Banks & Finances Spain

When choosing a bank in Spain, especially if you are a foreigner, it is important to consider factors such as the availability of services in English, the simplicity of opening accounts, and the availability of online banking. Here are some banks that offer the most favorable conditions for foreigners:

 

Banco Santander – the largest bank in Spain, offers a wide range of services for foreigners, including the ability to open accounts for non-residents before arriving in the country. The bank provides multilingual support and numerous branches and ATMs throughout Spain. Multi-currency accounts and investment products are also available.

 

BBVA – offers special accounts for foreigners with the possibility of remote opening. The bank provides access to online banking and mobile apps, making financial management easier; offers favorable terms on loans and investments for foreigners.

 

CaixaBank – the largest domestic bank in Spain with over 5000 branches; offers special accounts for expats, multi-currency accounts, and an English version of the website to ease the account opening process. Free accounts with preferential credit and overdraft terms are available for students.

 

Banco Sabadell specializes in services for expats and offers multi-currency accounts that can be opened remotely; provides support in English and offers favorable terms on mortgages and investment products.

 

N26 – is an online bank popular among young expats and students; offers free cash withdrawals worldwide, instant transfers, and integration with Apple Pay and Google Pay. Account opening is fully online, making it convenient for those who prefer digital solutions.

 

Revolut – a popular online bank, offers multi-currency accounts with competitive exchange rates and minimal transaction fees; supports mobile payments and has a convenient app for financial management.

Opening a bank account in Spain is an important step for those who plan to live or work in the country. Here is a brief guide on opening an account and the necessary documents.

 

Types of Accounts

 

Current account:

- The main type of account for everyday financial operations.

- Usually does not earn interest but allows for bill payments, receiving salary, and using debit cards.

 

Savings account:

- Intended for accumulating funds and may earn interest on the balance.

- Limited access to funds compared to a current account.

 

Deposit account:

- Offers higher interest rates but funds are frozen for a certain period.

 

Non-resident accounts:

- Special accounts for those who do not reside in Spain on a permanent basis. These accounts usually have higher fees and fewer available services.

 

To open a bank account in Spain, you will need the following documents:

 

- A valid passport or national identity card (for EU citizens).

- Spanish Foreigner Identification Number (NIE): For both residents and non-residents; the number can be obtained from the police or the Spanish consulate.

- Proof of address: This can be a utility bill, bank statement, or rental contract not older than three months.

- Proof of employment status: Employment contract, income certificate, student ID, or other proof of current status.

- Non-resident certificate (for non-residents): Can be obtained at the police station or Spanish consulate abroad. The cost is around 15 euros and the process takes approximately 10 days.

 

Account opening procedure

1. Choose a bank.

2. Prepare documents: Ensure all documents are translated into Spanish and notarized if necessary.

3. Visit a bank branch: Most traditional banks require a personal visit to complete the account opening process, although some online banks allow completing all steps remotely.

4. Fill out an application: Complete the application and provide the necessary documents. The process usually takes from 30 minutes to several days, depending on the bank.

 

Online banking

Some banks and online banks, such as N26 and Revolut, allow you to open accounts entirely online, which can be a convenient option for those who prefer digital solutions.

Stages of cash withdrawal

 

1. Find an ATM: ATMs are located in major cities, at gas stations, in shopping centers, and at train stations. ATMs belonging to large banks are usually less likely to charge high fees.

 

2. Insert your card: Insert your card into the ATM and follow the on-screen instructions. Most ATMs in Spain offer menus in multiple languages, including English.

 

3. Select the account type and amount: Choose the account type (current or savings) and enter the amount you wish to withdraw.

 

4. Currency selection: Always choose withdrawal in local currency (euros). This will help avoid additional fees for Dynamic Currency Conversion (DCC), which is usually less advantageous.

 

5. Confirmation and cash withdrawal: Confirm the transaction, enter the PIN code and wait for the cash to be dispensed.

 

Fees and limits

 

- ATM usage fees: Fees may vary depending on the ATM and the bank. The average fee ranges from 0.50 to 2 euros per transaction, but some ATMs may charge up to 6 euros.

 

- Cash withdrawal limits: Most banks set limits on cash withdrawals.

 

- Foreign transaction fees: Some banks charge additional fees for foreign transactions. Check your card terms before traveling.

 

Helpful tips

 

Avoid airport ATMs: Airport ATMs often charge higher fees. If possible, use ATMs in cities.

 

Check partner banks: Find out if your bank has partnerships with banks in Spain. This may allow you to withdraw cash without fees or with reduced fees.

 

Use travel cards: Consider using specialized travel cards like Wise or Revolut, which offer favorable terms for cash withdrawals and currency conversion.

