Banking in Spain
All residents and non-resident foreigners with financial affairs in Spain must have a foreigner’s identification number (Número de Identificación de Extranjero/NIE). This is similar to the fiscal number (Numero de Identificación Fiscal/NIF) all Spaniards have (and which is the same as their identity card and passport numbers). An NIE works as identification and a kind of tax number. Without an NIE, you won’t be able to purchase property, open a bank account, arrange credit terms or use temporary employment agencies. When you buy a property, you must apply for an NIE, which is required when the property is registered in your name.
Your NIE must be used in all dealings with the Spanish tax authorities, when paying property taxes and in various other transactions. Anyone placing money or assets in deposits or other forms or receiving credits or loans in Spain must give his NIE to the bank within 30 days of the operation. A bank cannot issue a cheque against a deposit without reporting your NIE and must report to the authorities any activity where an NIE hasn’t been provided. Banks and individuals can be heavily fined for non-compliance with the law regarding identification numbers. The form for an NIE can be downloaded from the Ministry of Interior website (: http://www.mir.es – go to Información sobre Trámites, then Extranjeros and then Modelos de Solicitud). Applications for an NIE can only be made in person and you should go to a national police station (comisaría) with a foreigners’ department (expect to queue for most of the morning). A representative can apply on your behalf only if you’ve given him a power of attorney made out abroad and translated into Spanish. (For reasons known only to a select few in the police, powers of attorney made out in Spain are sometimes acceptable, but not always!) However, once you’ve applied, anyone can collect the NIE on your behalf. If you have an employment contract or a letter from a Spanish employer or business stating why it requires you to have an NIE, you can obtain a number in around a week. Otherwise, you may have to wait up to three months. Spanish Currency Along with 11 other EU countries (Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands and Portugal), Spain’s currency is the euro (€). Euro notes and coins became legal tender on 1st January 2002 replacing the peseta. The euro is divided into 100 cents (céntimo) and coins are minted in values of 1, 2, 5, 10, 20, 50 cents, €1 and €2. The 1, 2 and 5 cent coins are copper-coloured, the 10, 20 and 50 cent brass-coloured. The €1 coin is silver-coloured in the centre with a brass-coloured rim, and the €2 coin has a brass-coloured centre and silver-coloured rim. The reverse (‘tail’ showing the value) of euro coins is the same in all eurozone countries, but the obverse (‘head’) is different in each country. Spanish coins carry three designs (the king’s head on the €1 and €2 coins, Cervantes on the 10, 20 and 50 cent coins, and the cathedral in Santiago de Compostela on the 1, 2 and 5 cent coins), the word ‘España’ and the date of minting. All euro coins can, of course, be used in all eurozone countries (although minute differences in weight occasionally cause problems in cash machines, e.g. at motorway tolls!). As in most other eurozone countries, many people in Spain still claim to have difficulty determining the value of items in euros and the vast majority of Spaniards still ‘think’ (and talk) in pesetas, particularly for large amounts. As yet, there are no slang terms for euros – there were several for pesetas. Euro banknotes (billetes) are identical throughout the eurozone and depict a map of Europe and stylised designs of buildings (as the member countries couldn’t agree which actual buildings should be shown!). Notes are printed in denominations of €5, €10, €20, €50, €100, €200 and €500 (worth over £300 or $600!). The size of notes increases with their value. Euro notes have been produced using all the latest anti-counterfeiting devices. Nevertheless, you should be wary, especially of €200 and €500 notes. The euro symbol may appear before the amount (as in this book), after it (commonly used by the Spanish, e.g. 24,50€) or even between the euros and cents, e.g. 16€50. When writing figures (for example on cheques), a full stop (period) is used to separate units of millions, thousands and hundreds, and a comma to denote fractions. It’s advisable to obtain some euro coins and banknotes before arriving in Spain and to familiarise yourself and your family with them. You should have some euros in cash, e.g. €50 to €100 in small notes, when you arrive, but should avoid carrying a lot of cash. This saves you having to change money on arrival at a Spanish airport (where exchange rates are usually poor and there are often long queues). It’s best to avoid €100 notes, if possible, as these sometimes aren’t accepted, particularly for small purchases. Note also that many shops and businesses don’t generally accept €200 and €500 notes. Importing & Exporting Money In theory, there are no restrictions on the import or export of funds by residents or non-residents, although you’re required to declare amounts over €6,000 (see below). A Spanish resident is permitted to open a bank account in any country and to import (or export) funds in any currency. However, when a resident opens an overseas account, his Spanish bank must routinely inform the Bank of Spain within 30 days of account movements above €3,000. When importing funds for the purchase of a property (or any other major transaction) in Spain, non-residents