Checks and Balances: Banking in Spain & Portugal

Remember the days when American Express advised us not to leave home without the company’s ubiquitous traveler’s checks, accepted and exchanged virtually everywhere … for a fee?

Alarmy Stock Photo

Forget about them.

They’re no longer accepted at banks and few offices (far between) will convert them to the local Euro currency.

It’s not only American Express checks. It’s all checks. Especially, personal ones. Even if you have a bank account in Portugal or Spain, you can’t just deposit your Christmas card gifts from back home or birthday presents sent on paper. Some banks won’t accept them at all; others, will charge a hefty fee – upwards of 25€ — for the privilege of waiting while each check is sent back to the USA for conversion before posting to your account.

EU countries are becoming cashless societies where plastic is the financial instrument de rigeur—at least at retail stores and points-of-sale. No longer are cards inserted, slid, or swiped; they’re hardly even touched, since the card “reader” comes within kissing distance of approval or denial, as your hand hovers over it. Increasingly, too, is your telephone as the tool of choice in financial transactions. Same concept, different instrument: card or mobile.

It may be awkward for some, but remind anyone from the USA in the habit of sending you checks that, not only can it take up to two months for you to receive it in the mail … and most banks (if they’ll even accept American checks) charge a minimum of 12.5% of the check’s value to convert and deposit it to your Portuguese or Spanish bank account. In the end, it’s a lose-lose proposition with you paying coming and going.

Best bet? Impersonal as they may be, international funds transfer services – Paypal, (Transfer)Wise, Western Union, etc. – will charge a small fee and choose the exchange rate, but the money will be received by you usually within 24 hours. Money can be transferred quite easily from home via the Internet.

Online, too, deposits, withdrawals, and transfers are now virtual, if not literal. Buying and paying online has boomed thanks to stay-at-home shoppers who purchase everything not available to them through local merchants or shopping centers.

Think that’s going to change once Covid no longer is such a threat?

Brace yourselves for the brave new world of banking.

Neither Spain nor Portugal typically credit your money that they’re holding (and investing) with interest. Quite the contrary: For the privilege of granting banks the right to serve as clearing houses for your recurring bills and financial transactions, several of Spain’s largest banks are charging fees of 90 Euros quarterly – that’s €360, nearly US $500 per year – to steward your funds, plus additional fees for withdrawals, transfers, and other transactions. While few banks or any in Portugal (that I know of) charge such usurious fees, they all do eat away at your savings with fees for every transaction. Adding insult to injury is that – on top of these fees – banks are also required to charge IVA (sales tax, if you will) of 21% in Spain and 23% in Portugal.

(If/when you do open an interest-bearing account, it’s almost not worth it: we deposited €11,000 in a U$D account for six months—you need to specify how long the investment period will last. At the end, we had earned about 40€ on our deposit. But that was before taxes were deducted on our earnings. In the end, our €11,000 earned a whopping 14€! Plus, the account usually isn’t insured.)

A bank account is required for residency in both countries so that your recurring bills can be directly debited.

Then there’s the Multibanco:

More than the ATMs Americans are accustomed to, Multibancos do much more than disperse cash from your account, or allow you to move money from one account to another within the same bank. You can pay bills and/or transfer money to other people, businesses, and government agencies (regardless of their bank) and debit directly those recurring charges—like your electric, water, car payment, insurance, and telecommunication bills. Forgotten your personal IBAN number? You can obtain it – along with a detailed summary of your transaction history – electronically through your home computer or mobile device and, of course, the Multibanco.

We’ve come to appreciate the Multibanco, but know that all aren’t alike. There’s a difference between an ATM and the Multibanco.

The branch we bank at, for instance, has a Multibanco outside, while, inside the entrance is its own ATM. You can’t use any other bank’s credit or debit card at that ATM … but, theoretically, you can use your bank’s debit card at any Multibanco.

When using a debit card with a Multibanco to withdraw funds from a bank account in the USA, always be certain to reject the option for the amount to be deducted in dollars. It’s the last question prompted – twice, including a confirmation – before the transaction is completed. Instead, opt for the withdrawal to be done in Euros, with your home bank handling the transfer. The same holds true when using a debit card for purchases: always choose the “euros” option, not the dollars one.

On a withdrawal (or purchase) of 100€, we’ve saved ten to fifteen euros that way … enough to buy a really good lunch in Iberia.

Supposedly, you can’t withdraw more than two hundred euros (€200) on any day from the Multibanco. We ass-u-me they’re inter-connected … so if we withdraw €200 from this Multibanco, we won’t be allowed to withdraw another 200€ from that one, using the same card and account.

If one needs cash – more than €200 – on the same day, however, there are ways around the Multibanco’s limits. If you have more than one bank account and debit or credit card, for example, just use another one to draw out up to another two hundred euros. Keep going … until you reach what you need or run out of cards.

