So, now that you’re living in Spain your life is all about euros. Here’s what you need to know about money matters in Spain – from taxes to tipping.
Opening a bank account
You’ll need to do this pretty quickly. Thankfully, by Spanish standards at least, opening a bank account is a relatively straightforward process.
Accounts are available for both residents and non-residents. You’ll need to present your passport, proof of address and proof of your employment status. You may need to get any English documents translated into Spanish by an official translator (traductor jurado) for them to be accepted by the bank.
- To open a resident’s account, you’ll also need your foreigner’s identification number (número de identificación de extranjero or NIE).
- If you’re opening a non-resident’s account you may also be asked to provide a non-resident’s certificate (certificado de no residente) which you can get from a police station on presentation of your passport.
Although applications can be made online, you’ll need to visit in person at some point in order to present your documentation so you may as well do the whole thing face-to-face. If your Spanish language skills are lacking, it’s a good idea to take along someone who can help translate for you.
Be sure to look into the charges before choosing your account. There may be opening fees and ongoing maintenance fees. Also, make sure the bank you choose has plenty of ATMs in your area – withdrawals from your own bank’s machines are likely to be free, but you’ll pay a €2 fee every time you use another bank’s ATMs.
Of course, you’ll need all the usual insurances in Spain: home insurance, vehicle insurance and so on. But another thing worth considering is health insurance. Your EHIC card will give you access to the Spanish healthcare system for the first three months of your stay. If you’re in receipt of a UK state pension or certain other benefits you’ll also get access for free on an ongoing basis. Alternatively, you’ll need to take out private health insurance or start making contributions to the Spanish social security system (seguridad social). Not everything under the Spanish health system is free– ambulances, prescriptions and dental work, for example, so you might want to top up your cover.
Income tax rates are generally higher in Spain than in the UK, especially taking into account the difference in the tax-free personal allowances. In the UK, this is £11,850, but in Spain it’s €5,151 for under-65s, rising to €7,191 for people over 75.
Taxes in Spain are split between state and regional governments so your tax liability depends on where you live. Income tax rates in Madrid start at 19%, rising through 24%, 30%, 37% to 45% for income above €60,000. The top rate of income tax in the communities of Andalusia and Catalonia is even higher at 49%.
If you’re an official resident, you’ll pay Spanish tax on all of your income – not just what you earn in Spain. If you’re non-resident, you only pay tax on the money you earn in Spain.
- There’s an excellent Spanish income tax calculator here: icalculator.info/spain.html
You’ll have to pay taxes on any property you own. Property ownership tax (impuesto sobre bienes inmuebles, or IBI), is an annual tax payable to the local government. It varies from region to region but is in the range of 0.3-0.5% of your property’s rateable or ‘cadastral’ value which is typically around 70% of the property’s actual value.
If your assets total more than €700,000 (plus a further allowance of up to €300,000 against the value of your main property) then you may also fall foul of Spain’s notorious on-again-off-again wealth tax or ‘patrimonio’. Abolished in 2009, it has been reintroduced as a ‘temporary’ measure regularly since 2015 and there are talks of abolishing it again. The tax varies depending on your residency status and where you live but is broadly between 0.2–2.5% of your net assets.
VAT (impuesto sobre el valor añadido or IVA) is included in all prices shown in shops. There are three rates:
- IVA superreducido: 4% on foods, medicine, books and newspapers
- IVA reducido: 10% on things like bus and train fares, toll roads, and non-basic foods
- IVA general: 21% on most other goods and services
For a good overview of taxation in Spain, see the Wikipedia page
Culturally, tipping isn’t really a thing in Spain. You might leave the few cents change you got on the table when you leave a café or restaurant, but it’s not expected. Waiting staff are well-paid professionals and they don’t have to rely on tips to make a decent wage.
Things are changing in the tourist hotspots where canny restaurant owners are beginning to see it as an easy source of extra revenue and signs encouraging tipping are starting to appear.
Other general tipping conventions:
- There’s no need to tip in bars
- Taxi drivers don’t expect a tip
- If you get help with your bags in a hotel, tip a euro per bag
- Tour guides are often self-employed and appreciate tips in recognition of their services
Spanish pensions are generous. If you’ve paid Spanish social security contributions for 15 years you’re entitled to the minimum Spanish pension. 35 years will get you the full pension. If you’ve moved to Spain from another EU country, your insurance contributions in that country may count towards your eligibility for a Spanish pension. Take advice from an independent financial advisor.
If you want to, you can draw your UK pension in Spain. Contact the UK Government’s International Pension Centre to find out how.
For more information about pensions, see our guide to Retiring to Spain.
Moving your money
When you need to transfer money from the UK to Spain or vice versa, bear in mind that doing it through your bank is an expensive way of doing it. Not only will they charge you a fee, they may also fleece you through the currency exchange rate they apply. If you’re moving small amounts of money, the fee will be disproportionately large. If you’re moving your savings or the capital to buy a house, the unfavourable exchange rate will hit you hard.
By far the cheapest way to move money across borders is to use a service such as money transfer company such as WorldFirst who will make this process simple and transparent. Just three steps:
- Make an international transfer: Tell us how much you want to send (over £1,000), who you want to pay and which currency you want to pay in. Then we’ll quote you a rate and you can book the trade.
- Send us your money: Once you’ve booked your rate you’ll receive a trade confirmation containing all the payment information so you can pay World First by debit card or bank transfer.
- We make your payment: That’s it. Put your feet up. World First will convert your funds and send the money to the account you requested, all at a great rate.
Money-saving tips and tricks in Spain
- When eating out during weekday lunchtimes, look for the ‘menu del dia’ (menu of the day) which is often great value. Because it changes every day, restaurants often don’t bother writing it out in English, so keep your eyes peeled.
- If you’re living in Spain and have the luxury of doing things in your own time, take advantage of the free opening times of museums and other attractions. For example, the Picasso Museum in Barcelona offers free entry on Thursday evenings and the first Sunday of each month.
- Rail tickets are cheaper if you book them online, and the further ahead you book, the cheaper they get.
- Beware of false economies. If you’re doing anything involving Spanish officialdom – from buying a car to selling your property consider securing the services of an accountant, solicitor or gestor as appropriate.
- Shameless self promotion but, save money when transferring money internationally with WorldFirst