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Economy, Money, Banking & Taxes - Spain Apply now for international schools jobs and start teaching abroad with overseas adventure.

Money

Up until 2002, Spain used the Peseta. However it has abandoned this since in favour of the Euro. The Euro can be split into 100 Cents. 1 Euro is equal to $1.37 or £0.82 and uses the currency code EUR.

Coins come in 1, 2, 5, 10, 20 and 50 Cent variants as well as in 1 and 2 Euro variants. These often feature commemorative coins which can be used in the same way as regular ones.

Bank Notes come in 5, 10, 20, 50, 100, 200 and 500 Euro variants. Each one is given its own number and is credited to an artistic period of European Architecture.

Economy

With a Gross Domestic Product of EUR 1 Trillion, Spain has the thirteenth largest economy in the world and despite its recently poor performance; it’s considered to have a widely improved economic situation from where it once was. Additionally, in May 2013 Spain had a EUR 2.2 Billion trade surplus with the rest of the European Union, with exports rising 7.3% annually.

Spain’s first large economies were in communications with companies like Telefonica and Abengoa servicing countries internationally, especially Latin America and parts of Asia. Soon this developed into a full-scale technology economy and has seen many sustainable energy companies rise to fruition. High-speed rail systems are also another area where the Spanish have flourished economically, with the second longest rail network infrastructure in the world, barely falling short behind China.

Since then, Spain has invested more into its technology development industries and today sees Automobile exports making up 11% of its economy, Penicillin exports at 5%, Oil exports at 4%, Automobile parts at 4%, Dump Truck exports at 2%, Orange exports at 1%, Pneumatic Tires at 1%, Olive Oil exports at 1%, Grape and Wine exports at 1%, Pork exports at 1% and many other exports helping to make up its economy including artichokes, tomatoes, ski footwear, ceramics, stainless steel, iron and a whole host of others.

Tourism also brings in an incredible amount of Spain’s economic funding, with a Tourist sector worth over EUR 40 Billion and making up 11% of the country’s employment, providing jobs for over two million people. The country can see upwards of eight million visitors a month and on average sees over sixty million tourists a year.

Banking

Banking in Spain works quite the same way it does in other western developed countries in the world and so visitors from the UK, Canada, the US and Australia should see little difference between the systems. However, it’s wise for those planning on banking in Spain to known that not all Spanish banks have all branches with English-speaking staff and you may be limited on where you can subsequently bank. Additionally, some banks in small villages have extremely limited opening hours and so it’s wise to plan ahead when and if you wish to bank.

Most banks will charge a fee for using an ATM that is not their own, so it’s wise to choose a bank with a good presence in the country. Luckily, all banks now provide Telephone and Internet banking services so this may be more applicable for transactions where an English speaker is required as most central bank offices will have an English speaker on hand, additionally, most banks offer the option of receiving bank statements and paperwork in English.

To open an account you do not need to be a resident, however, as a rule of thumb more options and services will be offered to residents, people are considered residents if they live in Spain for at least 183 days per year, use the country as a base for a business or professional activity and/or have a spouse and/or children under 18 who are permanent residents in Spain. Types of bank accounts include the Current Account, the Savings Account and the Deposit Account.

Current Accounts are used for day-to-day transactions and allow withdrawal of money with no restrictions or feeds. Savings Accounts offer higher interest rates but limits how many free withdrawals are available before a fee is applied. Deposit Accounts offer the highest interest rates but do not allow for cash withdrawals on a daily basis and will typically limit this to a few days, or maybe even a single day, per year.

Some of the best reputed banks in Spain include the Banco Santander, La Caixa, Banco Bilbao Vizcaya Argentaria (BBVA), Caja de Madrid, Banco Popular, Bancaja, Banco Sabadell, Caja de Ahorros del Mediterraneo, Caixa Catalunya and Bankinter.

Taxes

Taxes in Spain include Value Added Tax, Gift Tax, Capital Gains Tax, Inheritance Tax, Non-Resident/Property Tax, Wealth Tax and Income Tax.
Value Added Tax is applied at three levels based on the type of product, essential items such as groceries and supermarket foods have VAT added at 4%, products and services such as dentistry and hairdressing has a VAT addition of 10%, finally, non-essential products such as alcohol and cigarettes have a 21% VAT rate added.

If you receive a gift from a living person, a small amount of the gift is taxed according to its value and the province the participants live in, this is called Gift Tax.

Capital Gains Tax is added upon the sale or transfer of any assets, these can be moveable such a vehicles and items of various types, or immovable like houses, studios and apartments. This is applied differently based on the item’s value, with items up to EUR 6000 having a rate of 21% applied, items up to EUR 6000 to EUR 24000 is taxed at a rate of 25%, and finally, items over EUR 24000 has a tax rate of 27% added.

Gifts that are inherited, including monetary gifts, can also be taxed via Succession Tax, this varies greatly on the amount taxed but in general it scales with the value of the item, beginning at a base rate at under EUR 8000 being taxed at around 8% and scaling this up to items of a value of over EUR 800,000 being taxed at around 34%.

Property Tax and Non-Resident Property Tax is affected in a similar way but on different levels. Generally speaking, properties are taxed at between 6.5-8% upon purchase, and at another set annual rate based on the province the property is located in.  Non-Residents are always taxed at 24.75% of the purchase of any property and follow the same code as residents for the annual tax.

Wealth Tax is applied to an individual’s held wealth, with up to EUR 700,000 being Tax Free for both residents and non-residents. However, residents also get a EUR 300,000 allowance on their own home as well, and this means that a married resident couple in Spain has a joint Wealth Tax deduction of EUR 2 Million. All additional wealth above this threshold is taxed and scales based on the amount held and the province resided in, but typically begins at up to an additional EUR 167,000 being taxed at 0.2% and over EUR 10.7 Million being taxed at 2.5%.

A person is liable for Personal Income Tax if they spend more than 183 cumulative days in Spain inside of one Calendar Year (Spain’s Calendar and Tax years both run from January to December, unlike other nations), if their base for their professional practice or business is in Spain or if their spouse and/or children are Spanish residents. This is scaled greatly based on the profession and amount earned with residents being liable for tax on their worldwide income and non-residents being liable for only Spanish income tax if it’s from a Spanish source, typically with the former being at a scaled rate and the latter at a fixed rate.