Embargoes on Spanish bank accounts

Taxes Monday, October 15, 2018
Embargoes on Spanish bank accounts

You know that minute when you first realise that your wallet or purse is missing. The shock that runs through you to be replaced by a vague hope that you didn’t bring it with you in the first place.

In that second of realisation you’ve already flashed up how much cash was in it, which cards and how many telephone calls you have to make. If it was your bag that’s gone and phone along with it, there’s another list of implications for you to work through.

You often hear people saying, it’s not the cash they’ve taken that’s the problem. Many of us don’t carry much cash with us and it’s the implications that we most dread. The nuisance of contacting card companies and getting new cards issued and all to the benefit of no one. You can even catch yourself thinking, ‘I’d rather have just given them the cash.’

Having a Spanish bank account embargoed can have a similarly knock-on nuisance effect. It’s not so much that you can’t get your hands on your money (although that’s pretty annoying too) as the fact that no one else can either. The electricity and water boards in Spain don’t hang around. If your bills aren’t paid, you won’t be receiving your service for long after the event. Don’t expect clemency.

Why would anyone freeze my Spanish bank account?

In case you are blissfully unaware, the Spanish Tax Authority are able to put an ‘embargo’ on your Spanish bank account if you owe them money. In some cases, people are not even aware that they are in arrears at all until they get the news that their bank account is frozen.

There are many reasons why the Spanish Tax Authority might feel that they are justified in taking this action. Perhaps one of the most frequently encountered is the recovery of non-resident taxes in Spain. It can come as quite a blow to a non-resident who has come out for a relaxing two weeks in the sun to discover that their bank account is frozen, their electricity cut off and the tax man on their trail.

Non-resident imputed income tax is payable by all non-residents who are not renting out their Spanish holiday home. This is in addition to the IBI council tax that all property owners, including non-residents, must pay.

If you don’t keep up with your taxes, then ultimately The Spanish Tax Authority has the power to make their presence felt by other means. In Spain, an embargo on your Spanish bank account is an accepted method of settling arrears.

Non-residents who can be difficult to contact and are unaware of the systems here are particularly vulnerable. Faced with the inconvenience and upheaval of getting your bank account functioning again, you’re likely to have wished you’d taken a more direct route and paid your taxes in full in the first place.

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Hi, I am a Spanish resident, for 10 years, and today I found out that my account is embargoed. How can it be legal that they take everything? There was only a few hundred euros in there but they have taken it all. How do I eat? by food for my child? pay my bills? It can't be legal?

Unfortunately it is legal here and we do see it happen quite often, as is explained in this article. You should be able to see from the embargo on your account a reference number and an indication of which department it is that has placed the embargo. You can then contact that department to find out what the embargo is for, If you have a fiscal representative they should be able to do this for you. I am sorry to hear about your predicament and hope this helps a little. 

my bank account has been embargoed. i have no means of paying my tax bill so will i lose my house?

The embargo on bank accounts is usually only for the amount of the unpaid bill. Once that has been paid then the embargo is lifted. If you do not settle the account then the Tax Office will eventually proceed with the next asset that you have in order to obtain the funds. Your best option is to pay the bill as soon as possible. If this is not possible, you should contact the Tax Office and explain the situation but you should be aware that your property could be at risk.  

can a company make a payment to a supplier whose bank account has been embargoed by the Spanish authorities?

The account is blocked for the sum that is owed. The Tax Office is paid first and then other payments are made. This should not affect money entering the account but only that going out. 

Hello, I'm just about to sell my house in Spain and have two embargoes on it from 2010.
Can I use the 3% retention tax to pay or offset against these embargoes as I am in dispute with the authorities at the moment.Or do I just pay them out of the sale of the house.Hopefully there will just be enough money left.

Hi Kevin

Thanks for your enquiry. The 3% cannot be used for other purposes such as settlng an embargo. The embargoes need to be cleared before the property changes hands so you won't be able to use money from the purchase for them. If you have a solicitor helping with the sale they should be able to assist you with this. 

Hi I have had 2 amounts taken from my account 72€ and 6 months prior 104€ both said notification embargo. I have no idea what this is for. My account hasn't been frozen and the bank have said its from the treasury. I haven't lived in Spain for 4 years and pay all my bills.
Thanks in advance Louise

Hi Louise

You should ask at the tax office to find out what the embargo is for. There has to be some kind of reference number for it and they should be able to tell you. 

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