Handling 500-euro notes is like putting a target on your back, as far as Hacienda goes; they're 100% hot potatoes.
There is nothing illegal about them; they’re still legal tender despite none have been printed since 2019, it’s just that they’re as suspicious as hell. So, if somebody offers to pay you in Bin Ladens (as they became known in Spain) ask for smaller denomination notes.
If you deposit one in your bank account, the bank might inform Hacienda, because these large denomination notes are synonymous with money laundering.
In fact, depositing or withdrawing amounts superior to 3,000 euros, no matter what notes are used, will set alarm bells ringing in the insalubrious corridors of the Tax Department.
Your bank manager has no alternative but to inform on you so that this movement of cash can be investigated.
Any individual arriving in Spain from abroad with a large amount of money will come under investigation, or anybody leaving the country with more than 10,000 euros in cash without any legal document as justification will cop it.
Finally, remember that any large deposit made into your bank account has to be declared in your Renta before the Agencia Tributaria.
Of course, putting these restrictions in place was a case of closing the stable door after the horse has bolted because when the Euro came in, it just happened to coincide with the Building Bubble that led to the economic crisis of 2008. It almost appears as if the State was giving fat cats an ample chance to launder all those naughty Pesetas.