Living · Banking & tax
Banking and tax.
Opening a Spanish bank account is the easy bit. Tax — particularly getting it right from year one — is where people come unstuck. Here’s the realistic version: residency rules, IRPF, wealth tax, the double-tax treaties, and when you actually need an accountant.
This is general guidance, not personal financial advice. Spanish tax rules change. Cross-border tax interacting with your home-country tax is genuinely complex. For anything beyond a simple employed-income situation, get a Spanish tax advisor (asesor fiscal) familiar with foreign residents — the cost (€500–2,000/year) is dwarfed by the cost of mistakes.
Banking
Opening a Spanish bank account.
You need a Spanish account for almost everything — paying utilities, signing a long-term rental, buying property, getting paid in Spain. Most banks will open an account once you have a NIE.
The main banks
- Sabadell — popular with foreign residents. Strong English-language service. Solid digital banking.
- BBVA — second-largest Spanish bank. Excellent app, good English support, decent for non-residents.
- CaixaBank — biggest by branches. Branch presence in Frigiliana itself. Solid all-round.
- Santander — UK customers may already have a relationship via Santander UK; transfers easier.
- ING España — fee-free, online-only, excellent if you don’t need a branch. Limited in-branch service for non-residents.
Resident vs non-resident accounts
Banks distinguish between resident (you pay tax in Spain) and non-resident accounts. Non-resident accounts have higher fees and more restrictions; once you become a Spanish tax resident, switch your account type to avoid paying extra. The bank will ask for proof of residency status; bring your TIE/registration certificate.
What you’ll need to open
- Passport
- NIE (Número de Identificación de Extranjero)
- Proof of address (rental contract or property deeds)
- Padrón certificate (sometimes)
- Proof of income (P60/payslips/pension statement)
Most banks charge €5–15/month in fees for residents who don’t meet certain thresholds (regular salary deposit, mortgage, etc.). Online banks like ING are fee-free.
Tax residency
The 183-day rule.
You become a Spanish tax resident if any of these are true in a calendar year:
- You spend more than 183 days in Spain in the year, or
- Your main centre of economic interest is Spain (most of your work, business, or income is from Spanish sources), or
- Your spouse and dependent minor children live in Spain.
Tax residents are taxed on worldwide income and assets; non-residents only on Spanish-source income. The shift from non-resident to resident is significant and catches people out — particularly retirees and remote workers who think they’re "just visiting" but accumulate over 183 days across the year.
If you’re tax-resident in Spain
- You file a Spanish tax return (Modelo 100) every June for the previous calendar year.
- You declare worldwide income — UK pensions, US investments, German rental income — all of it.
- You may also need to file Modelo 720 — a declaration of overseas assets above €50k in any of three categories (bank accounts, shares/funds, real estate). Annual; failure to file is heavily penalised.
- You’ll typically pay tax on income above your personal allowance via Spanish IRPF (income tax) at progressive rates of 19–47%.
Double-taxation treaties
Spain has double-taxation treaties with most countries (UK, US, Germany, France, Canada, Australia, etc.) — these prevent you being taxed twice on the same income. In practice you usually pay tax in one country and get a credit in the other. The treaty determines which country gets first claim on each type of income.
UK State Pension: taxed in Spain. UK government pensions (civil service, NHS): typically taxed in the UK only. UK rental income: usually taxed in the UK first, then declared in Spain for credit. Get specific advice — these vary.
Self-employment
Registering as autónomo.
If you’re self-employed and based in Spain — freelancers, consultants, remote workers, small business owners — you register as autónomo. This is the Spanish equivalent of being self-employed/sole trader.
What it involves
- Register with Hacienda (tax office) via Modelo 036/037 — declares the type of business activity.
- Register with social security as autónomo — gives you access to Spanish public healthcare, contributory pension.
- Pay monthly social security — flat rate (around €230–290/month standard, or reduced rates for new autónomos in their first 1–2 years; or income-based since 2023 reform).
- File quarterly tax returns (Modelo 130 for income tax + Modelo 303 for VAT if applicable) and an annual return.
- Issue invoices in the Spanish format with applicable VAT and tax withholding.
Tariffs and incentives
New autónomos benefit from a reduced flat rate (around €80/month) for the first 12 months, increasing gradually. Andalucía currently offers further regional incentives — check current Junta de Andalucía programmes when you register.
Get an accountant
Autónomo paperwork is one of the strongest reasons to engage a local accountant — €40–100/month for a small operation gets everything filed correctly and saves hours of confusion. Almost every village and town has one; we can recommend a couple familiar with foreign clients in Frigiliana — drop us a line.
The main Spanish taxes
What you’ll actually pay.
IRPF — Income tax
Progressive rates from 19% to 47%. Combined state + Andalucía regional tax. Personal allowance ~€5,500 (more for over-65s). Spouse/family allowances apply. Most residents file annually in May–June.
IVA — VAT
Standard rate 21%. Reduced rate 10% on most food, restaurants, public transport, hotels. Super-reduced 4% on basic foods, books, medicines. If you’re autónomo, you charge VAT on most invoices and pass it to Hacienda.
IBI — Property tax
Annual local property tax. 0.4–1.1% of cadastral value (typically much less than market value). For a €400k house in Frigiliana, expect €400–900/year. Paid annually to the Ayuntamiento.
Wealth tax (Impuesto sobre el Patrimonio)
Tax on net worth above thresholds. Andalucía has effectively abolished wealth tax (as of 2022) for residents — major reason wealthy retirees pick Andalucía over other Spanish regions. There’s a national "solidarity tax" on assets over €3m which still applies. Other regions still charge wealth tax above ~€700k.
Inheritance tax (ISD)
Andalucía has applied near-100% reductions for inheritance and gifts between close family (spouse, children, parents). In practice, most family inheritances in Andalucía pay almost nothing in Spanish inheritance tax. Major regional advantage.
Capital gains tax (CGT)
Capital gains taxed separately from income at 19–28% progressive rates. Applies on share sales, property sales, fund disposals. Main residence rollover relief: if you sell and buy another main residence within 2 years, CGT can be deferred.
The Beckham Law
Special regime for newly-arrived workers — flat 24% income tax on Spanish-source income up to €600k for 5 years, with worldwide income tax-free (kind of). Strict eligibility — you must be coming as an employee or under specific visa categories (digital nomad qualifies). Transformative if you qualify.
When to get help
When you need an accountant.
Get a Spanish tax advisor (asesor fiscal) if any of these apply:
- You’re self-employed (autónomo) — get one.
- You have foreign income, foreign pensions, or foreign property income.
- You have assets over €50k overseas (Modelo 720 territory).
- You’re selling property or significant investments.
- You’re considering the Beckham Law or other special regimes.
- You have rental income from any source.
- You inherited or are gifting significant assets.
For a simple employed-income situation with no foreign assets, you can DIY using Hacienda’s Renta Web tool. For everything else, the cost of an accountant (typically €500–1,500 for an annual return; €40–100/month for ongoing autónomo support) easily justifies itself.
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