Taxes that apply when bringing money from abroad

Imagine that for work reasons you had to leave the country. You were working there for a while and at the end of your stay you decide to make an income. There is no other institution in Spain that is more concerned about this kind of issues than Hacienda.

Above all, if there are suspicious movements of funds, transfers, withdrawals or deposits in our bank account. If we make an unusual movement of capital, our bank has total freedom to inform the Hacienda. It is likely that in this case the tax office will demand a tax return from us. And admonish us if he thinks that our motives cannot convince him.

How could I avoid being admonished?

If you bring cash from abroad, and you do not make a corresponding notification to the Treasury, you can be charged from 10,000 €. This number as a minimum being so even with activities worth € 100,000.
For this reason, before sending currency, the S1 form of the Tax Office (AEAT) must be completed.

What is the S1 form?

The S1 declaration form is filed before the deposit of 100,000 euros in the Spanish national territory. Or the foreign payment equal to or greater than 10,000 euros paid by individuals during transport.

Which must specify some details such as:

• Indicate the country of departure of the payment.
• Indicate the country of arrival (if we transfer money from inside or outside) along with their respective locations.
• The method of transport
• Type of currency
• The amount to be moved
• State the source of the money (work, inheritance, etc.) along with its purpose, etc.

Once you do this, the tax office accepts the form and allows you to transfer the money. The money can then be declared at the customs checkpoint where you enter or leave and transport.

Important note: The declaration filed is valid only for the payment declared on the declaration date. This declaration must be present during the entire transportation process. The method of payment must be accompanied by the statement and presented by the carrier.

Can I be exempt from filing taxes?

The only persons exempted from the filing obligation are:

Persons representing companies authorized and registered by the Ministry of the Interior for the professional transportation of funds.

Although carrying money from one place to another does not mean paying additional taxes, it does generate economic sanctions before the AEAT. At least if it is not notified in advance or the transfer is not justified.

If you are a tax resident in Spain, but practice abroad, you can apply for a tax exemption. This is not the same as an exemption to declare, but it reduces the tax impact.

To do so, you must meet certain requirements:

• The company you work for must not be resident in Spain. Nor must you be working in a permanent establishment abroad. Which means that you must perform activities at a fixed location where the company does business abroad. Such as a branch, workshop, factory or warehouse.
• The countries where you work must impose taxes similar to personal income taxes. And they cannot become a tax haven.

Another option is to use an excess system. With it, we apply the so-called commuting bonus. That is, you charge more for the work abroad than for your function in this field in Spain.

What happens if the above steps are not taken into consideration before transferring money from abroad or from inland to Spain?

Specifically, the minimum fine per import is approximately 600 euros. The maximum amount can reach up to 50% of the value of the form of payment. And this can also be accompanied by public or private warnings. And added to this, the money can be withheld or seized.

What if you have or receive a pension or income from abroad?

It is not surprising that someone has a foreign bank account, foreign property, rent or pension. Migration and employment opportunities have made the mobility of people more and more common. In this case, we are also obliged to notify the Ministry of Finance.

At least whenever any of the following three situations occur:

• All our assets abroad exceed 50,000 euros.
• When we have securities, rights, insurances, deposits, management or income received abroad.
• If we are owners of real estate located abroad and we have rights over real estate.

In these cases, if we forget to notify the Treasury, the fine will be higher than that of transporting money. Specifically, in order to account for our wealth abroad, it is necessary to complete the AEAT form 720. This includes the three previous obligations.

If we do not make this declaration to the tax office, then the fine will increase considerably.

For example, if we have a house abroad and we do not notify, we will have to pay at least 10,000 euros.

If we together with the house also have more than 50,000 euros outside Spain. Or we have received income outside Spain, and we do not notify such situation, the minimum fine is 30,000 euros. The minimum is 10,000 euros for each obligation without notice. The last point will be of special transcendence. Because if you work in another country and receive pension income, you must also declare it to the Ministry of Finance.

Benefits in the case of the European Union

Some people work every day in a country that is not their country of residence. This is relatively common near border boundaries. Regarding border workers, they are subject to the following rules:

For France and Portugal: it is determined in their respective conventions that all income received is taxed in the country of residence. For example, Spaniards transiting every day to work in these countries will only declare the entry in Spain. Those who live in France or Portugal and work in Spain can only declare in their country of residence.
Regarding Morocco: There is no such provision in the agreement, so income from both countries may be taxed.
However, there is an advantage between the member states of the European Union. That they share the EU rules for coordinating social security systems. Therefore, if you work in a foreign country, part of the European Union, this regulation will apply. This will simplify the procedures of the Treasury Department.

Better ask TaxDown

If you need to bring money from abroad into Spain it can be a complex challenge. That’s why we at TaxDown are here to offer you a simple and effective solution that will guide you through the process, ensuring you meet all your tax obligations without stress and hassle.

With our help, we will take care of your forms such as the S1, we will provide you with step-by-step advice so that you can make your international transfers in an informed and legally compliant manner, avoiding possible penalties or fines.

Our commitment is to provide you with peace of mind and security in your international financial transactions, allowing you to enjoy the benefits of your funds in Spain without tax concerns. With TaxDown, bringing money from abroad is easier, safer and more convenient. Trust us to make your tax experience as safe and smooth as possible.