Banks and Banking in Spain

The Spanish banking system is well established and modern with all banking activity controlled by the Bank of Spain (Banco de Espana), which has its central office in Madrid and branches in all provincial capitals.

Banks are divided into clearing banks and savings banks and there are several foreign banks that also operate in Spain.

Bank Charges

Spanish bank charges are notoriously high and a large part of some banks' profit margins are made thanks to the charges paid by clients for just about every banking transaction imaginable. Charges are particularly high for the payment of cheques into your account and for bank transfers. Before you open an account, ask for a breakdown of all charges including annual fees. If you plan to make a lot of bank transfers every year, you should carefully consider how much this is going to cost you. You may be able to negotiate more favourable terms if you agree to maintain a minimum amount in your account or if you treat the branch manager to at least a coffee in the local bar!

Financially savvy people prefer to leave overseas money transfers to their foreign currency brokers. These specialists operate on behalf of hundreds of clients and get much better conditions in the currency wholesale markets, just like financial brokers do for investors who invest their savings on collective investment funds in order to get a better return.

Bank Transfers

If you plan to make currency exchange and money transfers to Spain, you should enquire about the facilities a bank offers for this (e.g. once the money arrives in your account, how long is it before you can use it) and what bank charges apply for using this facility.

Extra banking services

Banks sometimes offer a range of services such as insurance and investment banking, which could be useful to you. Bear in mind, however, that these services can be more expensive than those offered by specialised companies and aren't likely to be independent.

Banks with English speaking staff

If you're not planning to learn to speak Spanish or feel that Spanish banking language is beyond you, you may wish to base your choice of bank on the availability of English-speaking staff. Banks in resort areas and in large cities usually have at least one member of staff who speaks English, although you shouldn't count on this.

Banks in towns and villages in rural areas generally don't have English-speaking staff. When choosing a bank, it's also a good idea to ask friends and acquaintances for recommendations (or otherwise) and if after a while, you find you're not happy with your bank, you can always open an account somewhere else!

Opening your bank account

Both residents and non-residents can open a bank account in Spain. You need to be over 18 and provide proof of identity such as a passport. If you're a resident you'll need to provide your residence card details. If you own Property in Spain, the bank will probably also require your NIE (Numero de Identificacion de Extranjeros), which all foreign property owners must have. You can open the bank account in person or by postal application, although this is probably only advisable as a last resort.

Accountants (Gestors / Contables), Asesor Fiscales and Accounting in Spain

Britain has a double taxation agreement with Spain, to ensure people do not pay tax on the same income in both countries. However, taxation is a complex issue, and advice should be sought.

The Spanish Finance Ministry publishes a book in English called 'Taxation Regulations for Foreigners'. Further info:

Residents, including retired people, are liable to pay tax on income earned in Spain or from property held in Spain. This includes Property or Real Estate Tax, Wealth and Capital Gains Tax, VAT (IVA), inheritance tax, and local municipal charges.

There are various professional tax and financial advisors in Spain that you may need. They come under different names Gestor, Contable or Asesor Fiscal.

Gestor (Book keeper and form filler)

The Gestor is a professional dedicated principally to helping with Spanish Bureaucracy. Gestors are professionals and also belong to a Colegio.

The Gestor originates form the days when illiteracy in Spain was very high and the bureaucracy was complicated and accountants and lawyers (abogados) were out of reach to the general populace as their costs were so high. Luckily there are now many English speaking Gestors in Spain on hand to help.

He will help you apply for your Residencia, a Spanish driving license or complete your annual income tax return. If you are setting up a new business as self employed or as a limited company you will definitely need to employ one as there are numerous services he can help you with.

Please note, for an E.U. national, it is no longer required that you obtain 'residencia' even if you are living here permanently. There maybe tax advantages or necessities, but no legal requirement.

For a moderate fee, a Gestor can save you hours of leg work. He will know which forms to get, how to fill them in and give you basic advice. At the tax office he will save time by knowing which queue to stand in and will probably deal with the paperwork of several clients at a time. When there is a problem he will know the best way to approach the civil servants to sort it out.

Although a Gestor will advise you on what you can claim and what you should not claim when completing any income or allowance sections of a form, remember it is you who signs the form at the end of the day and you are responsible for your own declaration.

But be aware that a Gestor is not a Lawyer or a Tax Consultant and in certain specialist areas it may be necessary to seek the advise of these more qualified professionals.

Contable (Accountant)

You might consider employing a Contable when you first arrive in Spain and it comes to completing your annual income tax return.

