Cash remains a legal means of payment; however, there are restrictions for large purchases and other transactions in Latvia. This applies not only to businesses but also to ordinary individuals, reminds lvportals.lv. The main rule: individuals cannot conduct cash transactions exceeding 7,200 euros. The restriction applies regardless of who the other party to the transaction is — an individual or a legal entity. This rule cannot be circumvented by splitting one purchase into several cash payments. There is also a separate rule for real estate: cash transactions for real estate are prohibited regardless of the amount. For example, if a car costs 6,000 euros, an individual can pay for it entirely in cash, but if the car costs 11,000 euros, the entire amount cannot be paid in cash. Up to 7,200 euros can be transferred in cash, while the remaining amount must be paid electronically. When purchasing a car for cash, specialists from the State Revenue Service (SRS) advise keeping documents that confirm both the transaction itself and the payment. If the car is purchased from a company, a cash register receipt can serve as proof. In a transaction between two private individuals, for example, a sales contract indicating the amount may be required. This may be necessary if the SRS asks to explain the origin of the funds. Separate rules should be considered for monetary gifts. If the money is gifted by a spouse or a relative up to the third degree of kinship, such a gift is not subject to income tax regardless of the amount. Such relatives include, in particular, parents, grandparents, children, grandchildren, brothers, sisters, uncles, aunts, nephews, and nieces. If the gift is received from a person who is not a spouse or a close relative up to the third degree, the amount up to 1,425 euros from one donor during the calendar year is not taxed. Income tax applies to the amount exceeding this limit. At the same time, the total amount of non-taxable income also matters. If the total exceeds 10,000 euros in a year, such income must be reported in the annual declaration. The SRS also points out that cashless transactions are generally easier to verify: a bank account retains information about the payer, the recipient, the amount, and the time of payment. Proving the origin of large amounts of cash can be more challenging later.
