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Banks & Taxes in Spain
A Comprehensive Guide About Opening a Bank Account and Managing Your Taxes
Managing your finances is always an important task during the relocation process. In Spain, it is possible to open non-resident bank accounts without much paperwork. This not only makes it easier to handle mundane formalities, such as paying utility bills, receiving a salary, and taking out loans, but it saves expats excessive conversion fees when using their home account.
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Opening a bank account in a new country, and understanding the local tax system, always raises questions when relocating. This guide provides all the information you need to find your way through the financial maze of Spain.
The Spanish banking system is fully integrated with the international financial markets and is generally quite advanced. Spain has the greatest number of bank branches per capita in Europe, so you should be well covered regarding solutions for your financial transactions. Not only that, but banks in Spain also operate through telephone, online, and mobile banking, so accessing these services should be relatively easy.
As soon as you start generating income in Spain, you will be required to pay taxes. If you stay in the country longer than 183 days, you will also be taxed on your world income. This section covers all you need to know about the tax system in Spain and how to file a tax return as an employee or as a self-employed person.
How to Open a Bank Account in Spain
Are you wondering how to open a bank account in Spain? Expats will be happy to know, there are not many requirements to open a bank account as a non-resident. In fact, Spain offers a lot of options. This section will cover this information as well as introduce you to the best banks in Spain and go into detail on the bank fees and minimum deposit.
Bancos or Cajas?
When first looking at your options for setting up a bank account in Spain, you will find two types of services: private banks (bancos) or state-owned banks (cajas), also known as savings banks.
Private banks used to provide more complete services. Nowadays, however, the offers between private and state-owned banks are similar, but they can still differ in ways that may influence which type you want to use. For example, you may find that state-owned banks have fewer branches and ATMs available. In Spain, withdrawing from an ATM that is not operated by your bank may result in a fee. If you want to avoid these fees, it is better to open an account with a bank that has more branches and ATMs available.
Requirements to Open a Bank Account in Spain as a Non-Resident?
In Spain, you will find current (or “checking”) bank accounts for residents and for non-residents. As the name suggests, you can apply for the first if you have current residency in Spain. Even if you do not have residency, you can apply for a non-resident account. Typically, you can open both types of accounts online, regardless of your residency status. Although as either a resident or non-resident in Spain, a visit to the bank afterward is often required to sort through some paperwork.
When you gain residency, your non-resident account can be converted into a resident account, which has more perks. Likewise, if you stop being a resident in Spain, you can convert your resident account into a non-resident account.
There are some requirements that are the same for opening both types of accounts:
- ID or passport;
- if applicable, a document that proves your status or source of income in the country (employed, unemployed, pensioner, student, etc.).
To open a resident account, you will need:
- proof of your address in Spain (recent utility bill, or a rental contract);
- NIE (foreigners’ identity number);
To open a non-resident account, you will need:
- proof of your address outside of Spain (recent utility bill, bank statement, or rental contract);
- certificate of non-residence (certificado de no residencia), which can be obtained at a police station.
When opening a current account, you are typically given a debit card. Credit cards are not always available with every account type, so remember to check the specific conditions of each plan or account.
Bank Fees and Minimum Deposits
Although the banking market in Spain is quite competitive in comparison to the rest of Europe, the fees and costs for banking are high. No fee bank accounts in Spain are only available to students. Usually there are no fees for opening or closing current accounts in Spain. Monthly maintenance fees of about 8 EUR (9 USD) are standard. For sending or receiving transactions, transfer fees may differ depending on the currency, urgency, or destination of the transfer.
Minimum deposits are usually quite low and sometimes not required at all. ING and BBVA do not require annual bank fees. Deutsche Bank has the highest annual cost (80 EUR/90 USD), while Banco Mediolanum has the lowest (6 EUR/7 USD).
Best Banks and Bank Accounts for Expats in Spain
The top banks in Spain are both national and international, which include:
- Banco Santander;
- ING Bank;
Be aware that even when using major banks you are not guaranteed English-speaking staff. It might be a good idea to specify ahead of time that you do not speak Spanish to ensure that you receive the best support throughout the process of setting up your account.
To find the best savings accounts for your needs, you can consult the ranking created by TheBank.eu. This ranking considers both interest rates and deposit conditions across all major banks in Spain.
What are the Best Banks to Open Online Accounts with?
Within the most popular banks, you have the option to set up a regular account entirely online. Aside from the documents mentioned above, you may be asked for an email address or a video call to verify your identity.
As an expat, you might want to look for banks with accounts that are available to both residents and non-residents. Here are some of the best options, which include both national and international banks:
- ING, Cuenta Nómina;
- Deutsche Bank, Cuenta Nómina DB;
- BBVA, Cuenta Online;
- Banco Mediolanum, Cuenta Cero.