Then, of course, you can go into the bank itself to take out larger sums. But you’ll pay a higher fee for the personalized service.

Perhaps someone else can explain all the curious charges, fees, taxes, and take-aways affixed to our bank accounts in Portugal and Spain. You know: those amounts preceded by minus signs and abbreviations?

I understand “comissões” and my monthly “quotas” – fees charged for the bank’s associated accounts with additional benefits – but what about all those other encrypted letter deductions:

  • IMP.TRF.P?
  • DESP.TRF.P?
  • I.SELO OP.BANC?
  • COM SERV EST R O?
  • COM OE STP NET 24?

For pure economics, financial institutions are making money on top of money through a variety of fees, charges, and commissions.

“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning,” Henry Ford claimed.

Thomas Jefferson charged, “I believe that banking institutions are more dangerous to our liberties than standing armies.” Of course, neither man had access to the Multibanco.

Shared here are personal observations, experiences, and happenstance that actually occurred to us as we moved from the USA to begin a new life in Portugal and Spain. Collected and compiled in EXPAT: Leaving the USA for Good, the book is available in hardcover, paperback, and eBook editions from Amazon and most online booksellers.

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O Número Contribuente?

Americans are issued Social Security Numbers in the USA which are used to identify them—from taxpayer to pensioner.

Other countries assign their citizens (and residents) a variety of numbers. In Portugal, for example, in addition to a social security number, many of us also have a separate health care number, driver’s license number, and – of course – the ubiquitous “fiscal” (or taxpayer) number, technically known as our NIF but more popularly referred to as the número contribuente.

Every time we go shopping, we’re queried “Contribuinte?” by the cashier.

Merchants are required to ask if want to provide your “número contribuinte” for that purchase … although you aren’t required to give it. But, if you do, it’s recorded and reported to the tax office.

Will providing your NIFs for Lidl or Continente purchases affect your tax bill in Portugal?

It could!

Part of the reason behind tracking money spent and received is to thwart the “underground economy” and its financial transactions. But, thanks to giving our número contribuente, our own tax records display deductions we can take on our income taxes. And we’re entered in lottery-like “drawings” held regularly by Finanças and the tax office.

(Unless you pay income taxes here, however, you can’t claim these deductions. If you do pay taxes here, some “costs” are reclaimable.)

In welcoming us to their country, we want Portugal to know that we are investing in it, too, by purchasing from its businesses.

So, although not required or requested, when I head to SEF to renew my residencia, I’ll also be handing over a printout of the spending I’ve done here … attributed to my número contribuente!

Shared here are personal observations, experiences, and happenstance that actually occurred to us as we moved from the USA to begin a new life in Portugal and Spain. Collected and compiled in EXPAT: Leaving the USA for Good, the book is available in hardcover, paperback, and eBook editions from Amazon and most online booksellers.

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Moving Out, Moving On

What do you do when your doctor decides you cannot go up and down the 37 stairs (a dozen times daily) in your house anymore? Especially with your three dogs—which you walk twice around the village: once with the two little ones and, again, with the bigger boy? And, further, that the aches and pains in your back and your bones are unable to withstand the uneven cobble stones paving your streets because of the stresses and strains they put on you—especially when walking your dogs around your beloved village four times each day?

You don’t have 37 steps? Or three dogs? And your streets are paved with asphalt, not cobble stone, you say? Or you live on a quinta?

No matter.

Consider this scenario, one quite familiar to Americans seeking to move abroad to Portugal (and Spain). One of the indispensable requirements of obtaining a residency visa is documenting that you have a dwelling … at least for your first six months here.

You can rent or buy.

Though some opt for renting, knowing they will have to relocate when their lease is up, it’s a sensible choice—especially if you have few household items and worldly goods to transport. You’ll have a chance to live up close and personal and understand the lay of the land as you explore other neighborhoods, nearby towns and villages and cities, or (perhaps) elsewhere entirely in the country.

Your choice.

You have six months to travel and explore, gambling that, for whatever reason – a community of friends already living there, proximity to the coast and its Atlantic beaches, charm of the place that tugs at your heartstrings and beckons, a perfect plot to put down roots and live off the land instead of the grid – the time will provide opportunities so that you don’t have to rush to judgment about where you’ll live.

Others, like us, however, prefer to buy—submitting a property deed with our visa application, rather than a rental contract.

With all the moves we’ve made already, packing the mementos and monuments of our 25+ years together for a transatlantic shipment would be our last herculean undertaking before the Atlas in us shrugged.