must have the transfer of funds verified by a certificate from their bank (certificado de inversiones). Declaration Sums of €6,000 to €30,000 (per person and journey) must be declared to the customs authorities (on form B-1) when entering or leaving Spain. Non-EU nationals wishing to import or export sums above €6,000 must obtain authorisation from the Dirección General de Transacciones Exteriores (DGTE) by completing form B-2 at a bank. These regulations are designed to curb criminal activities, particularly drug-trafficking, and also apply to travellers stopping in Spain for less than 24 hours. If you don’t declare funds, they’re subject to confiscation. Residents receiving funds from non-residents or making payments to them of over €6,000 (or the equivalent in foreign currency) in cash or cheques must declare them within 30 days. A form must be completed (B-3), which includes the name, address and NIE of the resident, the name and address of the non-resident, and the reason for the payment. If you intend to export funds from Spain, irrespective of the amount, you should declare them, as this certifies that the foreign currency was imported legally and allows a non-EU national to convert euros back into a foreign currency. International Bank Transfers When transferring or sending money to or from Spain, you should be aware of the alternatives and shop around for the best deal. l Personal Cheque – It’s possible to send a creditor a cheque drawn on a personal account, although they can take a long time to clear (usually a matter of weeks) and fees are high. Some people prefer to receive a cheque direct (by post) from their overseas banks, which they then pay into their Spanish bank (although you must usually wait for it to clear). The main problem with sending anything by post to or from Spain is that it leaves you at the mercy of the notoriously unreliable Spanish post office (see Chapter 6). It’s possible to pay cheques drawn on a foreign account into a Spanish bank account; however, they can take weeks to clear, as they must usually be cleared with the paying bank (although some Spanish banks credit funds to accounts immediately). l Bank Draft (cheque bancario) – Another way to transfer money is via a bank draft, which should be sent by registered post. Note, however, that if it’s lost or stolen it’s impossible to cancel payment and you must wait six months before a new draft can be issued. Bank drafts aren’t treated as cash and must be cleared like personal cheques. l Bank Transfer (transferencia bancaria) – A ‘normal’ transfer should take three to seven days, but in reality it usually takes much longer and an international bank transfer between non-affiliated banks can take weeks! (It’s usually quicker and cheaper to transfer funds between branches of the same bank than between non-affiliated banks.) In fact, the larger the amount the longer it often takes (surprise, surprise!), which can be particularly awkward when you’re transferring money to buy a property. l SWIFT Transfer – One of the safest and fastest methods of transferring money is via the SWIFT or IBAN system. A SWIFT or IBAN transfer should be completed in a few hours, funds being available within 24 hours, although even these can take five working days. Most banks are members of the SWIFT system or have an IBAN code. The cost of transfers varies considerably – not only commission and exchange rates, but also transfer charges. l Telegraphic Transfers – One of the quickest (it takes around ten minutes) and safest methods of transferring cash is via a telegraphic transfer, e.g. Moneygram (: http://www.moneygram.com) or Western Union (: http://www.western union.com), but it’s also one of the most expensive, e.g. commission of 7 to 10 per cent of the amount sent! Western Union services are also available at post offices (( 902-197 197, : http://www.correos.es) in Spain under the agreement known as ‘Money in Minutes’ (Dinero en minutos). There are special rates and deals for certain countries such as Russia. Money can be sent via overseas American Express offices by Amex card holders (using Amex’s Moneygram service) to American Express offices in Spain in just 15 minutes. The cost of transfers varies considerably, not only in the commission and exchange rates, but also in the transfer charges, e.g. for a SWIFT transfer. Many Spanish banks deduct commission, whether a transfer is made in euros or a foreign currency, and although an EU directive limits the costs banks can pass on to customers Spanish banks charge what they like when making foreign transfers and may charge up to 0.7 per cent of the amount transferred as a ‘fee’. This can amount to a lot of money if you’ve sold a property in Spain and are transferring the money abroad. It may be cheaper to obtain a banker’s draft and pay that into your foreign account, but check the fees first. Failing that, you can withdraw cash from your Spanish account free of charge, but the amount may be limited and it is, of course, risky to carry too much cash with you. See also International Bank Transfers on page 327. If you intend to send a large amount of money to Spain or abroad for a business transaction such as buying a property, you should ensure you receive the commercial rate of exchange rather than the tourist rate. Some banks levy high charges (as much as 4 per cent) on the transfer of funds to Spain to buy a home, which is the subject of numerous complaints, while others charge nothing if the transfer is made in euros. Always check charges and rates in advance and agree them with your bank (you may be able