law 

1.1  The draft law is intended to limit potential non-fulfilment of tax obligations by certain taxpayers 

and, more particularly, to reduce the risks of: (i) concealing income, (ii) attributing acquired assets 

to  fictitious  sources  of  income,  and  (iii)  non-payment  of  taxes,  which  arise  when  settlements  are 

made in cash. 

1.2  The draft law grants the tax administrator the authority to restrict a taxpayer’s right to settle in cash 

where there is an established risk that a taxpayer, by settling in cash, may be concealing his income 

or avoiding tax in any other way.  

1.2.1  In particular, the tax administrator may give an instruction to a specific taxpayer that for a limited 

period  of  time,  up  to  one  year,  all  his/her  settlements  with  legal  or  natural  persons  engaged  in 

commercial activities are to be made as non-cash settlements. 

1.2.2  Such an instruction may be given if a taxpayer, or the manager of a taxpayer legal entity, has been 

found guilty of or has had an administrative penalty imposed on him/her for one of the following 

violations of law: (i) fraudulent or negligent keeping of accounts, (ii) legalisation of proceeds from 

crime and criminal assets, (iii) illegal employment, (iv) violating the procedure for paying a salary, 

(v) violating the rules on cash fund accounting, (vi) providing incorrect data on income, profits or 

1  

OJ L 189, 3.7.1998, p. 42.  

 
 
 
 
                                                 
ECB-PUBLIC 

assets, and (vii) violating tax laws. The instruction may also be given if there is an established risk 

that a taxpayer, in making settlements in cash, may conceal income or avoid paying taxes in any 

other way. 

2. 

Specific observations 

2.1  The ECB notes that Union law only regulates restrictions on cash payments in euro2. However, for 

consistency reasons, the ECB considers it appropriate to assess the draft law’s provisions against 

the relevant Eurosystem practices. 

2.2  The ECB notes that the draft law is in compliance with Union law3, 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  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’.  The  ECB  acknowledges  that:  (i)  such  other  lawful  means  for  the 

settlement  of  monetary  debts,  other  than  cash,  are  available  in  Lithuania;  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  However, limitations on settlements in cash should be proportionate to the objectives pursued and 

should  not  go  beyond  what  is  necessary  to  achieve  such  objectives.  Any  impact  of  the  proposed 

limitations should be carefully weighed against the public benefits expected to be derived from the 

proposed restrictions on settlements in cash. Also in view of the fact that the measures affect low 

value payments, the competent 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 

2  

3  

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). 
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. 

2