As a rule, euro banknotes and coins must be accepted in all transactions, regardless of their nature. Creditors are obliged to accept any type of banknote or coin and, as a general rule, cannot refuse them.

Refusing to accept euro banknotes and coins as a means of payment should only be possible if grounded in good faith (e.g. if the face value of the banknote tendered by the debtor is disproportionate to the amount owed to the creditor of the payment) or in case of agreement between the parties to use a different means of payment. This understanding reflects the provisions of Commission Recommendation of 22 March 2010 on the scope and effects of legal tender of euro banknotes and coins.

The legal tender and discharging power of euro banknotes and coins, i.e. the fact that they can be used as a means of payment in the relevant territory, arise from the Treaty on the Functioning of the European Union and Council Regulation (EC) No 974/98 of 3 May 1998 on the introduction of the euro. 

Nonetheless, there are legal restrictions to cash payments in Portugal:

• set out in Law No 92/2017 of 22 August 2017;
• in Decree-Law No 246/2007 of 26 June 2007, in accordance to which no one is obliged to accept more than 50 normal euro coins in any single payment, with the exception of the State, through Treasury cash offices, the Banco de Portugal and credit institutions the business of which is to take deposits from the public.

There are no penalties for refusing to accept payments in euro banknotes and coins. However, this refusal has consequences for the contractual relationship between the parties. Under the Portuguese Civil Code, the debtor fulfils their obligation by making the payment due, and the creditor may be considered in arrears if they do not accept the payment offered without good reason.