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Spanish Finance & Legal

Financial & Legal Advice in Spain
This section provides you with the information and contacts you need during your buying process. Included are contact details for Spanish banks, Mortgages in Spain, details on currency issues - all about the Euro, details on currency exchange and an in-depth guide to the financial situations you may soon find yourself in. Also included in this section is a detailed guide to the driving laws in Spain.

Please feel free to contact us for any additional advice or information during this busy and often confusing time.

Banking in Spain
Currency = Euro (€)

There are approximately 50 foreign banks in Spain. They can provide standard accounts, cash and credit card facilities and direct debit facilities so you should feel quite at home. All are full members of the Spanish clearing and payment system.

Opening times

The Spanish banking system is both modern and well established Normal banking hours are Monday to Friday from 8:30-9:00 in the morning until 2:00-2:30 in the afternoon. Sometimes the hours are lengthened once a week or may open on Saturdays during the winter months. Some banks also extend hours once a week and/or are open on Saturdays from 9:00-13:00.

During the hotter months between June and August (although sometimes September and October), most banks reduce their opening hours and do not open on a Saturday. Be warned that Spanish banks are strict and the guards will most probably refuse you entry if you arrive a few minutes before 2pm, unless you are an important customer. It is known however that they might let you in via the rear entrance as many of the staff will continue to work after closing time.

The core of the banking system and its dynamics are all monitored by the Banco de Espana (the Bank of Spain) whose main office is located in Madrid. There are branches situated within all of regional capitals.

Spanish banks exist in the form of two categories 'clearing banks' and 'savings banks'.

Clearing Banks

As with Britain, there are now fewer clearing banks in the present economic climate due to various mergers. Spain has two major banking forces which are the BSCH (Banco de Santander y Central Hispano) and the BBVA.

Other important banks in Spain include the Banco de Andalucía, Banco Atlántico and Banco Zaragozano. British banks Barclays, Lloyds and Solbank are well served and have full membership of the Spanish clearing and payment system.

Most large towns have at least one branch of the main banks and in cities there are several branches. Smaller towns usually have a very limited number of banks (perhaps just one) and villages sometimes have none at all.

Savings Banks

There are over 80 of these institutions - 'cajas' - in Spain and apart from the Catalan La Caixa and Caja Madrid that are both present in most of the country, Many of them serve the regions and provinces although the Caja Madrid and the Catalan La Caixa are more nationwide. The origins of these banks stem from charitable organisations that granted loans for the public's interest and for agricultural co-operatives. They are similar to what we call Building Societies in Britain, and exist as part of a wider co-operative banking system whose members are the 80 institutions mentioned earlier.

Foreign Banks

There are foreign banks that operate in Spain, although they tend to be concentrated mainly in coastal resort areas and in the large cities. British banking is represented by Barclays, the Royal Bank of Scotland (affiliated to the Santander bank) and Solbank, owned by Banco Sabadel. The American banks, Citibank and Chase Manhattan, are also present. Other foreign banks include Deutsch Bank (which has an agreement with the Spanish Post Office) and several Arab and Scandinavian banks.

Internet Banking

Internet banking has grown in popularity over the past few years and offers its particular advantages. Most banks offer the opportunity to bank this way. If you have a username and a password you most of your transactions can occur online and this is also particularly helpful if you are either limited in mobility, your job restricts the opportunity for you to get to the bank or perhaps other commitments eat into your personal time such as looking after children.

Of all of the banks with a strong online presence, the two that are considered to be the most highly evolved are:

Bankinter - www.bankinter.es
Although they have a strong online presence, they also have the backup of country-wide branch locations.

Patagon - www.patagon.es
This is an internet only banking solution linked to the BSCH group. (Banco de Santander y Central Hispano)

ING - www.ingdirect.com
Part of the Nationale Nederlande group


Choices Choices! - Choosing a Bank

Spain has approximately 30 banks nationwide banks and several regional ones and so with such a vast amount to choose from, how do you know which is best for you?

The two banks with the largest presence are BBVA (Banco Bilbao Vizcaya Argentaria) and Santander Central Hispano and are the equivalent to Lloyds, Barclays or HSBC.

