Spanish currency issues and how they affect real estate in Spain
Before committing to buy a new home in Spain you should familiarise yourself with issues relating to Spanish currency and real estate. Spain became a founding member of the Eurozone when they ditched pesetas in favour of the Euro in January 2002. This has resulted in the Spanish economy enjoying a more stable currency although it may not always appear this way when entering the market for real estate in Spain.
General financial information and problems with Spanish currency market
- Banks
Banks in Spain open between 9am and 2pm on weekdays and between 9am and 1pm on Saturdays although they may close slightly earlier during the summer.
In the tourist areas, a disparate range of businesses offer money exchange for all currencies. Most will either charge commission or offer lower exchange rates than banks. - Credit cards
Most major credit cards are accepted throughout Spain. A limit on the amount you can spend or withdraw may be imposed by some establishments, and a surcharge may also appear.
ATMīs can be found all over Spain and most cards will be accepted. An option to choose from several different languages will generally be available. Cash machines are particularly useful because of the short opening hours of Spanish banks. - IVA (VAT)
The sales tax in Spain is known as IVA and is charged at a rate of between 7% and 33% depending on the item bought. IVA is charged at 16% on most goods and services although food, wine and basic requirements are taxed at 7%. This is the same rate charged on real estate transactions in Spain.
The higher 33% bracket is reserved for luxury items such as jewellery, whilst cigarettes are also charged at this rate.
Spanish currency issues can make your home in Spain more expensive
When you buy property in Spain the actual cost will not become known until you have bought the currency to complete the purchase of your home. Spain is a Eurozone country and Sterling has fluctuated against the Euro by up to 10% in just a few months. The home in Spain you desire could become a good deal cheaper or more expensive.
If you have full funds available it is worth fixing the currency by means of buying it all on a spot contract. You would then hold it on deposit and send payments in Euros.
Many people underestimate the importance that exchange rates have on the cost of their home. Spain offers some good investment opportunities but the majority of individuals do not make the most of them. They exchange currency at their bank and then transfer their funds abroad. This does not guarantee the best exchange rates or protect against currency risk.
