If you live, work, or own property in Spain, choosing the right bank account is more than a matter of convenience. It can directly affect your taxes, Social Security contributions, and even the way you pay your bills.
With online banks now offering both Spanish and foreign IBANs, it is important to understand how your tax residency and type of account influence your financial obligations.
Classic Spanish banks vs online banks
The choice between a traditional Spanish bank and a modern online alternative often depends on your tax residency and the type of tax obligations you have in Spain. While online banking has become increasingly popular for its convenience and low costs, classic banks still play a key role for many residents.
Classic Spanish banks
Traditional banks remain fully recognised by the Spanish Tax Office, Social Security, and most utility companies. They allow direct debits for taxes and bills, and payments in euros are processed without exchange fees.
Another advantage is that holding an account with a Spanish bank is not reportable under Modelo 720, as it is considered a domestic asset.
However, classic banks can be less efficient when it comes to international transfers, and their online platforms are often less intuitive than those of modern fintech competitors. Their fees also tend to be higher, particularly for non-residents or clients with limited activity in Spain.
International online banks
International or fully digital banks offer sleek mobile apps, instant notifications, and excellent conditions for cross-border transfers. They are ideal for clients who move between countries or operate in multiple currencies.
Opening an account is usually straightforward, as the entire process can be completed online using digital identification and a mobile phone, often without the need to visit a branch or provide extensive documentation.
For Spanish tax residents, however, these accounts may present certain practical limitations. Balances exceeding 50.000€ must be reported under Modelo 720, and paying taxes or Social Security can be complicated if the account has a foreign IBAN. Some public bodies or companies still require a Spanish IBAN for automatic payments or tax settlements.
Many online banks now offer the possibility of opening either a Spanish IBAN (ES) or a foreign IBAN (for example, DE or FR), depending on the country from which the account is opened and verified.
However, having a Spanish IBAN does not automatically mean that the account can be used to pay taxes or Social Security contributions. This depends on whether the financial institution is recognised as a collaborating entity by the relevant public body. Clients should always confirm this before attempting to make such payments.
Choosing what works best for you
If you are tax resident in Spain and regularly need to make payments to the Tax Office or Social Security, maintaining a Spanish account, whether traditional or digital, is often the most practical solution.
However, if you handle multiple currencies or spend long periods abroad, keeping an additional online account can provide flexibility and better exchange rates.
In the end, a combination of both, a classic account for local obligations and a digital one for international operations, often offers the best balance between compliance and convenience.