to negotiate a lower charge or a better exchange rate). If you have your pension paid into a bank in Spain from another EU country, you should have it transferred in euros, for which (under EU regulations) there should be no charge and money must be deposited in your account within five working days. Spanish (and Portuguese) banks are reportedly the slowest in Europe to process bank transfers. It isn’t unusual for transfers to and from Spain to get stuck in the pipeline (usually somewhere in Madrid), which allows the Spanish bank to use your money for a period interest-free. For example, transfers between British and Spanish banks sometimes take from three to six weeks and the money can ‘disappear’ for months or even completely! If you routinely transfer large sums of money between currencies, you should investigate Fidelity Money Funds, which operate free of conversion charges and at wholesale rates of exchange. The leading companies include Foreign Currency Direct (UK ( 0800-328 5884 or 01494-725353, : http://www.currencies.co.uk), HIFX (UK ( 01753-859159, : http://www.hifx.co.uk) and Moneycorp (UK ( 020-7589 3000, Spain ( 902-887 243 (Costa Blanca) or 951-319 700 (Costa del Sol), : http://www.moneycorp.com). Obtaining Cash One of the quickest methods of obtaining (usually relatively small amounts of) cash in Spain is to draw on debit, credit or charge cards. Many foreigners living in Spain (particularly retirees) keep the bulk of their money in a foreign account (perhaps in an offshore bank) and draw on it with a cash or debit card in Spain. This is an ideal solution for holidaymakers and holiday homeowners (although homeowners will still need a Spanish bank account to pay their bills). Most banks in major cities have foreign exchange windows (and there are banks with extended opening hours at international airports and main railway stations in major cities), where you can buy and sell foreign currencies, buy and cash travellers’ cheques, and obtain a cash advance on credit and charge cards. Note that most banks charge around 1 per cent commission with a minimum charge of between €3 and €6, so it’s expensive to change small amounts. However, some banks charge a flat fee of €3 and no commission, irrespective of the amount, especially if you’re a client of the bank. There are numerous private bureaux de change (including most travel agents), many of which are open long hours, and some shops (such as El Corte Inglés department stores) have an in-house bureau de change. Note that banks at airports and railway stations often offer the worst exchange rates and charge the highest fees. There are automatic change machines at airports and in tourist areas in major cities accepting up to 15 currencies including US$, £ Sterling and Swiss francs. Most bureaux de change charge no commission (but always check) and are also usually easier to deal with than banks. If you’re changing a lot of money, you may be able to negotiate a better exchange rate. However, commercial bureaux de change don’t usually offer the best exchange rates and you’re usually better off changing money at a bank. (The posted exchange rates may apply only when changing high amounts, so ask before changing any money.) Note that ‘no commission’ usually means a poor exchange rate! The euro exchange rate (cambio) for most European and major international currencies is listed in banks and daily newspapers, and announced on Spanish and expatriate radio and TV programmes. There isn’t a lot of difference in the cost of changing cash, buying travellers’ cheques (see below) and using a credit card to obtain cash in Spain. However, many people simply take cash when visiting Spain, which is asking for trouble, particularly if you have no way of obtaining more cash in Spain, e.g. with a credit card. When travelling anywhere, don’t rely on only one source of funds! Prepaid Currency Cards Prepaid currency cards are a new alternative to travellers’ cheques and debit and credit cards, and can be used to withdraw cash from ATMs and to purchase goods in shops and restaurants, although in July 2006 few businesses in Spain accepted this form of payment. The cards, known by different names, are offered by several finance companies including International Currency Exchange (which calls its card ‘Cash2go’), Maestro (‘I-Travel Prepaid’), Travelex (‘Cash Passport’) and Western Union (‘Travel Cash Card’). Euros and US dollars are currently the only currencies available, and most companies allow ‘loads’ of between €150/$200 and €7,500/$10,000, the exchange rate being fixed when you ‘load’ the card. You’re then given a PIN, which allows you to withdraw cash at ATMs. Advantages of prepaid currency cards include greater security – if the card is lost or stolen there’s no link between it and your bank account, unlike a credit card, for example – and the card has no name on it so there’s no risk of identity fraud. Your cash withdrawals aren’t subject to exchange rate fluctuations – which may be an advantage or a disadvantage depending on whether the rate goes up or down. On the other hand, there are charges for most transactions, e.g. £2 for a cash withdrawal and £3 for a top-up. Read the small print carefully and make sure you understand all the associated charges before you take out a prepaid currency card. It’s also worth comparing the charges with those incurred on a credit or debit card, which may well be cheaper. Travellers’ Cheques If you’re visiting Spain, it’s safer to carry travellers’ cheques (cheques de viaje) than cash, although they aren’t as easy to cash as in some other