All property buyers and owners must have a bank account in Spain. But how to open and use the account?

1. The Spanish Banking System

We shall only concern ourselves here with commercial banks (both Spanish and foreign-registered), and savings banks (which can offer almost all of the services of a commercial bank), both of which we shall here call "banks".

At the beginning of 1999 there were in Spain, 93 private banks, 49 foreign-registered banks, 50 savings banks, and 94 local credit cooperatives, and since April 1994, any European Union bank can open branch offices in Spain with little bureaucratic formality. You should not suffer from lack of choices.

The Ministry of Finance (Hacienda) oversees the Spanish financial system in general, and the Banco de España is its instrument of monetary policy as well as the direct overseer of the banks.

2. Types of Accounts

Non-residents may, today, have any kind of account which a resident can have. Residents, on the other hand, can only have a "convertible" account with a foreign-registered bank.

So, both non-residents and residents may have accounts in pesetas in any bank.

Accounts in a foreign currency or "convertible" may be opened by:

non-residents in any bank, and by residents in any foreign-registered bank.

To open a bank account in Spain you will only need your passport or residence permit, and will be asked to fill out a form by the bank which will also set forth the bank's general terms and conditions.

You will probably also be asked for your N.I.F. or N.I.E. number which can be obtained at your nearest police station with a foreigners department.

A current account (cuenta corriente) usually carries a very low interest rate, if any.

A deposit account (cuenta de imposición a plazo) will give you interest depending on the time period of the deposit and the amount deposited. Banks can be bargained with about these conditions!

A savings book account (libreta de ahorro) usually carries a very low interest rate (if any) but does give you a continuous written record of your account, and in some cases can be used in cash machines for withdrawing money.

Residents will have 25% of any interest retained by the bank against their Income Tax Declaration, which should (but may not) be reported to you by the bank at the end of the year in a statement to be included with your Income Tax Declaration. The bank should also prepare a statement giving your average balance for the year, to be used in your Wealth Tax Declaration if you need to make one.

3. Transfers of Funds

There are now practically no restrictions or formalities to transferring funds to Spain from other countries of the European Union and the EES. If you want to make transfers to or from countries outside the Community area, consult your Spanish bank.

However, in the beginning of 2007 it was prohibited to take more cash  than 10.000 Euro across the Spanish border without reporting it on a special form available at all border points, including the airports. See special chapter at the end of this Fact Sheet.

Some banks are still charging heavy commissions on transfers of pensions from abroad, Other banks do not charge on such transfer. It pays to find out the conditions offered by the different financial institutions.

4. The cheque in Spain

To ensure that a cheque can only be deposited to the account of the person or business to which it is made, write "A ABONAR EN CUENTA" (to be credited to the account of) before the name of the recipient, or cross the front of the cheque with two parallel lines.

Do not leave spaces which may be used for increasing the amount.

Guard blank cheques, destroy excess cheques, and never leave a blank signed cheque with anyone.

Writing a cheque without funds in the bank is illegal.

5. Bank Statements

Most banks are willing to send your statement to any address you specify, in Spain or in your home country.

The identifying number is the same as that on your cheques, with the first four digits giving the bank's number, the next four digits the branch number, then two control numbers and the last ten digits are your account number. Banks recommend that you use this entire number to avoid any confusion.

Other items are as follows:

"Fecha del extracto" = date of the statement

"Hoja" = page number

"Saldo actual" = current balance

The column headed:

"Fecha" = gives the date of each transaction

"Oficina" = the identifying number of the transacting bank

"Concepto" = a word or code for the transaction (sometimes very cryptic, and sometimes explained on the back)

"Valor" = the date when a deposit will start receiving interest

"Importe" = the amount involved in the transaction

"Saldo" = balance after each transaction

6. Other Bank Services

Standing Orders (domiciliación):

You can order the bank to regularly pay certain bills when they come due - local taxes, garbage collection, electricity, water, phone, subscription to FIPE - by filling in a form supplied by the bank or the business billing you. Both the bank and the billing business must be informed of this standing order.

You must make sure that you have sufficient funds to pay such standing orders or you may arrive at your home to find essential services shut off for lack of payment (often requiring a reconnection fee!). Banks have been known to make mistakes resulting in the same unpleasantness!

Do not expect to get anything free from a bank. Ask for their list of fees for various transactions (which must be approved by the Banco de España).

The Bank Certificate:

It used to be obligatory for a foreigner to present a Bank Certificate if the money to buy a house came from outside Spain so that, under the then current control laws, you could take the money out of Spain if you wanted to. This is no longer necessary, you will only be required to certify the origin of the funds.

Mortgages (Hipotecas):

A resident or non-resident foreigner may take out a mortgage in Spain, including on State-subsidized housing ("VPO" or Vivienda de Protección Oficial).

You may use a Spanish or a foreign mortgage holder, and the mortgage may be in Euro or another currency.

A resident may finance the totality of the value of a property.

Interests on mortgages in Spain have been very low, but is now increasing. Variable interest mortgages can be had at 4-5% per annum, and fixed interest mortgages from 5-7%.

If you want to take a mortgage with variable interest, the best reference for the variations is the I.R.M.H. (Indice de Referencia del Mercado Hipotecario) published by the Banco de España.

Declaration of money

We have mentioned briefly to our members the new regulation making it obligatory to make a declaration if you pass the Spanish boarder with more than 10.000 Euro. This is not a change in the European policy of free capital transfer within the EU. It is only a measure to try to stop the white-washing of “black money” from criminal activities.

The new regulation took effect from 14^th of February. It prescribes that any person crossing a Spanish border (also on an airport), coming in or going out, and carrying more than 10.000 Euro, must fill in a form called S1.

The form can be obtained free of charge at the provincial offices of the Hacienda (ministry of finance) or Aduana (custom). But you can also find it on the web page of the tax collection agency AEAT (Agencia Española de la Administración Tributaria. The web address is http://www.aeat.es

You must fill in the form if you intend to cross the border with more than 10.000 Euro in cash (what the Spanish call “metalico”, even if it is paper money) or in bearers cheques (al portador).

For our members the new rules will have an impact if one sell a house in Spain at a price higher than what is declared in the escritura and receives from the buyer part of the sales price in cash or on a bearers cheque. It is better to ask for a “cheque bancario” (bankers draft) in your name, both because this is safer, and because you do not have to declare such a cheque when crossing the border.

Also movements of money over 100.000 Euro in cash or bearers cheques within Spain must be declared. Without a declaration on the S1, the banks cannot receive the money and place it in an account.