Buying in a “foreign” country requires a different type of fortitude. For instance, you need to envision – even fantasize – the lay of the land where you want to be: Urban, suburban, or rural? Village, town, or city? On the coast, in the center, or along the border? Single-family detached house, “row” home, duplex, apartment, condo, or land enough to grow (maybe even sell) your edibles and comestibles? New build or resale, renovation or ruin to rebuild from scratch?

Along with such demographic factors, you’ll also want to weigh in with the “psychographics.” Close your eyes and picture your perfect place. What does it look like? More important, how does it feel to you? For the sake of seclusion are you opting for less in terms of Internet and telecommunications options—especially if you’ll be working online? If dogs are already part of your furry family (or will be), will you be comfortable in a home without any land, requiring you to walk and pick up after them, regardless of the weather … which can be day upon day and weeks at a time of continuous rain or brutal, scorching sun where it can be 100 degrees or more in the shade throughout the summer? Do you have special health issues or concerns which will dictate medical availability and accessibility?

And what many of us forget to take into account is our age: Will what seems reasonable, doable, and accommodating now feel or be just as easy to cope with down the road five, ten, twenty years hence?

In our case, we didn’t know if Russ would be able to continue working remotely. Would his close-knit Door County performing arts company consent to him not working under their thumb? Would they be willing to contract communications and marketing – as well as attendance, virtually, at staff meetings – from a time zone six hours later?

We didn’t know when we began planning our move; yet, discretion being the greater part of valor, we concluded that we’d best assume that we’d be “freelancers,” with new income flowing from the USA except for Social Security.

Along with a relatively modest budget, that was a reality which dictated many of our choices and criteria where to look and live in Portugal.

Eyes closed, we envisioned our new home set in an idyllic village with cobble stone streets and a picturesque church whose bells would mark the tempo of our daily lives. Our home would be easily accessible by car to shopping, dining, and entertainment. After ten years of flying to our vacation bolt in southern Spain, it would also be within an easy driving distance. Importantly, too, it had to be approved for commercial use, as we planned to open our “Tapas Americanas” to produce income.

All told, we made three round-trips between the USA and Portugal in search of the “right” property, searching for places between Coimbra and Castelo Branco that met our needs … and wants. We scheduled one of our trips to coincide with a Pure Portugal seminar on buying and building, losing one possibly perfect property close to Miranda do Corvo because it sold before we could make an offer; we bypassed another property after learning at the seminar that a “build,” enclosed on three sides by a mountain, would be difficult to maintain because of the moisture and constant battle against damp and mold.

Towards the end of our second tour, we found a house that ticked off all of our boxes. In a village just 15 minutes outside of Castelo Branco, it was postcard picturesque. On the street level, it had housed a café before the owner’s husband died and she put the property for sale—including the lower-level café, a courtyard, and large kitchen.

Above, rose two more levels. On the first was a huge living room, two smaller rooms (formerly bedrooms, but offices for us), and a separate wing above the downstairs kitchen with a large guest quarters and en suite that not only would provide privacy, but could be used as an AirBnB rental. The top floor featured a master bedroom with walk-in closet and separate en suite, an adjacent multi-purpose room with a second (service) kitchen, and a huge covered terrace. The house also included a large attic with ample room for storage.

The drawbacks? After being vacant for several years, the elements had taken their toll on the premises which needed repairs, mold remediation, and painting … not to mention an entirely new kitchen constructed downstairs. Those 37 steps would be our daily exercise. And, although the café was zoned “commercial,” the landlady had allowed its license to lapse. To be granted a new license would require bringing the café up to current code—at least €10,000 in construction costs to make it handicapped accessible, more mobile and modern.

Not that it mattered, anymore …

Russ’ employers wanted him to keep working for them. This was well before Covid closures and work restrictions; they were willing, at least, to give it a try. Fortunately, everything worked well. Not only did it prepare the organization for the new realities of work caused by the pandemic, but it also prepared the way for other employees and contractors to work remotely as well.

We fixed up and improved the house, using the former café as our gathering area for friendly get-togethers. Walking the streets with our dogs, we got to know our neighbors. Because few in this provincial village spoke English, our conversational skills grew beyond “Bom Dia” and “Obrigado.” These good-hearted yet private people knocked on our door, bringing baskets with fruits and vegetables from their gardens or quintas. We came to enjoy the local holidays and festivities, even as we respected the solemn processions of locals paying their last respects to those dearly departed. Living on the main street brought life’s realities and rituals to our windows, balcony, and front door.

With each chime of the church bells, I grew older … crossing that milestone from sixties to seventies, from an energetic “senior citizen” to an “elderly” fussbudget. Limbs broken 20 years earlier sent me not-so-gentle reminders with increasing frequency. New ills, aches, and allergies began to trouble me. Never particularly patient to begin with, I increasingly identified with grumpy old men filled with frustrations, feeling (felling) my physical limitations and life passing me by.

