Bank accounts are a simple financial product that allows to include several people as holders of the same. To avoid last-minute inconveniences, it is important to be aware of the consequences of including your name in one of these.
How do bank accounts works?
The owners or holders of the money in the account can be: a natural person or a company.
If the holder is a company, there is usually more than one person listed as co-owners or authorized individuals, which allows them to “keep track of finances and have access to capital” that must be used for “professional purposes.”
As provided by law, the same account may have more than one holder that can be included at the time of opening of the same or at a specific time established to do so.
Types of co-ownership
Individuals who share ownership of the account may have different responsibilities:
- Joint (or cash pool): accounts in which one of the holders must obtain the approval of the other or others, in case of any decision to be taken regarding the money.
- Indiscriminate (also known as solidarity accounts): these are accounts in which “all those listed can make any movement individually.”
- Subordinate: In this case several levels are stipulated to make decision in relation to the funds of this account. Only those who appear as owners can decide unilaterally (top level).
These individuals do not own the account, they are only listed as “authorized” persons to handle certain operations.
When the owner dies
In the event of the death of the bank account holder:
- The first thing to do is inform the banking institution, submitting a death certificate that supports the information.
- When the bank receives said document, the money corresponding to the deceased person will be “blocked until the will is presented and executed.”
- If the account has several holders, the money immobilized or blocked will be only the portion “corresponding to the deceased person.”
- In case of an account with a single owner and an authorized one, all the funds in the account will be blocked and the authorized person “loses all rights he/she had to carry out any type of action” on all or part of the money in the bank account.
The treasury Department
The holders are considered owners of the funds of the account and, the Treasury Department considers them as such in proportional parts, reason why their fiscal responsibilities are considered in that way as well.
In case there is more than one owner, and there is no correspondence in the proportional distribution of the money in the account, this must be demonstrated by the taxpayer to be considered by the General Department of Taxation.
Those who appear in the account registered as authorized individuals, and who only “can carry out some transactions,” will not be affected by tax obligations, since the money in the accounts is considered property of the owner or owners.
Banks to send account owner’s information
Banks to send account owner’s information to Spanish Tax Agency in 2017
In order to prevent tax evasion and fraud, the Spanish Government is requiring banks to send information about their clients. With this measure, the Spanish Tax Agency intends to have better control over financial operations and prosecute fraud and tax evasion. Taxpayers will have to provide information about them and their bank accounts if they want to avoid bank account blocking.
The information required about fiscal residents includes the bank balance, name of owner or owners and value of the bank account. To do this, banking entities will have a period of five months, since January 1st until May 31st 2017. Taxpayers owning a bank account by December 2016 will have to submit all the above mentioned data to the Spanish tax authorities. If this is not the case, the bank account can be blocked in a period of 90 days.
In the same period from January to May, banks must report the accounts opened by Spaniards in the United States, as stated in the FACTA agreement signed in 2013. This already happened in previous years between January and March, but now the period is extended in order to make it coincide with the request above mentioned. This is part of the measures taken by the Spanish Tax Agency in order to prevent tax evasion and fraud.
The obtained information will not only be used by the Spanish Tax Agency; it can also be interchanged with international entities and organisms. By doing this, there is bigger control over the earnings and investments of taxpayers abroad. As new technologies evolve, the possibility of receiving earnings from abroad is wider. So is the ability to evade tax obligations in different countries at the same time. These agreements and measures are meant to prevent the fraud and tax evasion, especially the most sophisticated types of it.
Don’t hesitate to ask for more details about this new measure promoted by Spanish tax authorities. If taxpayers in the area of Torre del Mar, La Vinuela, Torrox or Velez-Malaga have any doubts or questions, they can consult our accountant and receive more information. A tax adviser can be very helpful in cases like this, as taxpayers want to obey the law and avoid bank account blocks.
The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.
Author: Rosana Tejada
Biographical Info: Rosana Tejada Crespo is a tax advisor holding a Master’s Degree in International Taxation. She specialises in companies and freelancers, tax regulations concerning foreign employees (Beckham Law), non-resident tax, inheritance tax and Spanish income tax. She is one of the founders of Legal & Tax Help (2000), which comprises a group of English speaking solicitors, economists and architects.