 

Bank notification: Notify your bank of your planned card usage abroad before traveling to avoid card blocking due to suspicious transactions.

Sending money abroad from Spain can be done using various services and methods, each with its own features, fees, and processing speed. Here are some popular and reliable ways to send money abroad:

 

1. Bank transfers (SWIFT)

Bank transfers through the SWIFT system are a traditional way to send money abroad. This method is reliable but may be more expensive and slower compared to other options.

 

- Required documents: recipient’s name, recipient’s IBAN, bank’s BIC/SWIFT code.

- Fees: typically range from 0.4% to 0.7% of the transfer amount, with a minimum fee of 18 to 35 euros.

- Transfer time: 2-5 business days.

 

2. Online platforms (Wise, PayPal, Revolut)

Online platforms often offer lower fees and better exchange rates compared to traditional banks.

 

- Wise:

- Process: Sign up, choose the amount to send, enter the recipient's details, and pay for the transfer.

- Fees: transparent and low, without hidden charges.

- Transfer time: up to a few hours.

- Additional features: the ability to track the transfer online.

 

- PayPal and Xoom (a subsidiary of PayPal):

- Process: You can send money directly to the recipient's PayPal account or use Xoom to transfer to a bank account or for cash pickup.

- Fees: about 2.5% of the transfer amount, additional fees for currency conversion.

- Transfer time: instant transfers for PayPal, 1-2 business days for Xoom.

 

- Revolut:

- Process: Sign up in the app, top up your account, and send money.

- Fees: low or nonexistent for most transfers.

- Transfer time: up to a few hours.

 

3. Western Union

Western Union allows sending money to bank accounts, mobile wallets, or for cash pickup.

 

- Required documents: recipient's name and address, phone number, in some cases — IBAN and BIC/SWIFT code.

- Fees: vary depending on the amount and recipient's country, usually higher than online platforms.

- Transfer time: instant transfers for cash pickup, 1-2 business days for bank transfers.

 

4. Postal money transfers

The Spanish Post also offers international money transfer services.

- Required information: recipient's name and address.

- Fees: depend on the amount and recipient's country.

- Transfer time: may take several days.

Foreigners can obtain a loan or mortgage in Spain, although the process may require additional steps and adherence to certain specific requirements.

 

Conditions for obtaining a mortgage for foreigners

 

1. Down payment:

- Foreigners generally need to make a larger down payment compared to residents. This is usually 20% to 30% of the property's value.

 

2. Interest Rates:

- Foreigners can expect fixed, variable, and mixed interest rates, which may be slightly higher than rates for residents. Average rates range from 4.76% to 5.70% depending on the bank.

 

3. Documents:

- To apply for a mortgage, foreigners will need the following documents:

- A valid passport

- Foreigner Identification Number (NIE)

- Proof of income (employment contract, recent payslips, and tax returns)

- Bank statements for the last few months

- Credit report from the country of residence

- Proof of primary residence

- Confirmation of the initial deposit.

 

4. Maximum Loan Amount:

- For foreigners, the loan amount usually covers up to 70% of the property's value. Residents can expect coverage of up to 80% of the cost.

 

Tips and Recommendations

Consult Professionals: Reach out to mortgage brokers or lawyers to help you understand the process and avoid potential issues.

Paying for large purchases, such as real estate and cars, in Spain requires knowledge of local laws and procedures. Here are the main methods and recommendations for making such payments:

 

Property Payments

 

1. Bank Transfer

- Process: The most common way to pay for property is through a bank transfer. After signing the contract, the buyer transfers money to the seller's account or their lawyer through their Spanish bank account.

- Required Documents: For this, NIE and an opened account in a Spanish bank are required.

 

2. Mortgage

- Mortgage Process: Foreigners can obtain a mortgage from Spanish banks. An initial deposit (usually 30-40% of the property's cost) is required, along with documents proving income and financial status.

- Interest Rates: Rates can be fixed or variable, depending on the bank's terms.

 

3. Cash

- Limitations: Spain has restrictions on cash payments for non-residents, not exceeding 10,000 euros. In most cases, paying a large amount in cash is not practiced and not recommended due to transparency transaction requirements.

 

Vehicle Payment

 

1. Bank Transfer

- Process: The payment for a vehicle typically occurs through a bank transfer. The seller provides the bank details to which the agreed amount is transferred.

- Documents: Passport, NIE, and a Spanish bank account are required.

 

2. Credit

- Process of obtaining credit: As with a mortgage, foreigners can get an auto loan from Spanish banks. You need to provide documents confirming income and undergo a credit check.

- Interest rates: Lending conditions vary by bank and include various interest rates and repayment terms.

