Sunday, July 13, 2008

Spending Money in Spain|Spanish Currency Transactions

Moving to Spain - Money and Currency Transactions in Spain

The Currency in Spain is the Euro

Banks in Spain
As a general rule, banks in Spain are open from Monday to Friday from 9.00am -14.00pm and on Saturdays from 9.00am to 13.00pm; however, in summer they may close a little earlier. Nevertheless, in my experience, many Spanish banks will be willing to stay and deal with your queries after closing time, as long as you have arrived there before 14.00.

Many banks in major Spanish cities have employees who speak English and can cope with all international transactions. You can choose to wait to talk to these employees if you find the Spanish language a problem. However this is not always the case. If you are moving to Spain, it would be well worth asking your local estate agent or gestor which local banks provide this service as this could save you a lot of problems later on. Learning Spanish is one thing; learning Spanish banking language and regulations can be quite another!

When you move to Spain it is good to note that most Spanish banks offer an internet service, where you can choose your language of transaction and undertake most transactions on the internet. Many Spanish expats find this service invaluable.

When using Spanish banking services, please remember that you will need to show your passport to the bank cashier, so have it with you at all times. In fact, it is mandatory throughout Spain to carry your passport (or, if you are living in Spain, your residencia) at all times.

If you wish to change foreign currency for Spanish Euros, you will be charged a commission on the transaction. Together with the cost of exchange rates, this can prove expensive. However, in many Spanish tourist areas you can find shops and offices who will exchange currency. Often the exchange rate and commission is favourably comparable to those offered by Spanish banks, so it’s a good idea to bear this in mind if you are staying in or moving to a tourist area in Spain and have brought foreign currency with you.

Being Paid in Spain
When moving to Spain, you may still be employed by a UK, or other nation company or have a foreign pension paid into your Spanish bank account. This can also prove costly, especially if you are paid by cheques in foreign currency, as you will not only be subject to the vagaries of the exchange rate, but foreign currency cheques can carry an extra charge in Spanish banks. It would therefore be a good idea before moving to Spain, to ask your employer, or pension company, if they could pay you in Euros. This is often not possible, but it is certainly worth asking.

Using Credit Cards in Spain
Most major credit cards are accepted throughout Spain, however, as in many countries, the establishment where you pay using your card may put a limit on the amount you can pay or charge you extra for the transaction.

Using Cash Machines in Spain
Most towns in Spain (and even many villages) have ATMs (cash machines) and, although you will be charged for each transaction, it may be worth using these rather than your credit card on some occasions. Most ATMs have instructions in a number of different languages as well as Spanish, so they are easy to use.

One thing to note about ATM machines in Spain. Some of these are in locked cubicles just inside the lobby of the bank when accessed outside of Spanish banking hours. You will need to swipe your card across the door lock to open it. Some Spanish banks accept all cards in their locks, but others only accept cards belonging to the banking company in question. When moving to Spain it would therefore be a very good idea, not only to ensure that you know where to find a nearby external (unlocked) ATM machine which accepts all credit cards, or where the nearest locked cubicle is which will take your credit card. This is really important, as Spanish banking hours are not only short, but Spanish banks also close for many public holidays and local fiestas and it could be many days before you find a bank open again.

Taxes on Purchases Made in Spain
As in the UK, tax is charged on most purchases in Spain. Spanish purchase tax is known as IVA (Impuesto al Valor Agregado) and varies between 7% and 33%, depending on the purchase made. Food, wine and basic living necessities are taxed at 7%, most other goods and services are taxed at 16% and luxury items including jewellery and cigarettes are taxed at 33%. As I write, the Spanish Government is considering lowering the tax on fuel in Spain, owing to nation wide protests, but it’s early days on that one...

Buying Property in Spain
When considering moving to Spain and purchasing Spanish property, you need to be aware that you can be hit by fluctuating exchange rates. As I write, the value of the Pound is lower in relation to the Euro than it has been for a long time (1 Pound will get you 1.248 Euros). If you have already planned how much your property is gong to cost, you need to take account of this. If Stirling falls any more against the Euro, your Spanish property will cost you more. Of course, if the opposite occurs, your Spanish house will cost you less.

It is obviously better to err on the side of caution and allow more money for your purchase of property in Spain to cover fluctuating exchange rates. It would also be a good idea to use a currency specialist to find you better exchange rates. I you think you can judge the market, or your currency specialist is able to do so, it would be profitable to buy your property when rates are best for you, or agree a fixed price based on an exchange rate with the Spanish estate agent or with your Spanish bank.

I hope all this has helped you iif you are considering living in Spain or travelling to Spain. A little foresight about Spanish currency, banking, purchasing and exchange rates, can make Moving to Spain so much easier.