Commissions and services vary greatly among the banks, so compare several and make a decision based on your needs. As often in Spain, a personal relationship at a bank is really helpful for sorting out problems and for if you need to get anything non-standard done. Ask friends, colleagues or teachers if they can introduce you to a director or sub-director of a local branch; if you have an opportunity take advantage of it.

Wow there are so many banks. What else do I need to know to help me decide where I should take my business?

Location


Your first consideration should be which banking institutions operate in your locality. If your property is in or near a small town or village then the choice may be very limited -perhaps even to just one savings bank. If this is the case, you may decide to widen your horizons to the nearest larger town, if only to have a better choice. However, there's a lot to be said for having your bank as near as possible to where you live. Service in branches in small localities is often much more personalised and the staff less hurried or stressed out with the pressure of meeting monthly objectives. On the other hand, small branches may not offer a choice of banking services and they are less likely to have English-speaking staff.

Bank Charges

Commissions and services vary greatly among the banks, so compare several and make a decision based on your needs. 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!

Bank Transfers

If you plan to keep most of your money outside Spain and to make transfers periodically to your Spanish account, 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 their charges are.

Extra 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.

English-speaking Staff

Should you not have the desire, the time or intend to learn Spanish banks in the resort areas and in large cities usually have at least one member of staff who speaks English, but don't assume that this will be the case. The smaller towns and more rural areas may not have this luxury at all.

Opening an Account

Firstly if you plan on remaining in Spain for a period lasting longer than 6 months you will need to open a bank account.

As a foreigner there are two types of bank account: resident and non-resident accounts.

If you are a non-resident you will need to provide a passport or an identification document valid to your country and be 18 years old. A driving license could also be presented but the validity of this will be upon the policy of the bank. Note that it is best to open the account in person as opposed to using the postal method as it is more immediate and may help you to familiarise yourself with the bank and its staff. If you want to open an account with a Spanish bank while you're in another country, you must first obtain an application form, available from foreign branches of Spanish banks or direct from Spanish banks in Spain.

Within 15 days of your account opening, you then have to prove your status as a non-resident by providing a certificado de no residencia which can be acquired and returned upon completion to the local police. Many banks do not ask for the certificado de no residencia. but if the case is that you are asked for one, you could always try another an alternative branch. Once your account has been opened the back should perform a follow-up check to see if you still hold non-resident status.

If your status alters after opening an account, then you are advised to inform your bank and give them a copy of your tarjeta de residencia (residence card).

If you are already a resident, the bank will probably also require your NIE (número de identificación de extranjeros), which all foreign property owners must have.

As a non-resident, you could try to survive without any form of bank account but using cash, credit cards, eurocheques and traveller's cheques but it will work out more costly in the long run, besides you need a bank account to pay direct debit based tax and utility bills.

If you do not have an NIE number, it is worth noting that you will need one to secure any items which carry a higher fiscal value such as a property or a car.


In terms of fees and services, non-resident accounts are virtually the same as resident ones. The only differences being that the bank may not be willing to issue you a credit card or provide you overdraft protection. Should the bank charge significantly higher fees for being a non-resident, we would recommend taking your business elsewhere

One final word of caution regarding opening accounts: if you make the initial deposit in a foreign currency, be sure to specifically ask that the currency be converted into euros immediately (we have heard of cases where this became a problem later). The bank should charge you no more than their typical foreign exchange commissions for this operation.

Type of Accounts

Most people open a current account or a savings account with their bank. A current account in Spain is much the same as that in any country and you'll be issued with a cheque book and ATM/ debit card. Note that cheques are generally not accepted as a form of payment in shops and businesses. Debit and credit cards are. You receive monthly statements regarding your account. Some banks pay nominal rates of interest on current accounts, although by the time with-holding tax at 25% has been deducted, you sometimes wonder why they bother.

Saving Accounts

All of the clearing and savings banks offer the opportunity to open a savings account. The major difference between a savings and a current account are that savings accounts offer interest.