 

Additional Expenses

 

1. Taxes and fees when purchasing real estate

- Property transfer tax (ITP): From 6% to 10% depending on the autonomous community.

- Notary fees: From 0.2% to 0.5% of the property value.

- Registration fees: From 0.1% to 0.25% of the property value.

 

2. Taxes and fees when purchasing a vehicle

- Value Added Tax (IVA): 21% on new vehicles.

- Property transfer tax (ITP): From 4% to 10% on used vehicles.

- Annual road tax: The amount depends on the engine power and the region of vehicle registration.

Savings and Savings

 

1. Bank Deposits:

- Current and savings accounts: Offer minimal interest rates but provide a high level of liquidity.

- Certificates of Deposit (CD): Fixed income for a specific term, rates depend on the bank and the term of the deposit.

 

2. High-interest savings accounts:

- Such accounts offer higher interest rates compared to regular savings accounts. For example, some Spanish banks offer rates up to 2% per annum.

 

Investment Opportunities

 

1. Real Estate:

- Residential property: Investments in residential real estate, especially in popular tourist areas such as Barcelona, Madrid, Costa Blanca, and the Balearic Islands, can provide significant income from rent and capitalization.

- Commercial Real Estate: Investments in commercial properties, such as hotels and office buildings, are also popular among foreign investors.

 

2. Stock Market:

- Shares: The main Spanish stock market is the Bolsa de Madrid, where you can invest in major Spanish companies such as Santander and BBVA. Using index funds (ETFs) is a simple way to diversify investments in the Spanish market.

- Bonds: Government and corporate bonds can be a reliable source of stable income.

 

3. Investments in Startups and Innovation:

- Biotechnology and Medical Technologies: Spain has a developed startup ecosystem in these areas, especially in cities like Barcelona, Madrid, and Valencia.

- Renewable Energy: Spain is actively developing projects in the field of solar and wind energy, which opens up opportunities for investors.

 

4. Golden Visa:

- The "Golden Visa" program provides residency for non-European citizens with investments starting from 500,000 euros in real estate or other assets such as stocks or bank deposits. This allows investors and their families to live and work in Spain.

 

5. Agritech Sector:

- Spain is one of the leading producers of agricultural products in Europe, such as olive oil and wine. Investments in the agricultural sector can be very promising, especially considering the global demand for environmentally friendly products.

 

Thus, investing in Spain offers various opportunities for capital growth and stable income. Regardless of the chosen strategy, it is important to conduct thorough market research and, if necessary, consult with financial and legal specialists to optimize your investments and minimize risks.

In Spain, foreigners are required to comply with tax legislation, which depends on their tax residence status. Here are the key aspects of taxation for foreigners:

 

Tax Residency

 

You will be considered a tax resident of Spain if one of the following conditions is met:

- Living in Spain for more than 183 days in a calendar year.

- Main professional activity is carried out in Spain.

- Main economic interests (e.g., family) are located in Spain.

 

Tax residents are required to declare their global income, whereas non-residents declare only the income earned in Spain.

 

Taxes for Residents

 

1. Income Tax (IRPF):

- Progressive scale: 19% on income up to 12,450 euros, 24% on income from 12,451 to 20,200 euros, 30% on income from 20,201 to 35,200 euros, 37% on income from 35,201 to 60,000 euros, 45% on income from 60,001 to 300,000 euros, and 47% on income over 300,000 euros.

 

2. Savings Tax:

- 19% on income up to 6,000 euros, 21% on income from 6,001 to 50,000 euros, 23% on income from 50,001 to 200,000 euros, 27% on income from 200,001 to 300,000 euros, and 28% on income over 300,000 euros.

 

3. Wealth Tax:

- Applied to assets valued over 700,000 euros (in Catalonia - 500,000 euros), with an additional 300,000 euros exemption for primary residence.

 

Taxes for Non-Residents

 

1. Non-Resident Income Tax (IRNR):

- Non-residents are taxed on income earned in Spain at a rate of 24% (on rental income) and 19% (on capital income).

 

2. Imputed Income Tax:

- Taxation on property not rented out, based on cadastral value.

 

3. Local Property Tax (IBI):

- Annual municipal property tax, with rates varying depending on the location of the property.

 

Double Taxation

 

Spain has agreements to avoid double taxation with many countries, allowing for a reduction in tax burden by crediting taxes paid in another country. These agreements are especially useful for preventing double taxation of income earned outside of Spain.

 

Penalties for Late Filing of Declarations

 

Penalties may be imposed in Spain for late filing of tax declarations: from 100 euros for each undeclared element to 150% of the tax amount due for undeclared assets.

