Romania: new thresholds limit the use of cash payments

Efective 9 May 2015, new maximum thresholds will apply to cash payments made in Romania. The law comes after a long period of legislative debate regarding the need to adjust existing provisions in order to reduce economic crimes such as tax evasion, fraud and money laundering.

The law applies to both making and receiving cash payments and prescribes different thresholds based on the type of service provided and the provider. Of note, the law imposes the following limits:

• Cash payments made or received by professional entities may be realised only if the amount falls under a daily threshold of RON 5,000 per person. Such professional entities include, among others, legal entities, authorised natural persons and freelancers.
• Cash payments between professional entities and natural persons pursuant to certain operations such as assignment of receivables, repayment of loans, delivery of goods or rendering of services may be made only if the amount falls under a daily threshold of RON 10,000 per person. This threshold is not applicable for the collection of payments in instalments, undergone by professional entities.
• Cash payments between natural persons pursuant to the transfer of ownership of goods or rights, the delivery of services, the granting or the repayment of loans may be made only if the amount is under a daily threshold of RON 50,000 per transaction.

Operations other than those mentioned above must be made via non-cash payment instruments. If the amount due exceeds the threshold, the payment cannot be divided into smaller amounts in order to meet the relevant requirements. If professional entities have more than one cashier’s desk, or their branches or secondary offices have an independent cashier’s desk, the thresholds apply per each cashier’s desk. The thresholds apply to both Romanian and foreign currency payments.

The new thresholds do not apply to payments due under agreements entered into before 9 May 2015.

There are no thresholds applicable to professional entities regarding:

• the deposit with, withdrawal from (for specific payments such as the payment of salary rights or other employment-related rights) or transfer of cash through authorised credit or payment institutions; and
• the payment of taxes, fiscal contributions, fines or any other amounts owed to the State budget.

Additionally, the law does not contain thresholds applicable to the operations performed by entities such as the State treasury, credit institutions, entities performing payment services, foreign exchange institutions and gambling operators performing authorised activities.

These thresholds are implemented by Law no. 70/2015 regarding the consolidation of the financial discipline with respect to the collection and the performance of cash payments and the amendment and supplementation of Emergency Government Ordinance no. 193/2002 on the application of modern payment systems.

Failure to observe the provisions introduced by Law 70/2015 may be qualified as an administrative offence or a crime, depending on the circumstances. The Ministry of Public Finances or the National Agency for Fiscal Administration may impose fines ranging from RON 100 to 10% of the amounts paid or received in cash which exceed the prescribed threshold.

For more information on how the new cash payment thresholds affect your business please contact Rodica Manea and Cristina Iacobescu.