Accountants are not difficult to locate in Spain. Both qualified Spanish and foreign accountants provide services in many languages. They are also called Asesor Fiscal.

Most businesses would retain an Asesor Fiscal on a monthly bases to complete all the statutory declarations, pay taxes, pay social security, complete all necessary procedures with INEM (Instituto Nacional de Empleo) when employing and dismissing staff.

Some accountants are also known as 'Econoministas' and will carry out business analyses as well. These tend to be the exception to the rule and it is not so straight forward to obtain the services of a proactive finance director to help with budgets or cash flow forecasting.

Inheritance and gift tax in Spain

If you own property or investment in Spain and one day you want to pass these on to your family, its worth reading below to help you avoid any unwelcome Inheritance or Gifts Tax liabilities that lie in wait down the road.

What is gift tax? (ISD)

ISD is a tax on acquisitions, not on transfers. In the UK equivalent (IHT), it is the estate of the deceased which is subject to tax. In Spain, the recipient of the lifetime gift or inheritance is the tax payer, ie. The taxable person is the recipient and spouses are not exempt. Under UK Inheritance Tax Law, a spouse is generally an exempt beneficiary (except in some cases of mixed domicile). With Gift Tax this is not the case. Spouses are treated in no way differently from adult children. It is worth repeating - spouses are not exempt from Spanish Inheritance Tax.

Who is liable for Gift tax / ISD?

  • An individual resident in Spain is liable (by way of obligación personal) to Gift Tax on receipts by him of assets (etc) sited anywhere in the world.
  • An individual not resident in Spain is liable (by way of obligación real) on receipts of assets sited in Spain.

Nationality has no effect on whether the tax is payable. The only two questions are:

  • Where do you reside?
  • And where are the assets located?

A married couple who jointly own a Property (whether or not resident here), when one dies, the survivor will be liable to Gift Tax (ISD) on the deceased spouse's share of the property. Any other assets inherited would also taxable. It is very important to look ahead and be prepared.

How much tax is payable?

All rates, percentages and tax band thresholds used below are those which apply to taxable events falling in the year 2009

Calculation of the amount of tax due is broken down into five stages:

  1. The value of the asset.
    The basis required for Gift Tax (ISD) is known as its 'real value'. This means that the starting point is a full and proper, open-market valuation.
    If there is a Money on the property (registered in the Spanish land registry) the appropriate amount can be deducted from its open market value.
  2. The relationship between the recipient (the tax payer) and the person making the gift or leaving the inheritance, falls into one of the following Kinship groups:
    1. Natural or adopted children, grandchildren and so on. Those in direct line of descent who are under the age of 21
    2. The same descendants listed above but over the age of 21 including ascendants in direct line and spouses. Please note that Spouses are not favoured beneficiaries and are treated no differently from adult children or parents and grandparents
    3. Extended kinship groups as far as first cousins
    4. Rest of the family and unrelated persons including unadopted stepchildren and common law spouse. Trustees might also be considered in this group
  3. Personal tax allowance (per recipient). Note: Tax allowance is only available on inheritance tax not Gift Tax

    Kinship Group

    Those included

    Allowance (Upon death only)


    Direct descendants under 21 yrs

    Euro 15,956.87 plus Euro 3,990.72 for each year under 21 yrs of age maximum allowance of Euro 47,858.59


    Direct descendants over 21 yrs, spouse, ascendants

    Euro 15,956.87


    Other relatives including brothers, uncles, nephews

    Euro 7,993.46


    Other family + unrelated persons, including common law spouses


  4. Having deducted any personal allowance available from the value arrived at in stage 1, you can now calculate the 'raw tax figure' with the following table:

    Band up to (Euro)

    Tax rate on band (%)

    Cumulative tax (Euro)

















































  5. Apply the relevant co-efficient. This is derived from the table below which takes into account the degree of kinship (Stage 2 above) and the taxpayer's pre-existing net wealth (for non-residents, pre-existing net wealth is calculated with reference to wealth only located in Spain only):

    Pre-existing net wealth


    A and B



    0 - 402,678.11




    402,678.11 - 2,007,380.43




    2,007,380.43 - 4,020,770.98




    4,020,770.98 (+)




A useful Inheritance Tax Example:

Mr and Mrs Jones are residents in Spain for tax purposes. They jointly own a Property. They have a bank account in Spain in Mr McCartiers name worth €400,000. Their wills stipulate everything will be left to the other in the event that one dies.