The bank and the type of account determine what your interest rate, minimum deposits and withdrawal constraints. If you need to save on the short-term in small amounts, then it is more likely that you will need to have immediate access to your funds. Interest payments are made twice a year but for residents any interest is subject to a 25% withholding tax at source on account of personal income tax.

A cash book is issued with saving accounts. This is where all of your transactions are recorded. In some banks, you can use the cash book to withdraw money from cash machines. Savings accounts sometimes include the option of a debit card, but you can't have a cheque book.

Investment Accounts


Long-term savings accounts and investment accounts are also available, although these generally have restrictions on the amount you can withdraw or penalties for withdrawing funds before time. Interest rates vary, although at present no standard savings accounts in Spain offer a good rate of interest. The best rates are obtained from investment account linked to stocks and shares, although there are associated risks of loosing some or all of your investment.

ATMs (Cash Points) - cajero

All of the banks can provide their customers with an all-in-one cash and debit card which are welcomed throughout all of the regions of Spain. The daily limit for card holders is about 300 euros per day from an ATM. It can be used to pay for your day-to-day items, such as your shopping petrol and the like.

The vast majority of cash machines/ATMs (cajeros) in Spain operate on either the ServiRed, 4B or Servired network. Most of these machines facilitate access to your accounts although you may find that if the particular machine you are using is not linked in anyway to your bank, you may end up being incurred a transaction charge. Some are slightly more lenient and allow a limited number of withdrawals that you can make per month before an extra charge is added. With that in mind you may wish to consider finding a location where there are ATMs that are affiliated with your bank of choice.

Beware though, that just because your network's logo is on an ATM machine, do not automatically assume that it belongs to the network. You have to be clear what network the ATM belongs to. This is easier in time once you become familiar with the banks in your chosen location and find out which ATM network each one belongs to.

Many of the cash points in Spain are developed with multinational users in mind and will often offer a choice of language for you, usually English, Spanish, French or German and then self-explanatory onscreen instructions. The on-screen instructions are easy to follow and self-explanatory. Some ATMs allow you to carry out other transactions too, balance checks for example and reserving tickets for the leisure activities such as the cinema, sporting events and the theatre.

Credit cards

Most major credit cards are accepted all over Spain although some establishments may put a limit on the amounts you can withdraw or spend and sometimes there may be a surcharge. Most places now have ATM's for withdrawing cash, at which most cards will work. Most machines have the instructions in several languages and even the smallest of towns are now getting the machines. They can be a godsend at evenings and weekends and on holidays when banks can often close for several days at a time. Make sure you keep a seperate record of your credit card numbers.

We are currently constructing a page to help assist you with what should happen if you lose your credit card

Purchase tax

The internal sales tax in Spain is known as IVA and varies between 7% and 33% depending on the item bought. Food, wine and basic requirements are taxed at 7%, most goods and services are charged at 16% and luxury items such as jewellery and cigarettes attract 33% tax. Hotels have a special 7% rate.

Mortgages

The mortgage market in Spain has opened up considerably in recent years and now all banks generally offer mortgage facilities to both clients and non-clients, although obviously clients receive more favourable terms. In order to obtain a mortgage from a bank in Spain you must be over 25 and have a fixed employment contract or have been self-employed for at least 3 years. Residents can theoretically borrow up to 90% of the value of the property, although the amount is usually nearer 70 or 80% and the actual amount lent will depend on your income. Non-residents can usually only borrow up to 60% and 50% maximums are also common. Note that not all banks will lend to non-residents. Mortgages are available for up to 25 years, although 10 or 15-year mortgages are the most common. Click Here for more Information

Transferring money worldwide

When you buy a property in Spain, you will know the price of the property in Euros but you will not know the actual cost until you buy all of the currency to pay for it. This means that the property could either cost you more than you had planned (if the Euro strengthens) or the property could become cheaper (if Sterling strengthens). Recently Sterling has fluctuated more than 10% against the Euro within a matter of months, so this does deserve careful consideration. On the basis that you are buying a property and not speculating on the currency markets, it is worth fixing the exchange rate for all of your future stage payments to the agent / developer.
How to fix the exchange rate:

1) Buy all of the currency now on a "spot contract". Hold the currency on deposit and send payments when they are due from your Euro account. To do this you need to have full funds available.

