Should I open a Spanish bank account?
Yes. If you own property, either as a Resident or a Non-Resident, certain of your bills will be collected by direct debit from your Spanish bank account.
EU citizens can apply for a Non-Resident Bank Account on arrival in Spain. If you are going to live in Spain you can change to a Resident's Account as soon as you have your residence permit (or certificate of fiscal residency obtained from the Tax Office - whatever other document your Bank may ask for if you do not need a residence permit).
Most banks are open from 9.00 am to 2.00 pm Monday to Friday, some are also open one evening each week and some also open on Saturday morning from 9.00 am to 1.00 pm. Nowadays it is common to find some English-speaking bank staff in tourist areas. You will usually need your passport for any transaction at the bank.
(To help against fraud, you may also need to produce your passport when paying for goods (eg petrol) by credit card. Generally, cheques are not accepted for payment of goods and you will be asked to pay either by cash or credit card.)
I'm a pensioner and will be living in Spain – how will I receive my pension?
This depends on personal choice, you need to open a bank account in Spain. You can either have your pension paid into your home country bank account and then make transfers from that to your Spanish account, or you can arrange with your pension provider to have your pension paid in euros directly into your Spanish account. Please be aware that if you decide to make transfers by cheques drawn on your home country account and paid into your Spanish account, it can take up to four weeks for the cheque to clear and the money to be available in your Spanish account.
Under EU banking regulations, banks should not charge exchange commission on the direct transfer of pensions (ie by direct transfer in euros).
Will my retirement pension be taxable in Spain?
Once you become a Spanish resident for tax purposes, your pension income (state or private) will be liable to Spanish income tax. The only exemptions are some UK government service pensions: police, fire service, civil service, local authority (but not NHS).
However, Spain has Double Taxation agreements with many countries which ensure that you do not pay tax on the same income in both Spain and your home country.
Anyone with a total worldwide income of less than 8,000 euros, which comes from one source (excluding investments), is exempt from Spanish Income Tax and does not have to file a tax return (subject to certain conditions).
Because of anomalies in the Spanish interpretation of "purchased annuities" there may be ways to reduce the Spanish income tax due on some private pensions and you should seek advice from a pension specialist on this subject.
A good financial planner will be able to advise you on offshore trust structures that will legally avoid Spanish Wealth tax, Inheritance Tax, Capital Gains Tax and Income Tax.