  • Mr McCartier unfortunately dies.
  • The property is valued at 400,000 Euros. Mr McCartiers share to be passed to Mrs McCartier is therefore 200,000 Euros.
  • There is no mortgage charge. So the net real value is also 200,000 Euros.

They were lawfully married so the kinship group applicable is Group B. Mrs McCartier gets a personal allowance of €122,606 on the value of the property she is inheriting, and a personal allowance of 15,956.87 Euros on all other inherited assets. This leaves €461,438 Euros to tax through the bands  (€600,000 -€122,606-€15956 = €461,438).

This results in a 'raw' tax figure of €99,306.

Inspection of the table of co-efficients reveals (a) that Mrs McCartier has Group B kinship with the deceased and (b) that her pre-existing net wealth (only that sited in Spain, in this case) is 200,000 Euros (her half of the property), and that therefore she must apply a co-efficient of 1.0000 to the raw tax figure.

The tax due on her inheritance from her husband is therefore (99,306 x 1) = 99,306 Euros (an average tax rate on the inheritance of almost 17%).

Of course, had they not been married, her tax would have been double that amount.

How and when does the tax have to be paid?

It is the taxpayer's obligation to present all the documents and necessary to the calculation of the tax due. He may opt himself to calculate the tax due and present his declaration (which includes the calculation) together with the money (a procedure called autoliquidación). This must be done as follows:

  1. The liability to tax arises on:
    1. On the date of death of the transferor; or when this is not known, the date on which declaration of death is duly signed in accordance with the Civil Code Art 196.
    2. Lifetime gifts: The date on which the gift is made (in whatever way is lawful for the asset in question)
  2. Tax declarations must be made:
    1. Within six months of the date of death of the transferor. There are some provisions allowing the tax office to agree to a deferral if requested within five months of the date of death.
    2. All other cases: within 30 calendar days of the day following the conveyance of the gift

How far back can the tax liability go?

The tax administration is prohibited from seeking payment, or applying sanctions for non-payment of tax, once a period of four years has passed counting from a) the date for final presentation by the taxpayer of all the required documents or b) the date of any tax offence.

This four-year (formerly five years) proscription period is a general one in Spanish tax law. There are various opportunities for the tax authorities to 'stop the clock' and keep the case to within a 4 year window.

How will the tax authorities know?

This area of the legislation and regulations clearly demonstrates the reliance placed in the Spanish legal system upon bureaucratic control with the emphasis on anti-evasion. The general intention of the law is to weave a web of reports around a taxable event, so that the taxpayer is effectively encircled by the system.

Most institutions (e.g banks), authorities and other people likely to be involved (e.g Notaries and Registries) in a transfer of value are obliged to make reports to the tax authority. This duty is reinforced by making them 'subsidiarily liable' for payment of the tax.

In short, they will seek clearance from the tax authority before making any payment or transfer which might be liable to ISD.

Life Assurance

Spanish life assurance is nearly always written on an own-life, own-benefit, basis. Naturally there is no opportunity to write policies in trust for a beneficiary. It is always possible to nominate a beneficiary, but this is a purely administrative annotation, and has no effect upon title. The proceeds of a life assurance policy are therefore assessable to ISD when the recipient is anyone other than the policyholder (usually the life assured), and are treated as any other asset passing to that recipient. A life assurance policy written in trust (say, a UK policy) for a spouse stands the risk of attracting twice the rate of tax: trustees will be unrelated to the recipient, and hence Group D transferors, where the spouse would have been Group B. It is good planning for a policy to be held on a life-of-another basis, since the recipient of the proceeds will also be the policyholder hence there is no transfer to be taxed (though if there is a savings element, there may be a charge to income tax on the policy gain).


Lifetime gifts from the same donor to the same done are cumulated over a rolling three year period. Upon death, lifetime gifts made by the deceased within five years of his death are accumulated with transfers at death to the same recipient.

Double Taxation Relief

There is no treaty with the UK concerning inheritances and gifts tax. ISD Article 23 provides a unilateral relief for 'similar taxes paid abroad' to those liable by way of obligación personal (ie Residents of Spain). The lesser of two sums may be deducted from the Spanish tax: a) the amount of foreign tax paid or b) the result of applying the average rate of ISD on the Gift / Inheritance in question to those foreign assets on which foreign tax has been paid.

Patently, no relief is available where no foreign tax has been paid. The prime example of this would probably be the death of one of an English domiciled couple resident in Spain. There is no UK IHT to be relieved against the ISD on any transfer between those spouses.


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