Opinion of the European Central Bank of 20 November 2019 on tax disincentives for the use of cash (CON/2019/39)
Date: 2019-11-20
Institutions: European Central Bank
Subjects: Greece, electronic banking, money, national law, payment system, tax on income, tax relief

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 20 November 2019  

on tax disincentives for the use of cash 

(CON/2019/39) 

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 amendments, the 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 legislative measures adopted in 2016 that promote 

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  avail  of 

existing  income  tax  credits  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  

2  

3  
4  

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).  

Council  Decision  98/415/EC  of  29 June  1998  on  the  consultation  of  the  European  Central  Bank  by  national 
authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 

Article 16 of the Greek Income Tax Law.  

This tax is an additional ‘penalty’ tax which will is payable on top of the other types of income tax applicable to the 
respective taxpayer.   

 
 
 
 
 
 
                                                 
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no longer eligible to benefit from  currently applicable income tax credits5. The minimum quotas of 

e-payments  currently  increase  progressively  on  the  basis  of  income  brackets,  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 threshold 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-payments  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 expenditure which 

is incurred by the taxpayer for the acquisition of goods and services in Greece or Member States of 

the  European  Union  or  the  European  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  credits12,  but  provide  that  taxpayers 

will  continue  to  benefit  from  such  lower  income  tax  credits  even  if  they  do  not  meet  the  revised 

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6  
7  
8  
9  

10  

11  

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). 

Paragraph 3 of Article 16 of the Greek Income Tax Law.  

Article 20 paragraph 3 of law 3842/2010 as amended by 69 of law 4446/2016.  

Article 7 para 1 of the draft amendments amending Article 15 of the Greek Income Tax Law.  

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  on  payment  services  in  the  internal  market,  amending 
Directives 2002/65/EC,  2009/110/EC  and  2013/36/EU  and  Regulation  (EU)  No  1093/2010,  and  repealing 
Directive 2007/64/EC (OJ L 337, 23.12.2015, p. 35).  

These  are  as  follows:  Group  1:  food  and  non-alcoholic  beverages;  Group  2:  alcoholic  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: miscellaneous goods and services 

Article 7 para 1 of the draft amendments amending Article 15 of the Greek Income Tax Law.  

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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, failure 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  understood  that  the  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 promote 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  

13  

14  

15  

16  
17  

These  are  proposed  to  be  reduced  to  the  following:  (a)  (i)  EUR  777  for  a  taxpayer  without  dependent  children; 
(ii) EUR  810  for  a  taxpayer  with  one  dependent  child;  (iii)  EUR  900  for  a  taxpayer  with  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 credit is increased by EUR 220 per child; (b) for taxable income 
exceeding EUR 12 000, 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).  

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. 

These are proposed to be reduced to the following: from 22 % currently to 9 % for income between 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).  

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  Greek  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.  

Article 13 of the draft amendments amending Article 23 of the Greek Income Tax Law.  

Article 16 of the draft amendments amending Article 39A of the Greek Income Tax Law. 

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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  payments  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 explicitly 

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  payments  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 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’26, has been taken 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 authorities. This is because these other means 

may  have  different  characteristics  compared  to  cash  payments  and  hence  may  not  be  fully 

equivalent alternatives. 

18  

19  
20  
21  

22 

23  

24  

25  
26  
27  

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’). 

Article 127(2) of the Treaty and Article 3.1 of the Statute of the ESCB. 

Article 128(1), first sentence of the Treaty and Article 16, first sentence of the Statute of the ESCB. 

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. 

Commission  Recommendation  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).   

See  paragraph  2.1  of  Opinion  CON/2017/18,  paragraph  3.1  of  Opinion  CON/2017/20,  paragraph  2.3  of 
Opinion CON/2017/27, paragraph 2.2 of Opinion CON/2017/40, paragraph 2.2 of Opinion CON/2019/04.   

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.   

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, for example, Opinions CON/2013/18, CON/2014/4 and CON/2014/37. 

See paragraph 2.1 of Opinion CON/2012/33 and paragraph 3.1 of Opinion CON/2010/36.   

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2.5 

In  this  respect,  the  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  creation  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  amendments’  objectives  of  (i)  combating  tax  evasion  and 

(ii) broadening  the  tax  base,  while  maintaining  fiscal  balance  after  the  decreases  in  corporate 

income tax and personal income tax may, in general, constitute ‘public reasons’ 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 Articles 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. Hence, 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  legislative  measures 

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 objective 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  accounts  with  basic  features 
(OJ L 257, 28.8.2014, p. 214). 

29   Within the framework 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/EC (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 Services 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 
internal  market,  amending  Directives  2002/65/EC,  2009/110/EC  and  2013/36/EU  and 
Regulation (EU)  No  1093/2010,  and  repealing  Directive  2007/64/EC  (OJ  L  337,  23.12.2015,  p.  35)  (the  Payment 
Services Directive 2). 

the 

in 

30  
31  

See paragraph 1.2 above.  

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,  paragraph  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.   

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other payment instruments. 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 transaction 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  thereof.  Also,  cash  payments  do  not  require  a  functional 

technical  infrastructure  and  related  investment,  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  that  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-business  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 case the  legislator  wishes to preserve cash payment  limitations, 

higher  thresholds  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 traceable 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  

33  

34  

35  

See  paragraph  2.6  of  Opinion  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.   

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  financing,  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). 

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.   
See also paragraphs 2.2 and 2.3 of Opinion CON/2015/55. 

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Done at Frankfurt am Main, 20 November 2019. 

[signed] 

The President of the ECB 

Christine LAGARDE 

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