Written by 10:07 pm European Union

Italy waters down plan to promote cash payments after EU criticism

ROME (Reuters) – Italy will scrap part of its plans to facilitate cash payments for goods and services after criticism from European Union authorities, Economy Minister Giancarlo Giorgetti said on Sunday.

In its draft 2023 budget the government had proposed changing the current system in which sellers risk fines if they refuse to accept card payments, by saying no penalties would be imposed for transactions below 60 euros ($63.49).

The move drew criticism from the European Commission, which said it was not consistent with previous EU recommendations to Italy to boost tax compliance, and Giorgetti told parliament late on Sunday that the government had backtracked.

“We intend to eliminate the measure on points of sales,” he said in testimony on the budget, adding that some sort of compensatory measures may be introduced to help shopkeepers pay the commission fees on card transactions.

“I hope there will be further reflection at the European level,” he added.

Critics say cash payments encourage tax dodgers in a country where around 100 billion euros in taxes and social contributions are evaded every year, according to Treasury data.

The current fines, which amount to 30 euros plus 4% of the value of the transaction, were one of the conditions for a 21-billion-euro tranche of the EU’s post-COVID Recovery Fund money that Rome secured in the first half of this year.

Despite the latest developments, Prime Minister Giorgia Meloni, who took office in October, continues to be more indulgent towards cash than her predecessors.

Her first budget, which must be approved by parliament before year-end, raises a limit on cash payments to 5,000 euros from next year, up from a previous ceiling of 1,000 euros.

($1 = 0.9450 euros)

(Reporting by Giuseppe Fonte, editing by Gavin Jones)

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