Tax & Accounting News

Spanish Tax

17/11/2008

Non resident individuals in Spain, have been reassured that they will not incur Spanish withholding tax (tax deducted locally usually up to 15%) on interest earned on their Spanish bank accounts, provided they provide key documents to the Spanish Bank.

Under Spanish law and the European directive, non-resident individuals in Spain are not subject to withholding tax on any interest earned on accounts held with Spanish banks because any interest received in Spain will be taxed in the UK in the normal way. 
 
However, to ensure that no tax is deducted in Span, all banks must have a declaration of fiscal residence from the account-holder. The bank will provide a draft, including personal details such as account-holder’s Numero de Identificacion de Extranjeros (NIE) (an identification number for non Spanish individuals) and their country of residence, which the account-holder simply needs to complete and sign.
Some Spanish financial institutions may also request a certificate of fiscal residence issued by HM Revenue & Customs.

The NIE is essential for non-residents in Spain who wish to carry out fiscal and legal transactions in Spain, including buying property. Banks are now requesting NIEs from account-holders who have not already provided the number and some banks are reported as having temporarily blocked accounts until they receive this.

Martina Fitzgerald, head of tax at Harris Lipman, said: “We welcome enquiries from anyone who wishes to clarify their Spanish tax position or who require assistance in obtain a fiscal residence certificate from HM Revenue and Customs.”