How to exchange money for buying a house in Spain?

Having done this recently in Malaga (US Citizen), you don't have to go through wise or revolut.

But first you have to obtain a “NIE”…without it you cannot do anything in Spain.

Although you must report your Spanish bank account to IRS, you don't pay taxes unless you earn interest (and good luck with that)..

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I transferred €425,000 to Santander Bank in Spain to purchase a flat in Madrid (back when the exchange rate was €1 = $1.14 -- ugh). The first step was establishing a Spanish bank account, which didn't (and I assume still doesn't) require an NIE. You will need one to purchase a property, though, so it makes sense to get it as soon as convenient. You don't need to put an enormous amount in the Spanish bank account to open it -- at least, I didn't. I don't remember the size of my initial deposit, but I'm sure it wasn't more than €1.000.

The next step was getting the funds in a US bank. I'm certain most banks in the US can do electronic fund transfers, including conversion from US dollars to Euros, with very little difficulty. There will be some fee, but it's reasonable. I've transferred money multiple times without exception.

The one thing I expect you will need to provide is a statement from your investment source, bank, or wherever as to the source of the funds. For large sums, there is concern about the potential for money laundering, I think. At least that's what my banker in Madrid said. Once you've been established, there shouldn't be any additional concerns.

That's probably why you can't use self-initiated on-line transfers -- there's no evidence about the source of the money.

I haven't heard of the IRS rule you mentioned. But I don't keep a lot of money in the Spanish account for a long period of time. I only move large sums when they are needed. Right now I've got a bit more than €4.000 in the bank in Spain.

Good luck with the move!

Hi Zurlita,

I bought a house in Spain as a US citizen three years ago. I hope my experience can be of some help.

I opened a non-resident bank account in Spain before the purchase. (I already had an NIE.) I've been living and working in different countries for years, and usually when I make an international transfer I keep it under $10,000 to avoid red flags. For the house, however, I transferred all the money from the US to my Spanish bank account at once using Currency Fair, which is another online money transfer service. They immediately asked for documentation on where the money came from for clearing it of money laundering. I sent them my bank statement, it was very clear, and the money was accepted and sent through very quickly.

I've been using money transfer services instead of banks' international transfers for years as you save a lot, not only in fees but in the actual exchange rates they use. The banks' exchange rates are usually much worse, and they make it hard to find them for comparison purposes. My experience with US banks dealing with international matters has been pretty bad. The big money transfer services are experts and easier to work with. Lately I've been using Wise and really like it.

I don't think you'll find any of the big money transfer services are FDIC certified - they're not American. According to Wise's website, they follow the strict rules set by the regulatory agencies in the countries they operate in. There's quite a bit of information on this on their website. I feel they are safe.

Regarding the IRS - there is a lot of really misleading information on the web about the FBAR / FinCEN form 114. Yes, if you have more than the equivalent of $10,000 in a foreign bank account at any time during the year, you have to fill out a form online. It takes 5-10 minutes. You tell them how much money you have in the foreign account(s), and where it is. That's it. It does not charge you a tax.

If you have foreign earned income you need to report that to the IRS, and if it's more than the foreign earned income exclusion ($112,000 in 2022) you need to pay tax on it to the IRS. That's where you pay a tax - on your income if it's that high. Reporting the money you have in a foreign account just lets the IRS know that you might have foreign earned income, but reporting the account does not result in a tax. The money sitting there in an account is not taxable by the US if it's not income.

I think people get worked up about it because they don't like the IRS knowing where they keep their money, and yes, some people have money secretly stashed in different places, maybe they never paid income tax on it, and maybe they don't want the IRS to know that. But reporting your foreign bank account does not result in a tax. (There are, however, penalties for not filing the FBAR/FinCen form 114.)

I hope this helps. Good luck!

Hello all,

Thank you for taking the time to provide so much information to zurlita.

I hope zurlita finds these information meaningful as well

Cheers,

Yoginee

Expat.com team

@Al SAmD

Thank you, Al SAmD, for the very clear and detailed answer. It helps a lot! And good luck in Spain!

Zurlita M.

@wanderer17

Thank you, Wanderer17, for your help! Best wishes,

Zurlita M.

@Tempowiz

Thank you, Tempowiz, for your help and for sharing your experience!

Best wishes,

Zurlita M.

There are currency exchange services which give better exchange rates.  I know of at least two, and I use one of them.  I won't mention the name as I think it is against the forum guidelines, but you can fairly easily find these services with an internet search.

The manner in which the service I use works is that I do a transfer from my bank account to another bank; this one ends up in Ireland if I'm not mistaken. I can see my balance in that account, on line.  I can elect to exchange to a wide range of currencies. 

After that exchange, I can transfer it to a bank of my choosing.

What I've done last year is transfer some USD into that account; then I wait and watch the Eu exchange rate.  When it looks favorable, I exchange USD for Eu.  I may not transfer those funds, yet, to my Spain account as there's no diffference in the yield between the two banks (ie, non interest earning accounts).

What I've experienced is that this service is FASTER than my bank, in conducting the transfers.  As well as giving me a better rate.

Regards

Hi BlueMoonx47,

Thank you for your response.

Searching online I found several services for exchanging money. But I was curious to know about the experience that the American expats living in Spain can share on this matter, as well as, about their recommendations. I know about Wise and Revolut, but I've read online some not so good reviews from people who exchanged significant amounts of money (for buying a house, for example).  That's why I wanted to know the opinion of others who used such services. Somebody suggested Currencyfair and probably this what you are talking about. 

Thank you!

Zurlita M.

Speaking from personal experience, if you are going to use Wise or Revolut (which I never issues with even for larger amounts) - try breaking up the transfer to multiple smaller amounts and create 10K-ish transactions. If that's a viable option for you (it does take time) you can lower the risk of flagged transactions.

@ThePropertyAgent

Thank you for your advice, ThePropertyAgent,! I will try it.

Zurlita M.

I transfered 400'000 euros from my country to a spanish bank. Fair rate BUT I had to pay a pretty big fee to the bank.

Ask your bank about possible fees with amount limit/rate.