2) Buy as much currency as you can afford now (e.g. for the first 2 payments) and reserve an exchange rate for the remaining payments. To reserve an exchange rate you need to buy a 'forward currency contract'. In effect you are buying currency now but paying at a later date when you have the funds available. The exchange rate that you achieve on a "forward contract" is not quite as good as that for a "spot contract" but it does guarantee that you know the cost of the property. You will be required to pay 10% of the value immediately and the balance by the date that you have reserved the currency for.

Currency and Exchange Rate Issues

Foreign currency issues can have a significant impact on the cost of your purchase. One minute you it could be a lot cheaper, the next a whole lot more.

Rather than dealing with your traditional bank you may wish consider using a foreign currency specialist can offer you direct access to the information you need in order to secure the best available exchange rates. This allows you to make significant savings on your overseas purchase and ensure you don't lose money. If you have your own dealer (if he/she comes with a personal reference from a reputable contact then all the better), you are able to make sure that you have a channel to find out all of the current information that will influence your circumstances. You can even tell the dealer what exchange rate is most favourable to you so should the rate match what you are seeking then it can be secured.

The thing is that that many property seekers spend considerably more time trying to find the right property and the accompanying means of financing it rather than looking into transferring their funds. If this is left to the last minute, then you could end up paying whatever the current exchange rate is. As the exchange rate can fluctuate several times a day you could end up spending £30,000 more on a €500,000 property.

The main reasons that people still rely on traditional banking methods is usually because they are not aware that such bespoke services exist and also because they are not situated on every high street around Britain. Even if we know we can save money elsewhere we still tend to settle for what we feel is 'safe'.

However, Buy Spanish has teamed up with one of the reputable leaders in this field, Currencies Direct, so don't underestimate how important this could be. Find out how much you could save by clicking here

The Euro

Euro banknotes first entered circulation across twelve EU countries on 1 January 2002. These are:

Belgium , Germany, Greece, Spain, France, Ireland, Italy, Luxembourg, the Netherlands, Austria, Portugal and Finland.

All of the seven banknote denominations carry a common design in all the participating countries, whilst the coins carry a national design on one side and a single European design on the reverse side.

The 14.5 billion banknotes are issued in the following denominations: 5, 10, 20, 50, 100, 200 and 500 euros. The designs on the notes are a symbol of Europe’s architectural heritage. On the front you will see windows and gateways representing the cooperation of the member states. On the reverse side are bridges from specific eras and the bridge as is the case here provides a metaphor for the communication between the European people and the world.

Likewise the first Euro coins were also introduced on the same date as the banknotes, on 1 January 2002. They replaced the twelve different sets of coins from the previous national ones. Each of the member states issues their own euro coins each with their own design. Technically they are all identical in weight, size and metal composition. Their volumes of manufacture and dispersion are all decided by the European Central Bank.

There are currently eight denominations stretching from 1 cent to a €2 coin.

In all there are 50 billion coins. There are themes carried on in the design which are common though. Firstly there are the 1,2, and 5 cent coins which imprint Europe’s place on the international stage. The 10, 20 and 50’s design represents the EU as the coming together of the nations involved. A Europe without barriers is present on the 1 and 2 euros

Has the euro affected prices ?

The general opinion is yes because prices have been rounded up to the nearest decimal. Most people are not that concerned though as the cost of living has not inflated that much. In some cases the reverse is true where prices have actually decreased. In terms of it being accepted by the Spanish, this is widespread and its integration successful and of course aided visits from other EU citizens.

If you need to get a drink or a snack from a vending machine or even a parking ticket at the airport, all have now had the necessary conversion. Some are multilingual furthering the appeal of the coin.

The end of the peseta…..

At least this was pleasant and its withdrawal prompted celebrations. Monuments were even put up in its memory. Coins and notes were recycled and used for amongst other things, boat propellers, tubing and barrels.

Be especially careful when setting off from service stations or restaurants on the left side of the road.

Take care when overtaking - allow more space between you and the car in front so you can see further down the road ahead.

