Latvia’s Ministry of Finance (FM) has withdrawn its planned proposal to introduce a 750 euros threshold for declaring cash deposit transactions, according to information published on the Legal Acts Drafting Portal.
The ministry explained that the draft regulations on reporting suspicious transactions and submitting threshold declarations received significant objections during the public consultation process. As a result, the Cabinet of Ministers regulation has lost its relevance.
Last summer, the proposed amendments were opposed both by the ruling coalition party Union of Greens and Farmers (ZZS) and by opposition parties. On the 19th of August, a public gathering titled “Clear Language About Cash and Freedom,” organised by the conservative think tank Demos, took place in Esplanāde, attracting numerous ZZS and opposition politicians.
Previously, the Finance Ministry had stated that the planned changes to cash regulation would not affect law-abiding taxpayers. According to the ministry, improving transparency in cash circulation and enabling comparisons with individuals’ declared legal income would benefit society as a whole. Reducing the shadow economy would promote fair competition among businesses and enhance social protection for employees,
while increased tax revenues would allow the state to better meet public needs.
The proposed amendments aimed to clarify how information would be submitted to the State Revenue Service (VID). Credit institutions and other financial entities would have been required to report client cash transactions exceeding specific thresholds. This included reporting cash deposits of 750 euros or more per transaction and cash withdrawals of 1,500 euros or more, with the data used by VID for risk analysis.
The 750 euros deposit threshold was based on the assessment that risks associated with introducing cash into the financial system are higher. Therefore, a lower threshold was proposed to more effectively identify funds of unknown origin—for example, when deposited amounts exceed a person’s declared income.
Meanwhile, the higher 1,500 euros threshold for cash withdrawals reflected the fact that the origin of funds is already known within the financial system, thus posing lower risks.
Greater scrutiny would have been applied particularly to small businesses and their board members,
especially where there were risks related to undeclared “envelope wages.”
Under the proposal, credit institutions would have submitted data to the Financial Intelligence Unit (FID), which would then forward it electronically to VID. The data would have been used to monitor tax compliance and assess risks by cross-referencing with other indicators. The Finance Ministry noted that these changes were part of the government’s Shadow Economy Reduction Plan and broader efforts to increase transparency in cash circulation and curb undeclared income.
According to estimates by the Finance Latvia Association, setting a 750 euros threshold for cash deposits would have resulted in FID and VID receiving information on approximately 28,000 individuals depositing around 43 million euros and about 18,000 legal entities depositing approximately 83 million euros within a single month. Additionally, banks estimated that roughly 3,800 individuals withdraw more than 1,500 euros in cash monthly (totalling around 23 million euros), along with approximately 540 companies withdrawing about 60 million euros.
The Finance Ministry had previously stressed that the regulation would not impose additional obligations or restrictions on residents or businesses, as individuals would retain the right to freely use their cash. No consequences were foreseen for those receiving and declaring legal income.
Information would have been obtained from credit institutions and financial entities rather than directly from clients.
Individuals would not have been automatically required to explain each transaction to VID. The ministry also emphasised that no broad, individual-level monitoring was planned; instead, the data exchange would serve as a targeted tool for risk assessment.
In practice, this meant that individuals and businesses operating transparently would not face additional administrative burdens or obligations to provide explanations. The data would be assessed in conjunction with other information already available to VID, and only cases raising suspicions of significant tax evasion risks would be subject to closer scrutiny. In such cases, taxpayers could be asked to explain discrepancies or voluntarily declare previously undeclared income. If no justification were provided, VID would have the right to initiate a tax audit.
The ministry had also noted that Latvia would be aligning with an international trend toward increased exchange of financial information, which plays a crucial role in combating tax fraud, tax evasion, and avoidance. Similar low-threshold cash reporting requirements are already in place in several European Union countries, where authorities closely monitor transactions that may indicate undeclared income or illicit funds.
The amendments, submitted for coordination in summer 2025, also envisaged that entities subject to the Law on the Prevention of Money Laundering and Terrorism and Proliferation Financing would be required to submit threshold declarations for cash deposits of 750 euros or more, cash withdrawals of 1,500 euros or more, and non-account cash transfers of 1,000 euros or more.
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