Managing your money
When contemplating becoming resident either by renting or buying a property in Tenerife, it is very important to remember some salient facts about managing your money.
Spanish banks charge some of the most expensive fees in Europe. There’s no doubt that banks charge at a higher level and on a greater range of services than most other countries of the European Union. For example, it comes as quite a shock for new account holders from other countries when they discover how much they’re charged for clearing cheques from a different Spanish bank to their own.
Buying property in Tenerife
As with elsewhere, usually the most expensive purchase is a property. For the new arrival, this will mean importing funds into Spain to pay for the purchase.
I caution clients to take great care upon acquiring property and how funds are transferred.
Firstly, identify what the paying bank and the receiving bank are going to charge you for the service; fees do vary between the rival banks. Also, be aware of other companies offering facilities of exchange at lower charges.
Secondly, properly identify to whom you are paying the funds:
- If transferring purchasing funds to a lawyer, estate agent or other professional, ensure they will hold your money in a bonded client account and that they have professional indemnity insurance or the equivalent.
- If paying direct to a seller, any deposit you make has risks attached. For example if the seller defaults on selling to you and attempts to hold on to your deposit there is obviously a clear case of breach of contract but enforcing any action in Spain could prove extremely difficult for a variety of reasons. Advancing any additional monies ahead of a completion before the notary must be considered out of the question.
Bringing money in to Tenerife
When residing in Tenerife, I generally advise clients not to import any more money than is necessary to maintain their lifestyle. As a non-resident of the UK for example, it’s quite legitimate to make extensive use of offshore banks and facilities and this is usually very satisfactory in protecting and enhancing assets.
Returning to the Spanish residents’ bank accounts, remember two important points:
- If you have a deposit account, any interest earned will have 15 per cent tax withheld and paid to the Spanish tax authorities
- For those on a pension from another European country, these should be received without a bank commission charge. European Union banking regulations require all banks in member states to comply with this. The simplest way of ensuring that you receive the pension in full is to arrange for the paying bank to forward a direct transfer through the banking system. If your Spanish bank makes any charge against this process, they will be required to refund you in full.
Taking money out of Tenerife
When exporting large sums of money from Spain, use an organisation that only charges at a reasonable level for the service. Some banks charge a percentage of the amount transferred and this can be a very expensive operation.
- Above €600 – Every transaction out of Spain above €600 has to be reported by the Spanish bank to the authorities.
- Under €6000 – You can carry up to €6000 in cash in and out of Spain without restriction.
- Above €6000 – You are required to declare (on form B1) how much you are carrying and for what purpose.
- Above €30,000 – You are required to declare (on form B2) the amount and purpose. The correct procedure is to obtain B1 or B2 from a bank and present it to customs at the departure point. If you don’t do this and are stopped and searched, you may have to face serious consequences.