Italy waters down plan to promote cash payments after EU criticism

Italy has decided to scrap parts of its plans for cash payments for goods or services, following criticisms from European Union authorities, Economy Minister Giancarlo Giorgetti said on Sunday (18 December).

The government proposed to change the current system, in which sellers face fines if refuse to take card payments. However, no penalties would apply for transactions less than €60.

The European Commission was critical of the move, saying it was inconsistent with the previous EU recommendations to Italy to increase tax compliance. Giorgetti informed parliament late Sunday that the government had reversed course.

He said: "We intend to eliminate the point of sale measure," and added that compensatory measures could be implemented to help shopkeepers pay commissions on card transactions.

He added: "I hope there will continue reflection at the European Level."

Critics claim that cash payments encourage tax avoidance in a country where about €100 billion of taxes and social contributions are evaded each year, according Treasury data.

The current fines of 30 euros and 4% of transaction value are one condition for a 21 billion-euro tranche from the EU's post COVID Recovery Fund money, Rome obtained in the first half this year.

Despite these latest developments, Prime Minister Giorgia Maloni, who was elected in October, is still more generous with cash than her predecessors.

Her first budget must be approved by parliament prior to year-end. It increases the cash payment limit to €5,000 next year from the previous €1,000.

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