A Tourist Can No Longer Pay an Amount Exceeding NIS 55,000 in Cash to a Business Owner in Israel
As of January 2019, a tourist is prohibited to give and a business owner is prohibited to receive cash in excess of NIS 55,000.
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As of January 1, 2019, the Law to Reduce the Use of Cash will come into effect which prohibits both parties to a transaction— including tourists — from giving and receiving cash payments in excess of certain amounts (as will be explained in detail below). The bill also includes foreign currency and checks, and the duty to record the payment or the receipt.
The law applies to all types of transactions in Israel, such as: a regular transaction (products and services), a transaction that involves the sale or purchase of a property, providing or receiving a service, donations, loans, gifts, payment of wages and more. (Bank operations, deposits, withdrawals, transfers or money-changing are not subject to the restrictions, except for restrictions on the cashing of checks).
It should be emphasized that this law also applies to tourists (who are not Israeli citizens) and limits them too in their use of cash and checks in Israel.
The idea behind the law is to fight unlawful capital, economic crime, money-laundering and terrorism financing.
The restrictions on the use of cash will take effect on January 1, 2019, (and the restrictions on the checks in a financial institution will take effect six months later, on July 1, 2019).
Violating the law concerning executing transactions in cash in excess of the prescribed threshold shall be considered a criminal offense for which an administrative fine or financial sanction will be imposed on a businessman. As a gesture to allow people to get used to the law, no financial sanction or fine shall be imposed on a person who violated the restrictions for the first time during the nine months after it came into effect.
Restrictions on a cash transaction:
• A business owner may not pay or be paid in cash for a business transaction exceeding NIS 11,000 (and from a tourist for a transaction exceeding NIS 55,000).
• A private person may not pay a business owner in cash for a business transaction exceeding NIS 11,000.
• A private person, business owner, and tourist may not give or receive from a private person a cash payment as a gift exceeding NIS 50,000.
• A business owner may not receive from a tourist a cash payment exceeding NIS 55,000.
• A private person, business owner, and tourist may not give or receive a cash payment in excess of NIS 11,000 for a wage, donation or loan. (A supervised financial organization may receive a larger cash loan.)
• A tourist may not give a business owner a cash payment exceeding 55,000 NIS for a business transaction.
• A private person may not give or receive a cash gift or transaction from another private person exceeding NIS 50,000.
Notwithstanding the foregoing, if the transaction, the loan or the contribution is more than NIS 11,000, cash can be given or received up to 10% of the transaction amount or up to NIS 11,000, whichever is lower. In a gift or transaction between private people, up to NIS 50,000 may be given in cash. However, it is forbidden to pay any cash for a wage exceeding NIS 11,000.
It should be noted that the restrictions on the use of cash payments (other than with regard to wages) do not apply to close relatives, such as spouses, parents, grandparents, children, siblings, grandchildren, and the spouses of any of these, as well as any other person who is a dependent (i.e. a person who does not support himself and is dependent on that person).
It is also important to note that at this stage, the law will not apply to Gemachim that use cash to give or receive a loan, donation or gift. (This postponement is granted for two years only or until the date on which the Law Supervising Entities comes into force, whichever is earlier).
Restrictions on the use of checks:
• A business owner may not give or receive a check of any amount for his business involving a wage, donation, gift or loan, without specifying the name of the payee or the beneficiary on the check. (He has to fill in the line that starts “To.”)
• A private person may not receive a check for more than NIS 5,000 for a wage, donation, gift, or loan, without his name being indicated on the check as the payee or the beneficiary.
• A private person may not give another private person a check payment of more than NIS 5,000 for a wage, donation, gift or loan, without the latter’s name being indicated on the check as the payee or the beneficiary.
• A private person may not give a business owner (within the scope of the dealer's business) a check payment of any amount for a wage, donation, gift or loan, without the business owner’s name being specified on the check as the payee or the beneficiary.
• A private person, business owner, and tourist may not write a check or receive a check of any amount without the check owner’s name and identity number indicated on the check. Likewise, the business owner has to document every transaction for which he gave or received payment.
Israeli Shortcut’s chairman advises all foreign residents to update themselves on these new laws to avoid unpleasant run-ins with the law.