When a series of gastrointestinal problems and my first bout with sciatica brought me to hospitals, laboratories, pharmacies, and clinics, my physician insisted that pharmaceuticals could just do so much to help; some major changes must now be made in our lives.

“You cannot continue to climb up and down all those stairs,” she stated, “especially with the dogs. And the uneven cobble stones in the streets aren’t helping, as the dogs pull you going after a dog or cat.”

“So, what are you saying; what do you suggest?” I asked, presuming her forthcoming answer.

“You must move!” she informed me. “Find a one-level home with a backyard, a quintal. Maybe a bungalow. You will see how much better you will begin to feel.”

Move? Again? After all that planning? From a village that had welcomed and embraced us: Newcomers! Over the last ten years or so, the local population had been halved—from 1,200 to 600.

I had adjusted and adapted my life in retirement to one of active involvement. Since moving to Lousa, I had one book published and was working on a new one. I wrote regularly for The American Magazine (UK) and The Portugal News. I created and administer several popular Facebook groups—one for “Portalegre People” (where our other home was located); another for “LGBTQ+ People and Friends in Portugal”; and a third, “American Expats & Friends in Portugal and Spain,” for expats, immigrants, the curious, and wannabes. Most important, however, was the progressive, interfaith congregation I pastored for hurting and spiritually hungry “People of Faith Online.”

Move? At this point, I needed to think of it not as moving out, but moving on. Nonetheless, it’s not as easy as one might think.

Stay tuned …

Shared here are personal observations, experiences, and happenstance that actually occurred to us as we moved from the USA to begin a new life in Portugal and Spain. Collected and compiled in EXPAT: Leaving the USA for Good, the book is available in hardcover, paperback, and eBook editions from Amazon and most online booksellers.

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Buyers, Beware (Renters, Too)!

Technically, Portugal’s mainland is divided into 18 districts (distritos) formerly referred to as provinces; 278 municipalities (concelhos); 159 cities (cidades); 533 towns (vilas); and 2,882 civil parishes (freguesias). Countless “unofficial” villages like ours add to these numbers.

Unless you know someone with boots on the ground, speak the language well enough to be treated like a local, or are lucky by happenchance to be in the right place at the right time, finding an acceptable place to live means turning to “property agents” to help and guide you.

The property representation enterprise differs from country to country within the European Union, and is altogether different from what we have experienced back in the States.

Beginning online … where most people start their property searches. Property portals Kyero, Idealista, Custo Justo, Olx, and Milanuncios are good places to look, along with Facebook groups like Pure Portugal.

Then, if we use the handy form online to request more information or a showing, we have every right (if not reason) to expect a representative will contact us … if not today or tomorrow, sooner than later. No?

Often, multiple agencies will list the same property … but with different (and, sometimes, conflicting) information. Whether the property is connected to municipal water and sewer mains (and/or has wells and a septic tank or field) … if the water is heated by “bottled” gas, gas lines, or electricity … the condition and construction of the windows, doors, and roof … which appliances and what furniture shown in the pictures are included in the price … all of this matters to us and makes a difference regarding those properties that interest us.

Pictures are worth thousands of words. The more (current) pictures posted of a property, the more (or less) attractive it will appear. Pictures of any land included with the property are nice, but – by and large – we’ll want to see the inside of properties where we may live.

Yes, we’ll be noticing those cracks in the walls, the missing tiles on the floors, the damp mold on the ceiling, the condition of the roof and its wood, cement, or metal beams. Why shouldn’t we?

Most properties in Portugal and Spain have their own peculiar quirks, as there are few (if any) real building codes required … especially in the smaller towns and villages. With steps of different heights and widths, and slight little step-downs or -ups between rooms, mobility can be a major accommodation factor. Even those of us without wheelchairs have tripped, slipped, or bumped into something all-too-often. It’s part of the idiosyncratic “character” of these curious properties.

While “location, location, location” and its condition are factors in determining a property’s price, all too often, “time is of the essence” for us. Our time is limited when we’ve come to the country, primarily, to find a property.

So, after viewing a property, ask your property agent get back to you quickly with answers to your questions, reassurances about your concerns, and any helpful information that they can provide.

“The real estate market in Portugal offers the luxurious, the good, the average, and the mediocre … with prices adjusted to the condition of the property,” asserts one local, “depending on what you are looking for, where you’re looking, and your available budget.

”That’s why proper property representation is vital.

Or, as our British friends would say, “bloody brilliant!”

Shared here are personal observations, experiences, and happenstance that actually occurred to us as we moved from the USA to begin a new life in Portugal and Spain. Collected and compiled in EXPAT: Leaving the USA for Good, the book is available in hardcover, paperback, and eBook editions from Amazon and most online booksellers.

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