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INTERNET

Moving to Spain: What’s more expensive than in other countries?

Many foreigners decide to move to Spain for the great weather, lifestyle, food and crucially its cheaper cost of living. But some are surprised to learn that several costs are higher here than in their home countries.

withdrawing money from an ATM
Photos: JORGE GUERRERO, LLUIS GENE / AFP

Most of the more higher-than-average costs in Spain are linked to communications, technology and official matters, meaning that those who move here to do or set up a business have to pay out more than they initally might have thought. 

Internet

In 2020 internet prices in Spain were among the highest in the whole of the EU. Home internet consumption has of course skyrocketed since the start of the pandemic with many needing it to work from home, keep in contact with friends and family, and for entertainment. According to a report by the Digital Economy and Society Index in 2020, only Belgium, Cyprus and Ireland were found to have higher internet prices than Spain. Prices typically vary between €30 to €55 per month for line rental and internet services, depending on what internet speed you want. This is true for mobile phone internet services as well as home internet services. 

Netflix

Not only is the internet more expensive in Spain, but it was found that internet-based services such as Netflix are also more costly here than in other countries. The comparison website Comparitech did a study at the end of 2020 on Netflix subscriptions, quality and price around the world. It discovered that in regards to the standard Netflix plan, Spain ranked fifth out of the top ten countries with the most expensive Netflix plans, costing €11.99 per month.

Banking services

It’s common for banks in Spain to charge a monthly or quarterly fee for their services, something that is virtually unheard of in places such as the UK. This is typically in the region of €25 per quarter, but varies between banks. Additional bank charges in Spain include paying for bank cards or replacement cards. Many readers have also discovered random maintenance fees added to their accounts throughout the year.

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Starting a business or going self-employed

The high social security payments in Spain, make starting a business or going self-employed here much more expensive than in many other countries. Currently, autónomos (self-employed people) pay €283 a month at the min­imum rate, regardless of whether they earn anything that month or not. Self-em­ployed work­ers in Spain cur­rently pay the highest monthly so­cial se­cur­ity fees in the EU, higher than the €14 per month in the UK, €50 a year in the Netherlands or Ger­many’s €140 for work­ers who earn more than €1,700 a month. One thing to keep in mind though is that paying this social security in Spain gives you access to public healthcare, allows you to get sick pay, as well as maternity and paternity pay, which is unlike the self-employment schemes in other European countries.

READ MORE: Self-employed in Spain: What you should know about being ‘autónomo’

Postal services

Spain’s Correos postal service is another matter that many find expensive when moving to Spain, compared with their home countries. In January 2021, the National Commission of Markets and Competition (CNMC) found that for sending parcels within Spain and internationally within Europe “prices are not affordable for private customers compared to the average prices paid by the rest of the European Union”. The price of stamps for letters has also been steadily increasing since 2015.

Official documents and bureaucracy

In Spain, you need a form for everything (or even two or three), and most forms typically come with a fee attached, in order for them to be processed. This could be anything from applying for your residency documents to applying for planning permission to do renovations to your property or paying for help in submitting your tax forms.

In fact, many people in Spain have to hire a gestor in order to help them navigate all these official documents, a profession that simply doesn’t exist in many other countries. This is someone who is a cross between a consultant, an administrator, an adviser, and an accountant, who can help you with several official matters, as trying to do them yourself can be a minefield. Of course, this comes at an extra cost too as gestor fees typically cost around €25 to €75 per month.

Add this to translation fees too and you’ll soon begin to see why you’re spending a lot more money to live in Spain than you thought you would be. 

READ ALSO: What does a ‘gestor’ do in Spain and why you’ll need one

Electricity

The price of electricity seems to fluctuate a lot in Spain. In some years, it is one of the most expensive countries in the EU for electricity bills, but in other years it’s not so expensive. For example, in 2020 Expansion.com listed Spain as having one of the highest electricity costs in the EU, only being surpassed by Italy. Last year, the prices lay somewhere below €30 per megawatt, while in other countries they barely exceeded €20 per megawatt.

READ ALSO: The hidden costs of moving to Spain

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MONEY

Rampant branch closures and job cuts help Spain’s banks post huge earnings

Spain’s biggest banks this week reported huge profits in 2021 and cheered their return to recovery post-Covid, but ruthless cost-cutting in the form of thousands of layoffs, hundreds of branch closures and the removal of many ATMs have left customers in Spain suffering, in this latest example of ‘Capitalismo 2.0’. 

A man withdraws cash from a Santander branch in Madrid.
More than 3,500 Santander workers lost their jobs in Spain in 2021 and a further 2,000 more employees working for Santander across Europe were also laid off. Photo: PHILIPPE DESMAZES / AFP

Spanish banking giant Santander on Wednesday said it has bounced back from the pandemic as it returned to profit last year, beating analyst expectations and exceeding its pre-COVID earnings.

Likewise, Spain’s second-largest bank BBVA said on Thursday that it saw a strong rebound in 2021 following the Covid crisis, tripling its net profits thanks to a recovery in business activity.

It’s a similar story for Unicaja (€137 million profit in 2021), Caixabank (€5.2 billion profit thanks to merge with Bankia), Sabadell (€530 million profit last year), Abanca (€323 million profit) and all of Spain’s other main banks.

