ECJ – Approximation of laws – C-544/19 (ECOTEX BULGARIA) – Ban on cash payments when combating fraud according to AG CJEU not in violation of EU law

While this is not a VAT case, banning cash payments may be measure to combat VAT fraud.

On November 18, 2020, the ECJ issued the AG Opinion in the case C-544/19 (ECOTEX BULGARIA). The AG concluded that a Ban on cash payments when combating fraud according to AG CJEU not in violation of EU law.



In this connection, it is to be examined, with regard to the company’s responsibility, whether a general national legislative provision which restricts cash
payments, regardless of whether they constitute remuneration for a counterperformance, is admissible and whether the restriction of the cash payment of a share in undistributed profits under Article 3(1) No 1 ZOPB is covered by the scope of Directive (EU) 2015/849; if such a provision is admissible, this raises the
question of whether it is left to the Member States to fix the threshold value for cash payments at an amount below EUR 10 000.

If this is found to be the case, it is to be examined to what extent a national legislative provision such as that of Article 5(1) ZOPB, which provides for a
financial sanction at the fixed level of ‘50 per cent of the total amount of the payment made’ for legal persons in respect of all financial transactions, is
admissible with regard to the proportionality of the penalty pursuant to Article 58(1) and the circumstances pursuant to Article 60(4) of Directive (EU)
2015/849 and whether it does not constitute a breach of the principle of effective judicial review in light of the prohibition regulated in Article 27(5) ZANN on the court reducing the sanction below the minimum level provided for in Article 5(1) ZOPB.

AG Opinion

1.National provisions such as those at issue in the main proceedings, which, with the aim of combating tax evasion and tax avoidance, prohibit natural and legal persons from making domestic cash payments that reach or exceed a threshold and require them to do so that they make a transfer or a payment to a payment account do not fall within the scope of Directive (EU) 2015/849 of the European Parliament and of the Council of May 20, 2015 on preventing the use of the financial system for the purpose of money laundering  and 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 Directive 2006/70 / EC of the Commission.

2. Article 63 TFEU is to be interpreted as meaning that it does not conflict with national provisions such as those at issue here, which are justified by the need to combat tax evasion and tax avoidance, if they are capable of ensuring that this objective is achieved and not go beyond what is necessary to achieve it.

The referring court will have to examine whether these conditions are met, taking into account:

– These rules can only really achieve the stated objective if they are accompanied by measures in favor of private individuals’ access to banking services. In that regard, the referring court should in particular ensure that persons in need of protection without an account have the opportunity to open a bank account with basic functions under more favorable conditions than the other consumers, as is the case in Article 18 (4) of Directive 2014/92 / EU of the European Parliament and Council of 23 July 2014 on the comparability of payment account fees, switching payment accounts and access to payment accounts with basic functions. Furthermore, the referring court should ensure that those rules are accompanied by special or derogations in favor of persons

– These rules may constitute a measure contrary to the principle of proportionality in so far as they provide that the amount of the fine to be imposed on natural and legal persons in the event of a breach of the rules on cash payment restrictions is a fixed percentage of the total amount payment made in breach of these provisions is calculated, and exclude any adjustment of the amount of this fine according to the circumstances of the specific case.










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