countries and many places no longer accept them. They aren’t usually accepted as cash by businesses, except some major hotels, restaurants and shops, which usually offer a poor exchange rate. Most banks charge a commission of 1 per cent when cashing foreign currency travellers’ cheques with a minimum fee of between €3 and €6 (so it’s wise to avoid changing small amounts), but there’s usually no commission when cashing euro travellers’ cheques. Banks offer a better exchange rate for travellers’ cheques than for banknotes. Note that you must show your passport when changing travellers’ cheques. Always keep a separate record of travellers’ cheque numbers and note where and when they were cashed. Most cheque issuers offer a replacement service for lost or stolen cheques, although the time taken to replace them varies significantly. American Express claim a free, three-hour replacement service at any of their offices, provided you know the serial numbers of the lost cheques. Without the serial numbers, replacement can take three days or longer. Banks Although Spanish banks aren’t renowned for their proficiency, the service they offer has changed out of all recognition in the last few decades, during which the number of banks and branches has increased considerably (some have also gone bust!). Spanish banks have become highly automated and their cash dispensers (ATMs) are among the world’s most advanced (ServiCaixa is particularly good and offers a wide range of functions including tickets for concerts and theatres, mobile telephone top-ups and payment of bills as well as cash withdrawal) and most ATMs have multi-language options. On the other hand, where human involvement is concerned some banks remain Neanderthal. Most banks also offer home banking services via telephone and/or the internet, and there are several internet/telephone-only banks: ING Nationale-Nedenlanden (( 901-020 901, : http://www.ingdirect.es), Openbank (( 902-365 366, : http:// www.openbank.es) owned by Banco Santander and Uno-e (( 901-111 113, : http:// www.uno-e.es) owned by BBVA and Telefónica. All three internet banks offer (relatively) high interest current accounts with immediate access to your money, as well as the usual banking services. A strange idiosyncrasy of some Spanish banks is that they sell goods, such as household appliances, bicycles and computers, and other services (e.g. holidays, insurance and property). There are two main types of bank in Spain: clearing banks (bancos) and savings banks (cajas de ahorros). The Spanish clearing banks with the largest branch networks are the two giants, Banco Santander (previously the BSCH and the fourth-largest bank in Europe since its takeover of the British Abbey National) and Banco Bilbao Vizcaya-Argentaria (BBVA), and the smaller Banco Popular, Banesto and Sabadell Atlántico. All banks in Spain are listed in yellow pages under Bancos. Spain also has around 50 savings banks, which were originally charitable organisations granting loans for public interest and agricultural policies. Savings banks are similar to building societies in the UK and savings and loan banks in the US and hold around 45 per cent of deposits and make some 25 per cent of personal loans. The two largest Spanish savings banks are La Caixa (some 3,600 branches) and Caja Madrid (almost 1,900 branches). In general, savings banks offer a more personal, friendly service than clearing banks and are excellent for local business (many have limited regional branch networks). However, although they provide the same basic services as clearing banks, they aren’t always best for international business. There are also some 100 co-operative savings banks (cooperativas de crédito), whose members are agricultural co-operatives, although they play only a small part in Spain’s banking system and hold just a few per cent of total bank assets. There are around 50 foreign banks operating in Spain – fewer (and with an overall smaller market share) than in most other European countries. Most major foreign banks are present in Madrid and Barcelona, but branches are rare in other cities. Among foreigners in Spain, the British are best served by their national banks, in the major cities and resort areas. Barclays, Deutsche Bank and Lloyds TSB are the most prominent foreign banks in Spain. These banks are full members of the Spanish clearing and payment system and can provide cheque accounts, cash and credit cards, direct debits and standing orders, and loans and mortgages. The Royal Bank of Scotland also operates at some Banco Santander branches. Note, however, that foreign banks in Spain operate in exactly the same way as Spanish banks, so you shouldn’t expect, for example, a branch of Barclays in Spain to resemble a branch in the UK or any other country. Surprisingly, considering the size and spending power of foreign residents and tourists in Spain, most Spanish banks make few concessions to foreign clients, e.g. by providing general information and statements in foreign languages and multilingual staff. Exceptions to this include Bancaja (: http://www.bancaja.es), Bankinter (: http://www. bankinter.es), Cajamar (: http://www.cajamar.es), Solbank (: http://www.sol bank.es) and Unicaja (: http://www.unicaja.es). If you have a complaint regarding your bank, don’t expect to receive a quick resolution (or any resolution at all). A complaint should be addressed to the ombudsman (defensor del cliente, although the title may vary) of your bank. The Bank of Spain (Banco de España, Servicio de Reclamaciones, Alcalá, 50, 28014 Madrid, ( 913-385 068, : http://www.bde.es – information available under ‘Servicios al Público) can provide further information on filing a complaint. Opening Hours Normal bank opening hours are from between 8.15 and 9am until between 1.30 and 2pm, Mondays to Fridays, and from between 8.30 and 9.30am until 1pm on Saturdays, except in summer (banks are closed on Saturdays from April to September). Savings banks open all day on Thursdays (until 7pm), but are closed on Saturdays. Some branches in major cities remain open continually from the morning until 4 or 4.30pm from autumn to spring, although they may close earlier on Fridays. Some banks are experimenting with longer hours at certain branches and opening from, for example, 8.15am until 8.30pm (or may open from around 8.15am to 2pm and again from around 4.30 until 7.45pm). Banks in shopping centres may also open all day until late in the evening (some are open the same hours as hypermarkets, e.g. from 10am until 10pm). At major international airports and railway stations in major cities, there are also banks with extended opening hours, although they often have long queues. Banks are closed on public holidays, including local holidays (when banks in neighbouring towns often close on different days), and they may also close early during local fiestas. Note that many bureaux de change have long opening hours and some are even open 24 hours in summer in some resort areas. Opening an Account You can open a bank account in Spain whether you’re a resident or a non-resident. It’s better to open a Spanish bank account in person than by correspondence from abroad. Ask your friends, neighbours or colleagues for their recommendations and just go along to the bank of your choice and introduce yourself. You must be aged at least 18 and provide proof of identity (e.g. a passport), your address in Spain and your passport number or NIE (see page 325). If you wish to open an account with a Spanish bank while you’re abroad, you must first obtain an application form, available from foreign branches of Spanish banks or direct from a Spanish bank in Spain. You must select a branch from the list provided, which should preferably be close to where you will be living in Spain. If you open an account by correspondence, you must provide a reference from your current bank. Note that all Spanish bank accounts have 20 digits: the first four are the bank code, the next four are the branch code followed by the sort code (two digits) and then your account number (ten digits). Non-residents If you’re a non-resident, you’re entitled to open a non-resident euro account (cuenta de euros de no residente) or a foreign currency account only. An important point to note is that when importing funds for the purchase of a property (or any other major transaction), the transfer of funds must be verified by a certificate from your bank (certificado de inversiones). Although it’s possible for non-resident homeowners to do most of their banking via a foreign account using debit and credit cards, they need a Spanish bank account to pay Spanish utility and tax bills (which are best paid by direct debit). If you own a holiday home in Spain, you can have your correspondence (e.g. cheque books, statements, payment advices.) sent to an address abroad, although some banks no longer offer this service. Residents To open a resident’s account you must usually have a residence permit (permiso de residencia), certificate of residence (certificado de residencia) or evidence that you have a job in Spain. Note that it isn’t advisable to close your bank accounts abroad when you live in Spain, unless you’re sure that you won’t need them in the future. Even when you’re resident in Spain, it’s cheaper to keep money in local currency in an account in a country you visit regularly than to pay commission to convert euros. Many foreigners living in Spain maintain at least two cheque (current) accounts: a foreign account for international transactions and a local account with a Spanish bank for day-to-day business. Cheque Accounts The most common account in Spain is a cheque or current account (cuenta de ahorro con talonario/cuenta corriente), which are provided by all Spanish banks, although many Spaniards don’t trust cheques and prefer to deal in cash. Personal cheques aren’t usually accepted for payment by local retailers and cannot be guaranteed, although banks can issue a book of certified cheques and some supermarket chains issue identity cards (which they sometimes misleadingly call ‘credit’ cards), allowing customers to pay with personal cheques. Cheque account holders are normally issued with cash or debit cards (see page 337), although you must usually ask for one. Charges: Spanish banks levy some of the highest charges in Europe for day-to-day transactions such as writing cheques, standing orders, direct debits and credit card transactions. Always obtain a list of charges before opening an account and compare the charges levied by a number of banks. A number of entries (account transactions) per year (e.g. 30) are usually free, after which there’s a charge per entry (e.g. €0.25), although a bank manager can waive certain charges. If you arrange to have your salary or pension paid into a Spanish bank account (called domiciliación de nómina), you may qualify for a choice of gifts, entry in a grand draw to win a car or other prizes, and low or no-fee services such as a low-interest overdraft or a free credit card. If you wish to change banks, don’t maintain a bank account with a small amount of money in it, as you will continue to be charged fees, but write a