This may be promising news for Spain’s banking sector, but their profits have come at a cost for many of their employees and customers. 

In 2021, 19,000 bank employees lost their jobs, almost all through state-approved ERE layoffs, meant for companies struggling financially.

BBVA employees protest against layoffs in May 2021 in Madrid. Spain’s second-largest bank BBVA is looking to shed 3,800 jobs, affecting 16 percent of its staff, in a move denounced by unions as “scandalous”. (Photo by GABRIEL BOUYS / AFP)

Around 11 percent of bank branches in Spain have also been closed down in 2021 as part of Spanish banks’ attempts to cut costs, even though they’ve agreed to pay just under €5 billion in compensation.

Rampant branch closures have in turn resulted in 2,200 ATMs being removed since the Covid-19 pandemic began, even though the use of cajeros automáticos went up by 20 percent in 2021.

There are now 48,300 ATMs in Spain, levels not seen since 2001.

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Apart from losses caused by the coronavirus crisis, Spain’s financial institutions have justified the lay-offs, branch closures and ATM removals under the premise that there was already a shift to online banking taking place among customers. 

But the problem has been around for longer in a country with stark population differences between the cities and so-called ‘Empty Spain’, with rural communities and elderly people bearing the brunt of it. 

 

Caixabank laid off almost 6,500 workers in the first sixth months of 2021. Photo: ANDER GILLENEA/AFP

Just this month, a 78-year-old Valencian man has than collected 400,000+ signatures in an online petition calling for Spanish banks to offer face-to-face customer service that’s “humane” to elderly people, spurring the Bank of Spain and even Spain’s Prime Minister Pedro Sánchez to publicly say they would address the problem.

READ MORE: ‘I’m old, not stupid’ – How one Spanish senior is demanding face-to-face bank service

It’s worth noting that between 2008 and 2019, Spain had the highest number of branch closures and bank job cuts in Europe, with 48 percent of its branches shuttered compared with a bloc-wide average of 31 percent.

Below is more detailed information on how Santander and BBVA, Spain’s two biggest banks, have reported their huge profits in 2021.

Santander

Driven by a strong performance in the United States and Britain, the bank booked a net profit of €8.1 billion in 2021, close to a 12-year high. 

It was a huge improvement from 2020 when the pandemic hit and the bank suffered a net loss of €8.7 billion after it was forced to write down the value of several of its branches, particularly in the UK. It was also higher than 2019, when the bank posted a net profit of €6.5 billion.

Analysts from FactSet were expecting profits of €7.9 billion. 

“Our 2021 results demonstrate once again the value of our scale and presence across both developed and developing markets, with attributable profit 25 per cent higher than pre-COVID levels in 2019,” said chief executive Ana Botin in a statement.

Net banking income, the equivalent to turnover, also increased, reaching €33.4 billion, compared to €31.9 billion in 2020. This dynamic was made possible by a strong increase in customer numbers, with the group now counting almost 153 million customers worldwide. 

“We have added five million new customers in the last 12 months alone,” said Botin.

Santander performed particularly well in Europe and North America, with profits doubling in constant euros compared to 2020. In the UK, where Santander has a strong presence, current profit even “quadrupled” over the same period to €1.6 billion.

Last year’s net loss was the first in Banco Santander’s history, after having to revise downwards the value of several of its subsidiaries, notably in the UK, because of COVID.

The banking giant, which cut nearly 3,500 jobs at the end of 2020, in September announced an interim shareholder payout of €1.7 billion for its 2021 results. “In the coming weeks, we will announce additional compensation linked to the 2021 results,” it said.

BBVA

The group, which mainly operates in Spain but also in Latin America, Mexico and Turkey, posted profits of €4.65 billion ($5.25 billion), up from €1.3 billion a year earlier.

The result, which followed a solid fourth quarter with profits of €1.34 billion, was higher than expected, with FactSet analysts expecting a figure of €4.32 billion .

Excluding non-recurring items, such as the outcome of a restructuring plan launched last year, it generated profits of 5.07 billion euros in what was the highest figure “in 10 years”, the bank said in a statement.

In 2020, the Spanish bank saw its net profit tumble 63 percent as a result of asset depreciation and provisions taken against an increase in bad loans due to the economic fallout of the virus crisis.

“The economic recovery over the past year has brought with it a marked upturn in banking activity, mainly in the loan portfolio,” the bank explained, pointing to a reduction of the provisions put in place because of Covid.

In 2021, BBVA added a “record” 8.7 million new customers, largely due to the growth of its online activities. It now has 81.7 million customers worldwide.

The group’s net interest margins also rose 6.1 percent year-on-year to €14.7 billion, said the bank, which is undergoing a cost-cutting drive.

So far, it has axed 2,935 jobs and closed down 480 branches as the banking sector undergoes increasing digitalisation and fewer and fewer transactions are carried out over the counter.

At the end of 2020, BBVA sold its US unit to PNC Financial Services for nearly 10 billion euros and decided to reinvest some of the funds in the Turkish market.

In November, it launched a bid to take full control of its Turkish lending subsidiary Garanti, offering €2.25 billion ($2.6 billion) to buy the 50.15 percent stake it does not yet own.

The deal should be finalised in the first quarter of 2022.

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