Introduction

The Spanish banking system is as efficient as any in the world but, as one would expect, it has some different practices and procedures. Bank charges are high so care has to be exercised when transferring money across international boundaries. While there are no restrictions on the amount of money coming into or going out of Spain, it is monitored by the government. It is no longer possible to ‘hide’ interest payments in offshore accounts. Money laundering is tightly controlled in the UK but less so in Spain. It is not possible to obtain a 100 per cent mortgage on a property from a Spanish provider.

Spanish Banking

Banking in Spain is fragmented. There are about 150 different banks. They serve different markets and have different functions. Clearing banks, savings banks, lending banks, cooperative banks and some foreign banks of French, German or British parentage compete with each other. These banks have many branches but naturally some of the smaller outlets do not offer a full range of services.

The Spanish banking system has some unusual procedures but it is efficient, and usually staffed by friendly, hard working, multilingual people capable of offering a customer some of the most up-to-date services including telephone and internet banking. Credit or debit plastic cards are accepted for the purchase of consumer goods or for obtaining cash from an ATM (hole in the wall cash dispenser) of which there are many.

In selecting a Spanish bank it makes sense that some staff should speak English and that it has access to services such as mortgages and investments. It should be a main branch thus preventing delays in foreign transactions.

Bank accounts of residents and non-residents are distinguished from each other. A nonresident account is called cuenta extranjera and a cheque book (talonario) is marked cuenta en euros de no residente. Different tax regulations apply but the banking operation for a non-resident account is exactly the same as for a resident account.

A current account (cuenta corriente) pays a low rate of interest – practically nothing (0.1 per cent). A resident will have 15 per cent of interest earnings withheld and paid to the Spanish tax authorities – less than practically nothing – and a non-resident should declare any liability to the tax authorities back home. Yet this account will incur some of the highest bank charges in Europe irrespective of the currency involved. Write a cheque and a charge occurs; transfer a payment and a charge occurs. With the exception of some free banking, charges occur every time a transaction takes place. Spanish banking is expensive!

Deposit accounts exist. They pay different rates of interest depending on the amount invested, the time period fixed in advance and the currency in which they are held. Again a resident will have 15 per cent of the interest withheld by the bank to cover income tax. The bank gives a receipt and the amount is deducted from income tax liability upon completing an annual tax return.

Free Banking

The use of a credit or debit card on motorway tolls is free of charge. So too is a cash withdrawal from an ATM on a debit card, provided it is within a bank’s computerised system. There are two computer ‘ring mains’ in Spain – Servis Red and Tele Banco. All Spanish banks ‘plug into’ one or the other. It is not the brand of card that determines the charge, but the computer system completing the transaction. Using the wrong one attracts a charge of up to 2€ per transaction. No other transaction is free unless you are receiving a pension from the Spanish state system.

Al Portador

Some tradesmen, among others, prefer a cheque (talon) made out to al portador (cash) as there is no record of who cashes it. It is a system of understating earnings for tax avoidance. Payment of services by this method usually ‘forgets’ WA (VAT) from the charge so both parties benefit from the transaction.

The use of personal cheques is less frequent in Spain than in most European countries. It is a country that prefers cash or credit cards. Post-dated cheques can be cashed immediately irrespective of the date and if a cheque is written with insufficient funds in the account, it is still possible to collect a partial amount up to the value of the available funds.