Spain has strict drink driving laws, only allowing 0.25 milligrams of alcohol per litre of blood - stricter than the UK where the limit is 0.4. New drivers are effectively forbidden to drink and drive, with a very low 0.1 mg/l limit.

Seat belts front and rear are obligatory everywhere.

Speed limits, shown below, are implemented rigorously. Radar traps are frequent.

Remember - Speeding and other traffic offences are subject to on-the-spot fines.

In all countries a full UK driving licence is required. As in the UK, seat belts should be worn front and rear. Below are motoring regulations relating to Spain.

The law operating in Spain regarding the use of indicators on motorways is being strictly enforced. You will risk being fined for not indicating before overtaking and again before pulling back to the nearside lane after overtaking. Also, ensure you do not cross the solid white line as you enter the motorway from a slip road, but wait until the line is broken.

Please note: All information on this page is provided for information purposes only. It is only intended as a guide. We try to keep the information on this page up-to-date, but we cannot be held responsible in any way for any consequences arising from any inaccuracies. If you find a mistake or would like to send us some additional information, please email us.

The Buy Spanish A-Z for Drivers

Bail Bond

no longer a legal requirement for Spain and most insurance companies have stopped issuing them.

Children in cars

Children under 12 cannot travel in the front unless using a suitable restraint system.

Documentation

always carry your driving licence, vehicle registration document (V5), and certificate of motor insurance. If your licence does not incorporate a photograph ensure you carry your passport to validate the licence. If the vehicle is not registered in your name, carry a letter from the registered owner giving you permission to drive.

Drinking and driving...
Don't do it!

Over 0.05 per cent of alcohol per lit re of blood and you could face anything from a severe fine, withdrawal of your licence, up to imprisonment. Remember as we said above, Spain has strict drink driving laws, only allowing 0.25 milligrams of alcohol per litre of blood - stricter than the UK where the limit is 0.4. New drivers are effectively forbidden to drink and drive, with a very low 0.1 mg/l limit.

Fines

On the spot fines are issued. Ensure an official receipt is issued by the officer collecting the fine.

First-aid kit

This is advised but is not compulsory when travelling

Fuel

All grades of unleaded petrol (benzin), diesel (gasoleo 'A') and LPG are available as well as lead substitute additive. Leaded no longer exists. It is allowed to carry petrol in a can. Credit and debit cards are widely accepted, although they probably won't work at automatic pumps, which are often the only pumps open out-of-hours and at lunch-time (from noon to 3pm) away from the Autoroutes. It's a good idea to let your card issuer know you will be travelling abroad. This ensures they don't suspend your card if they spot it being used in unfamiliar places, which they sometimes do as an anti-fraud measure.

GB sticker

UK registered vehicles displaying Euro-plates (circle of 12 stars above the national identifier on blue background) no longer need a GB sticker  when driving in European Union countries.

Remember then that you MUST have a Euro Plate

Glasses (Spectacles):

All wearers must carry a spare pair in the car at all times. 

Headlamp converters

These are compulsory.

Lights :

Dipped headlights should be used in poor daytime visibility. Motorcycles must use dipped headlights during the day at all times.

Minimum age for driving

Provided you hold a full UK licence, is 18 for a car and for a motorcycle over 75cc. If you've got an old-style all-green licence you might find the police will not understand them, so either get them up-dated or take an International Driving Permit as well.

Motorcycle

Drivers and passengers must wear crash helmets 

Motor insurance

Third-party insurance is compulsory. A green card is not required but your insurer should be advised of your trip.

Replacement bulb

A set of these is compulsory 

Seat belts

Seat belts are compulsory for front and rear seat occupants, if fitted.

Visibility Vests

These are now compulsory in Italy and Spain (and likely to become compulsory throughout the EU) if you need to walk on a motorway. In theory, it's not compulsory to carry one, but if you breakdown on the motorway you will be breaking the law if you walk to an emergency phone without one. We strongly recommend carrying one at all times. A suitable high visibility vest is supplied by Advanced Safety Products and conforms to BS EN471:1994 Class 2

 






 

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