Banking
Currency
The currency in Spain, as in most EU countries, is the euro. 100 cents equals 1 euro, and the coins and the notes are easily recognisable after a short while. The largest of the coins is EUR 2 and the smallest of the notes is EUR 5. The notes are distinguished from each other by both size and colour and are the same throughout the EU.
Opening an account
There are two types of banks in Spain: a savings bank and a regular bank. Savings banks offer the same services as a regular bank but do not have shareholders — instead, they invest their profits in social, educational, scientific and cultural projects.
Opening a savings account (cuenta de ahorro) or current account (cuenta corriente) in any Spanish bank is a straightforward process. You simply need your passport or residency /ID card and an address in Spain and then let the bank manager fill in the forms for you.
Once you make a minimum deposit of €20, you receive a paying book – wich satates whether you have a resident or non-resident account. Non-residents can open a non-resident euro account or a foreign currency account only. You will be sent an ATM card within a couple of weeks.
You will need a bank account if you wish to pay bills such as water, electricity and telephone by direct debit. One you give the company you bank’s name and sort code you will be directly debited for these services.
If you wish to stop a direct debit, visit your branch to ask them to cancel it and write to the company concerned. You must also write your branch if you change address.
Bank branches
Bank staff and managers are strangely friendly in Spain. The smile and recognise you on subseguent visits. They may even know your name.
The major national banks can be found in all cities and towns, but each region also has its own banks such Bancaja.
Taxation
The Spanish tax year runs from 1 January to 31 December and taxes are levied by governments at three levels: centrally, regional and locally. There are assessment and tax collection centres in all provincial capital towns whose information section will offer free advice and help you fill in your tax declaration, though they won’t do it for you.
There is a difference between being a Spanish resident for civil purposes and being a resident for tax purposes. If you live in Spain for mor than 182 days per year, you are automatically considered a Spanish resident for tax purposes.
This means you will be liable to pay income tax on your worldwide income when you complete a declaration during May or June the following year.
Non- residents Income Tax is calculated according to any income derived in Spain, including a money deposit with a Spanish bank, a property in Spain or income made from any business in Spain.
The various types of taxes
- Income tax-IRPF : Employees’ income tax is deducated at source by employers; self.employed workers pay the tax quarterly. Non-residents who earn money from a Spanish source, and non-residents own property should file an income tax declaration. Residents and non residents with income in Spain must make their annual income tax declaration between May 1 and June 20.
- Wealth Tax- Impuesto sobre el Patrimonio: Payable by residents and non residents on high-value capital assets, including property, cash in bank accounts, vehicles, boats, life insurance, jewellery, stocks and shares in Spain. Residents are entitle to an allowance of €258,435 against wealth tax.There is not allowance for non-residents who must pay tax on all their assets in Spain.
- Property / real estate tax or rates- impuesto sobre bienes inmuebles urbanos IBI: Paid by all properties owners, residents or non residents, to go towards street cleaning, education, council administration, local sport amenities etc.
- Waste collection /Mains drainage tax – Basura y alcantarillado: Annual tax payable by all property owners.
- Capital gains tax – Impuesto sobre incremento de patrimonio de la venta de un bien inmueble: Residents pay 15%, non residents 35% of the profits made on the sale of property and other assets such as a business, antiques or stocks and shares in Spain.
- Inheritance and gift tax – Impuesto sobre sucesiones y donaciones: Payable by beneficiaries within six months of a death if the person died in Spain.
- Business Tax – Impuesto sobre actividades económicas/IAE: Paid by all businesses with annual turnover exceeding €1 million.
- Company / Corporation Tax – Impuesto sobre sociedades: 35% on profits made by partnerships and registrered companies such as Sociedad Anónima (SA) or Sociedad Limitada (SL).
- Offshore company tax - Impuesto especial: Annual tax on offshore companies that do not declare the individual owner of property in Spain or the source of investment.
- Motor vehicle tax- Impuesto de circulación: Paid by anyone who owns a Spanish-registrered vehicle.
Insurance
Homeowner's insurance
Homeowner's insurance (seguro del hogar) covers your house, the home itself and the things you keep in it against disasters: fire, wind, etc.
The premium of the policy depends on the value of the house, the things you keep in it and the risks you wish to be covered.
When a house is rented, it may only be insured by the landlord. The tenant may insure its contents.
There is no law that requires a homeowner to have insurance, however, if you borrow money to buy a house, the bank will normally require you to contract, at least, fire insurance to protect its interest until the loan is repaid.
Life insurance
A contract of life insurance (seguro de vida) provides that, in consideration of the premium to be paid, the insurer promises to pay the beneficiary an agreed sum upon the death of the person whose life is to be insured.
The person whose life is insured is generally called the "insured". The person named in the policy to benefit from the death of that person is called the "beneficiary". Where the policy contains the identity of the beneficiaries, they will not have to wait for the estate partition to be made in order to perceive the indemnity.
Health Insurance
Most people in Spain are covered for health treatment under social security, but more than six million Spanish residents take our private health insurance to avoid waiting lists and gain access to a wider range of hospitals and specialists if they need to.
Always check what is included and excluded with any policy. Spanish companies have the right to cancel a policy at the end of the insurance period if you have an ongoing serious illness with high expenses.
Many expats find that Spanish policies offer more limited cover than schemes in their own countries.
Car insurance
There are two types of automobile insurance in Spain. Third party liability insurance is the minimun mandatory insurance required to drive a car. It covers personal injury and damage to a third party’s property (passangers and car).
Then there is fully-comprehensive insurance, which covers injury and damage not covered by third-party liability insurance. It also covers theft of the vehicle and damage of its contents.