Each bank allows users to open accounts online. After setting up your account, you may be asked to visit a bank branch once you are in Spain. You will need to provide some of the original documentation and/or meet with a representative to finalize the procedure.
Writing Numbers in Spain
Writing numbers in Spain may be different than what you are used to. To avoid confusion, especially when dealing with banking or taxes, know that large numbers are separated in the groups of thousands with a period instead of a comma. A comma separates the dollars from cents numbers. For example, a larger number like one million would appear as 1.000.000,00.
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What is the Tax System in Spain?
When relocating to Spain, one very plausible question is: What is the tax system like? If you live and work in Spain, you have to pay taxes on your income and assets. Tax rates vary according to your level of income and whether you are staying in the country as a resident or non-resident.
The tax system in Spain relies on different types of taxes, the most significant ones being income tax, social security contributions, corporate taxes, and VAT (value added tax). Some of these may be taxed at a national level and others at both national and regional levels.
Spain has double taxation agreements in place with 93 countries to avoid doubly taxing foreigners.
What Types of Taxes Are There in Spain?
Social Security Contributions
Expats living and working in Spain are expected to pay contributions to Social Security in exchange for a free healthcare system and other government benefits, such as pension and unemployment benefits. The overall contribution rate in Spain is relatively high compared to other European countries. Around 6.35% of the contributions are paid by employees, and 30.15% by employers.
VAT in Spain
VAT, or IVA (Impuesto Sobre el Valor Añadido) in Spain has a current standard rate of 21%. Some cases may benefit from a reduced rate of 10% and a super-reduced rate of 4%.
Some of the goods and services that are exempt from VAT include financial and insurance transactions, resale of the property, welfare, education, and medical and health services, among others.
For properties, different taxations apply.
- For new homes, you will have to pay VAT and Actos Jurídicos Documentados (AJD), which is the equivalent of stamp duty.
- For second-hand homes, you will pay property transfer tax and AJD.
Income Tax in Spain: Tax Codes and Tax Rates
The income tax system in Spain follows a pay-as-you-earn (PAYE) system, where a percentage of the tax is withheld from your paycheck on a monthly basis. This system is progressive, which means higher tax rates apply to higher salaries. This personal income tax is known as Impuesto Sobre la Renta de las Persona Físicas (IRPF).
These are the five tax brackets and their corresponding rates in Spain (the total tax is the sum of state and regional taxes):
|Tax brackets (EUR)||Tax brackets (USD)||Total tax (%)|
|0 to 12,450||0 to 13,960||19|
|12,450 to 20,200||13,960 to 22,650||24|
|20,200 to 35,200||22,650 to 39,470||30|
|35,200 to 60,000||39,470 to 67,280||37|
|More than 60,000||More than 67,280||45|
How to Complete Your Tax Return as an Employee in Spain
At the end of each term, both residents and non-residents have to file a tax return for IRPF. However, if you are a non-resident, you only need to pay taxes on your Spanish income. For taxation purposes, you are considered a resident if you live in Spain for more than 183 days a year.
This tax return is filed between April and June of the following year. Refunds are paid between May and July of the next year.
You will need to file an annual tax return if your income exceeds these limits:
|Type of Income||EUR||USD|
|Income from employment||22,000||24,720|
|Capital gains and savings income||1,600||1,800|
Taxes and Tax Return for Self-Employed in Spain
If you are self-employed, or autonomo, you will have to pay social security, VAT, and income taxes. Social security taxes for self-employed people in Spain are around 200 EUR (220 USD) per month. Newly registered workers may pay only 50 EUR (56 USD) monthly. The VAT is usually around 21%. The rate could be lower depending on your type of business or service.
As for income taxes, you will also need to pay the IRPF, although rules tend to be more complicated for self-employed workers. You need to pay 20% of your profits in advance (revenue minus costs) in IRPF. This is done every three months at the end of each trimester by submitting the tax form Modelo 130 (Estimación Direta).
Besides these payments, which are considered advances, you still need to file an annual tax return in May or June, which corresponds to the form Modelo 100, Declaración de la Renta. After submitting this annual tax return, you may be reimbursed depending on your individual situation (e.g., single parent, under 25, etc.).
Which Tax Rates Apply for Businesses?
The general corporate tax rate in Spain is 25%. Depending on the type of business you have, other taxes may also apply. Newly created companies are taxed at a 15% tax rate for the first period in which they obtain a profit, as well as the following tax period.
Another tax is the business and professional activities tax. This is a local tax that is levied annually depending on the type of activity and location where this activity is carried out. This tax may not exceed 15% of the presumed average profits of the business/professional activity.
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