How are accounts and deposits abroad taxed to the Treasury?

There are many Spaniards who with the aim of obtaining the maximum profitability for your savings,look beyond our borders, betting on the opening of accounts and the contracting of deposits abroad, given by the attractive fixed-term impositions offered by many European banks, and which are unattainable for Spaniards.

For example, the J&T Banka bank of the Czech Republic offers a payment of 1.92% APR for a fixed term of five years.

Aware that this situation is increasingly common, especially for the comfort and security offered by the Internet today.

For this reason, from AYCE Laborytax we wanted to review how these accounts and deposits abroad are taxed to the Treasury,to clarify all the doubts about how these assets should be declared.

What taxes must be paid to the Tax Agency for foreign deposits?

Immersed in the campaign of the 2017 Personal Income Tax Return,it is a good time to review the taxes that will have to be paid to the Tax Agency for foreign deposits,one of the main doubts that arises to all those people who seriously value this possibility.

The first thing is that, any account or deposit contracted abroad, must be indicated in box 22 of the declaration,being integrated into the taxable base of the savings, appearing as income from movable capital.

Having clarified this point, the taxes payable on foreign accounts or deposits will be exactly the same as for domestic accounts and deposits:

• 19% for the first 6 000 euros.
• 21% for the following EUR 44 000.
• 23% for any profit over €50,000.

Deposits contracted in countries with double taxation with Spain

If the deposit has been contracted in a foreign country with double taxation with Spain, there is the possibility of avoiding double payment.

To do this, it will be necessary to indicate to the entity that it does not apply any type of withholding on the income obtained,when settling the corresponding tax in Spain.

It will be necessary to do it through the Certificate of Tax Residence,which can be downloaded through the website of the Tax Agency, using the electronic DNI or the Cl@ve Pin.

Subsequently, you have to access the Tax Certificates section and request the Tax Residence Certificate, previously selecting the country of origin of the bank in which the money is deposited.

If it were the case that the entity applies, even so, the corresponding withholdings; to avoid them, it will be necessary to indicate in box 533 of the declaration that these withholdings have already been applied due to international double taxation.

Is it mandatory to inform the Treasury and the Bank of Spain?

If the amount invested in foreign deposits as well as the balance of a foreign account exceeds 50 000 euros,counting all our assets, it will be mandatory to inform the Treasury; because it is the sum of the balance of all accounts abroad, or the average balance of the last quarter.

It will be informed by
the presentation of form 720,
which must occur during the first three months of the year, regardless of whether the money is distributed among different entities.

On the other hand, it will also be necessary to inform the Bank of Spain when the total amount of the goods abroad exceeds one million euros.

To do this, the Survey on Foreign Transactions (ETE) will have to be presented, although this situation occurs with much less assiduity.

What amount can be deducted from withholdings applied abroad?

There are two options when deducting the withholdings applied by a foreign financial institution:

• Deduction of the amount paid abroad on the occasion of the tax analogous to the Personal Income Tax, as well as the Income Tax of Non-Residents.
• Deduction of the resulting amount after the application of the average effective tax rate on the taxable base taxed abroad.

Are only the interest on foreign deposits taxed in this way?

There are other returns on capital that must be declared in the same way as the interest generated by foreign deposits.

This is the case of dividends obtained by shares deposited on a foreign exchange,as well as interest generated by remunerated accounts that have been contracted in a foreign bank.

To declare, apply or deduct this type of withholdings, as well as to pay personal income tax, the same procedure must be followed as in the cases discussed above.

conclusion

Deposits abroad

are an excellent alternative for Spaniards to get the most out of savings, given the high commissions offered by foreign banks for a fixed term, compared to those offered by Spanish banks.

If you are seriously considering the possibility of hiring a deposit abroad and you still have some doubt in the pipeline, our tax advisors in Madrid and Toledo will offer you all the information you need.