letter to your bank informing them that you’re closing the account. Interest: Spanish cheque accounts pay little interest on account balances, e.g. just 0.1 or 0.2 per cent interest on the average balance. Generally, an interest-paying cheque account (i.e. paying a ‘normal’ rate of interest) requires a minimum balance of around €1,500 and even then it may pay interest only on the balance above this amount. So there’s little point in keeping a lot of money in a cheque account when you can deposit your money in a deposit or savings account (see below) and earn interest on the whole balance. Writing Cheques: Spanish cheques (cheques or talones) may be different from those you’re familiar with. Your account details (Código cuenta cliente/CCC with 20 digits – see Opening an Account above) are printed at the top right of cheques and statements. This information is required when payments are to be made directly to or from your account, e.g. for direct debits. The payee’s (páguese a) name should be written in the top left corner (it’s usual to write Sr. D. in front of a man’s name and Sra. Da. in front of a woman’s). The amount in figures should be written in the top right corner. Many people put a hash (#) sign before and after the amount, e.g. #4.500, 25#, so that it cannot be altered, although this isn’t obligatory. The amount should also be written in words (en letras) on the line below the payee’s name, e.g. cuatro mil quinientos euros con veinticinco céntimos. The date must be written in words under the amount (in words) and after the town where the bank is located. Your signature should be written in the bottom right corner below the date. The amount and date in words must usually be written in Spanish, although some banks allow you to write it in English and other languages. If a cheque is made out to the bearer, the words al portador must be added. However, it isn’t recommended to pay a cheque to the bearer, which is regarded as currency and could change hands a number of times during its validity period (although people will ask you to do this, so that the payment cannot be traced or so they can cash it immediately). It’s usually better to pay someone in cash. Note that, in order to pay a cheque into your bank account, you must sign the back. When making a cheque out to a named person, you should write, for example, ‘Páguese a John Smith por este cheque’. To ensure that a cheque can be paid only into the account of the payee, you must add y Cia between diagonal lines on the front or add a abonar en cuenta before the name of the payee. Note that your bank isn’t required to reimburse you for a falsified cheque if you’ve been negligent when writing it. Validity: Spanish cheques are valid indefinitely, although it isn’t wise to keep a cheque for longer than six months before cashing it. All cheques, including post-dated cheques, are payable on presentation (if the funds are available). If you write a cheque without sufficient funds in your account, your bank must pay out whatever is in your account as part payment, although this isn’t always done. Your bank also sends you a ‘notarial protest’ (declaración substitativo de impago/declaración equivalente), which they must do within 15 days if the cheque is issued and payable in Spain (they have 20 days if it’s issued in another European country and 60 days if it’s issued outside Europe). You’re obliged to pay a penalty of 10 per cent of the unpaid amount of a cheque, e.g. if you write a cheque for €1,000 and have only €750 in your account, you must pay the €250 shortfall plus a €25 penalty. It’s illegal to overdraw a bank account without prior agreement and it can lead to many problems. You cannot usually stop payment of a cheque unless the cheque or cheque book has been lost or stolen, when a police report (denuncia) must be produced. If your cheque book is lost or stolen, you must notify your bank by telephone immediately and confirm the loss in writing. Once you’ve informed your bank of a loss, any cheques written after that time cease to be your responsibility. Beware of accepting cheques from foreigners (even for small amounts), as they often bounce, resulting in a bank fee, e.g. €3, plus the loss of your money! Bills of Exchange: When buying something on credit in Spain, cheques aren’t usually used to pay instalments. Instalments are made via bills of exchange (letra de cambio), one of which is issued for each payment due. You’re required to sign one for each payment to be made (e.g. 24 if you’re paying monthly for an item over two years), which are then presented to your bank for payment by your creditor each month. Make sure they’re made out in the name of the company that sold the goods and not an individual. If funds aren’t available to pay a bill of exchange, you will receive a ‘bill of exchange protest’ (letra protestada) from your bank asking you to pay the amount due plus extra costs. You should never sign letras on behalf of a company or someone else, as you’re personally held responsible for payment. Standing Orders & Direct Debits: You can have your standing orders (domiciliación de pagos) and direct debits (domiciliación bancaria) paid by your Spanish bank by simply completing a form at your bank and giving them a copy of a bill. This is the best way to pay all regular bills, such as electricity, gas, water, telephone, local taxes and community charges. However, you should check your statements to ensure that payments have been made, as banks cannot always be relied upon. Deposits: You can pay cheques drawn on a foreign bank into a Spanish account in all