 

Key Tax Dates

 

- April-June: Annual tax return filing period.

- December 31: Deadline for filing the non-resident income return.

 

For foreigners residing or earning income in Spain, it is important to understand your tax obligations and comply with local laws. It is recommended to consult with tax professionals to optimize your tax payments and ensure compliance with all legal requirements.

In Spain, the tax declaration process for foreigners varies depending on their tax residency status and sources of income.

 

Determining tax status

 

1. Tax residents:

- Residing in Spain for more than 183 days in a year.

- Main economic activity or interests in Spain (for example, family).

- Tax residents are required to declare their worldwide income.

 

2. Non-residents:

- Those who do not meet the tax residency criteria.

- Obliged to declare only income earned in Spain, such as income from property rental or work in Spain.

 

Main tax declarations

 

1. Form 100: Used by tax residents to file the annual tax return.

2. Form 210: Used by non-residents to declare income earned in Spain, including rental and property sale income.

 

Tax return filing process

 

1. Document gathering:

- NIE (foreigner identification number) or NIF (tax identification number).

- Documents verifying income: payslips, bank statements, rental agreements, etc.

- Documents proving expenses that can be deducted from taxable income: mortgage payment receipts, pension contributions, charitable donations, etc.

 

2. Filing the return:

- Online through the Renta Web portal.

- Using the "borrador": A preliminary tax return provided by the tax authority that must be checked and, if necessary, corrected.

- In person at the tax office or through an authorized bank: If online submission is not possible or requires additional consultations.

 

Important Tax Dates

 

- Start of tax return submission: early April.

- Deadline for tax return submission: June 30th.

- Deadline for non-residents: December 31st for submitting returns on income earned in Spain.

 

Tax Benefits and Deductions

 

- Startup investments: Possibility of a 50% deduction from the investment amount, up to a maximum of 100,000 euros.

- Mortgage interest: Interest paid on a mortgage for primary residence can be deducted from the taxable base.

- Pension contributions: Contributions to pension plans may also reduce the taxable base within the legal limits.

 

Recommendations

 

- Professional consultation: Given the complexity of Spanish tax legislation and potential international aspects, it is recommended to consult a tax specialist, especially if you have income from multiple sources or countries.

- Compliance with deadlines: It is very important to submit tax returns on time to avoid fines and late fees.

Registering as a self-employed person in Spain requires no initial costs, which is one of the few free aspects of the process. However, after registration, you will need to pay a monthly contribution to the social security system, known as the "freelancer quota."

 

Freelancer Quota

As of 2023, the social security system for the self-employed in Spain has changed, and contributions are now calculated based on actual income. Every self-employed person must prognosticate their income at the beginning of the year and pay the corresponding contributions. These projections can be updated every two months, allowing for adjustments in payments based on income changes.

 

Quota amounts for 2024:

- Up to €670: €230

- From €670 to €900: €255

- From €900 to €1166.70: €273

- From €1166.70 to €1300: €297

- From €1300 to €1500: €300

- From €1500 to €1700: €300

- Over €6000: €542.

 

Benefits for New Freelancers

A reduced rate of €86.66 per month has been established for new freelancers for the first year. This period can be extended if income does not exceed the minimum interprofessional wage (SMI). Young men up to 30 years and women up to 35 years can extend this period up to three years.

 

Special Benefits

In some regions of Spain, such as the Canary Islands, Extremadura, and Galicia, newly established freelancers can be completely exempted from social security contributions for the first two years under certain conditions.

 

Tax Declarations

Starting in 2024, all self-employed individuals are required to file an annual tax declaration, regardless of their income level. This change aims to simplify and standardize the declaration process for all categories of taxpayers.

 

Benefits and Deductions

Self-employed individuals in Spain can take advantage of various tax deductions:

- Business Expenses: Deductions for business expenses such as office rent, internet, and electricity costs.

- Contributions to Pension Plans: Contributions to pension plans can reduce the taxable base.

- Investments in Startups: The possibility to deduct 50% of the amount invested in startups, up to €100,000.

 

Social Security and Insurance

Contributions to the social security system provide:

- Coverage for medical expenses and sickness benefits.

- Unemployment benefits in case of cessation of activity.

- Pension savings for the future.

 

Thus, Spain offers a variety of benefits and deductions for self-employed individuals and freelancers, making the system more flexible and adapted to actual income. Regular updates of income forecasts and utilizing tax deductions can significantly ease the tax burden and ensure future stability.

 

For more detailed information and consultation, it is recommended to contact a tax specialist or use resources from the Tax Agency, such as (https://sede.agenciatributaria.gob.es/Sede/en_gb/irpf.html) .