Rome: A proposed change to Italy’s 2026 budget law has reignited debate over the role of cash in the economy, as lawmakers consider doubling the legal ceiling for cash payments from €5,000 to €10,000.
Supporters argue the move would restore consumer freedom and reduce what they describe as excessive financial oversight. Critics warn it could deepen tax evasion and expand Italy’s shadow economy, one of the largest in Europe.
The amendment, introduced by the ruling Brothers of Italy party led by Prime Minister Giorgia Meloni, follows a previous increase enacted in 2022, when the cash payment limit was raised from €2,000 to €5,000.
Government defends proposal
Italy’s governing coalition insists the measure will not weaken efforts to combat tax evasion or financial crime. According to the government, higher cash limits do not automatically translate into illegal activity and should not penalise lawful consumers.
Deputy Prime Minister Matteo Salvini has framed the proposal as a matter of personal liberty. Speaking at a political event in Rome, Salvini said citizens should be free to use their money without having to justify transactions. “We are not in Venezuela,” he said, rejecting what he described as a culture of suspicion toward cash users.
Opposition raises alarm
Opposition parties and trade unions have strongly criticised the plan, arguing that Italy’s economic structure makes higher cash thresholds particularly risky.
Francesco Boccia, leader of the Democratic Party in the Senate, described the amendment as a political manoeuvre that risks undermining fiscal discipline. Angelo Bonelli, co-spokesperson of Green Europe, warned that the proposal would “open new space for the underground economy” and incentivise tax evasion.
Giacinto Palladino, head of the banking and insurance union First Cisl, said cash remains a primary channel for undeclared transactions. “Keeping cash limits low has always been an effective deterrent against tax evasion and money laundering,” he said, adding that tax evasion, rather than laundering, is the more immediate concern in Italy.
What the data shows
According to the Observatory on Italian Public Accounts at the Catholic University of Milan, tax evasion declined from €105.8 billion in 2018 to €92.6 billion in 2022. Government estimates, however, place total tax and social security evasion in 2022 between €98.1 billion and €102.5 billion.
The Bank of Italy has previously cautioned that while cash limits do not eliminate illegal conduct, they serve as a practical barrier. It has also noted that electronic payments, which allow transactions to be traced, are associated with lower levels of tax evasion.
The impact of the 2023 increase to €5,000 remains difficult to assess, given the short timeframe since its introduction.
Shadow economy remains large
Italy’s shadow economy continues to weigh heavily on the debate. Data published by national statistics agency ISTAT last year showed that underground and illegal economic activity reached €217.5 billion in 2023, equivalent to 10.2% of GDP and marking a 7.5% increase from the previous year.
These activities include undeclared labour, illicit trade, and unreported commercial transactions, particularly in sectors such as construction, textiles, and catering.
The proposed amendment includes a €500 stamp duty on cash payments between €5,000 and €10,000, along with an obligation to issue invoices. Critics argue these safeguards could be easily bypassed through informal agreements between parties.
EU framework sets upper limit
At the European level, the EU adopted a package of anti-money laundering and counter-terrorism financing measures in 2024. Under Article 80, cash payments for goods or services are capped at €10,000 across the bloc.
However, the regulation establishes a maximum threshold rather than a mandatory standard, allowing member states to impose stricter limits. The rules are set to come fully into force in 2027.
Cash regulations vary widely across Europe. Some countries impose no specific limits, while others enforce strict ceilings or partial restrictions, reflecting different national approaches to balancing financial freedom and enforcement.
A question of balance
Supporters of Italy’s proposal argue that cash itself is not the problem, but rather the illegal use of it. Critics counter that in an economy with entrenched informal practices, higher cash limits reduce transparency and weaken enforcement.
As parliament debates the amendment, the issue has become emblematic of a broader challenge: how to balance consumer autonomy with the need to curb tax evasion and organised financial crime.
The decision will test whether Italy prioritises flexibility for lawful cash use, or reinforces barriers aimed at shrinking its shadow economy.