major currencies. Your bank may credit your account immediately, which means that you can draw on the money before the cheque has been cleared (which may take weeks). Many banks charge a flat fee per cheque (e.g. €3 or €5), so it pays to write cheques for large amounts, and you receive the exchange rate for cheques and travellers’ cheques (which is higher than when changing cash). Correspondence: All correspondence from Spanish banks is in Spanish and it’s advisable to learn to interpret your statements and other correspondence you receive. The most common words used in statements are fecha (date), debe (debit), haber (credit), fecha operación/valor (date of operation/transaction), saldo (balance) and concepto (description). Account statements (estados or comunicaciones de movimentos) are sent to customers monthly or quarterly, although you can request one at any time by asking for an extracto or an avance. Most banks now provide the option of receiving all correspondence via your online account. Internet Security: Bogus emails claiming to be from your bank and asking for confidential information such as your account numbers and PIN are widespread in Spain. In 2006, Banesto, Caja Madrid and Cajamar were particularly targeted by fraudsters in China who sent out tens of thousands of emails via the internet. The emails look authentic, as they contain the bank’s logo and the sender’s email address includes the bank’s domain. In many cases, unsuspecting recipients sent personal details or clicked on a website link included in the email and the fraudsters were able to access (and empty) accounts. If you’re in any doubt about the authenticity of an email, contact your bank immediately. Savings Accounts You can open a savings account (cuenta/libreta de ahorro) or deposit account (cuenta de imposición a plazo) with any clearing or savings bank in Spain. Savings banks offer savings schemes and loans for buying property and other purchases, although general banking services may be limited compared with those of clearing banks. The post office also provides a range of savings accounts (see page 140) in association with Deutsche Bank. Most financial institutions offer a variety of savings and deposit accounts, with varying interest rates, minimum deposits, and withdrawal restrictions, depending on the type of account and the bank. For short-term savings and small amounts, it’s best to open a savings account where funds are on call and withdrawals can be made at any time. Interest is usually paid twice a year, but is negligible unless the average balance is above a certain sum, e.g. €1,500. Funds in a term deposit account must be deposited for a minimum period or term (e.g. 7, 14, 30 or 90 days, six months or a year), which is the notice you’re required to give in order to withdraw funds without a penalty. The longer the period you’re willing to have your money tied up, the higher the interest rate paid. High interest accounts may require a minimum account balance of €1,500, €3,000 or even €6,000. These accounts can usually be in euros or a major foreign currency and some accounts allow for the payment of standing orders and direct debits, although there may be a maintenance charge, e.g. €3 or €5 per year. Savings account holders receive a pass book in which all deposits and withdrawals are recorded (which can be done via an ATM) and they may also be issued with a cash card, cheque book and a credit card, depending on the type of account. For residents, the interest earned on bank accounts and deposits is subject to a 15 per cent (18 per cent from 2007) withholding tax at source in lieu of personal income tax. Tax withheld at source can be deducted from tax payable when the following year’s income tax return is filed. Non-residents are now subject to the European Savings Tax Directive (ESTD) under which non-residents with a non-resident account can choose to pay retaining tax at 15 per cent (this will be increased to 20 per cent in July 2008 and to 35 per cent in 2011) or allow an ‘exchange of information’ whereby the Spanish bank provides details about the account to the tax authorities in their country of residence. Cash & Debit Cards All Spanish banks offer customers combined cash and debit cards (tarjeta de débito), which are widely used and accepted throughout Spain. Purchases and cash withdrawals are automatically debited from your cheque or savings account. You don’t receive a monthly statement, although you can obtain account balances and mini-statements from cash machines (ATMs), and cannot overdraw your account with a cash or debit card. A card allows you to withdraw up to €600 per day from ATMs operated by your own bank – less from those of other banks. There are many thousands of ATMs in Spain, where the three main networks are Red 6000, Servired and Telebanco 4B (indicated by a blue and yellow striped logo with the inscription ‘4B’). Cash can also usually be obtained from a network other than the one your card belongs to, for which there’s a fee (from €1.50 to €3). Most ATMs accept a bewildering number of Spanish and foreign cards, usually illustrated on machines, including credit and charge cards (see page 340). Note that, although foreign debit cards such as those belonging to the Visa network, can be used to obtain cash in Spain, they’re usually treated as credit cards and a charge is made. Most ATMs are located outside banks. In cases when they’re located inside the bank or in a lobby, you may need to run your card through a card reader to gain access. The procedure for withdrawing money from an ATM is usually as follows: 1. If the machine is in working order, a message such as Introduzca su tarjeta, por favor (Insert your card, please) is displayed. If your card is rejected, try again; if it’s rejected a second time, try another machine. If a machine is temporarily out of order, a message such as Cajero temporalmente fuera de servicio is displayed. 2. Most machines permit you to choose the language in which instructions are displayed. If this is the case, the first screen will show a selection of languages. 3. Next you’re asked to enter your personal identification number (PIN) and press the green ‘enter’ (anotación) button. If you make a mistake, press the yellow ‘erase’ (borrar) button and re-enter your PIN. As a security measure, if you enter the wrong PIN three times, your card will be retained by the machine and you must contact your bank for its return. 4. Select the service required, e.g. balance enquiry (saldo), statement enquiry (extracto de saldo) or cash withdrawal (sacar dinero). 5. If you’ve chosen to withdraw cash, the screen will usually display a choice of amounts, e.g. €20, €50, €100, €150 and €200. Note however, that some machines only offer amounts payable in €20 and €50 notes. If the amount you wish to withdraw isn’t displayed, you can press the ‘other amounts’ (otras cantidades) button and enter the amount required. If you make a mistake, press the yellow ‘erase’ (borrar) button and re-enter the correct amount. If you request more than your current credit limit (or account balance), you will be asked to request a smaller amount. 6. Remove your card, receipt (machines may automatically issue a receipt or ask you if you require one – (¿Desea un recibo?) and cash when instructed. The ‘cancel’ (cancelar) button can be used to terminate a transaction at any point and your card will be returned, so you then can start again, if required. Note that it’s inadvisable to rely entirely on a cash or credit card to obtain cash in Spain, as your card may be ‘swallowed’ by an ATM and it may be some time before it’s returned via your bank. If you lose your cash card or it’s stolen, you must report it to your bank as soon as possible or phone the appropriate number: Red 6000 ( 902-206 000; Servired ( 902-192 100; or 4B ( 902-114 400. Offshore Banking If you have a sum of money to invest or wish to protect your inheritance from the tax man, it may be worthwhile looking into the accounts and services (such as pensions and trusts) provided by offshore banking centres in tax havens (paraísos fiscales) such as the Channel Islands (Guernsey and Jersey) and the Isle of Man (around 50 locations worldwide are officially classified as tax havens). The big attraction of offshore banking is that money can be deposited in a wide range of currencies, customers are usually guaranteed complete anonymity, there are no double-taxation worries, no withholding tax is payable and interest is paid tax-free. Many offshore banks also offer telephone banking (usually seven days a week) and some provide internet banking. A large number of American, British and other European banks and financial institutions provide offshore banking facilities in one or more locations. Most institutions offer high-interest deposit accounts for long-term savings and investment portfolios in which funds can be deposited in any major currency. Many people living abroad keep a local account for everyday business and maintain an offshore account for international transactions and investment purposes. However, most financial experts advise expatriates not to invest their savings in an offshore tax haven until they know what their long-term plans are. Accounts have minimum deposit levels that usually range from the equivalent of around €750 to €15,000 (£500 to £10,000), with some as high as €150,000 (£100,000). In addition to large minimum balances, accounts may also have stringent terms and conditions, such as restrictions on withdrawals or high early withdrawal penalties. You can deposit funds on call (instant access) or for a fixed period, e.g. from 90 days to a year (usually for larg sums). Interest is usually paid monthly or annually; monthly interest payments are slightly lower than annual payments, although they have the advantage of providing a regular income. There are usually no charges provided a specified minimum balance is maintained. Many accounts offer a cash card or a credit card (e.g. MasterCard or Visa), which can be used to obtain cash from ATMs throughout the world. When selecting a financial institution and offshore banking centre, your first priority should be for the safety of your money. In some offshore banking centres, a percentage of bank deposits up to a maximum sum is guaranteed under a deposit protection scheme in the event of a financial institution going bust (the Isle of Man, Guernsey and Jersey all have such schemes). Unless you’re planning to bank with a major international bank, you should check the credit rating of a financial institution before depositing any money, particularly if it doesn’t provide deposit insurance. All banks have a credit rating (the highest is ‘AAA’) and a bank with a high rating will be happy to tell you (but get it in writing). You can also check the rating of an international bank or financial organisation with Moody’s Investor Service (: http://www.moodys.com). You should be wary of institutions offering higher than average interest rates; if it looks too good to be true, it probably is! The above has been taken from the excellent publication by David Hampshire Living and Working in Spain - A Survival Guide