US Citizen with Spanish BBVA Account - Question

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jhg
Posts: 1
Joined: Mon Feb 14, 2022 4:52 pm

US Citizen with Spanish BBVA Account - Question

Post by jhg »

I am a US Citizen, domiciled in the US, with Spanish heritage.

I have owned an inherited rental property in Madrid since 2002, and have had a checking account with BBVA since 2002 for managing that rental property.

Recently BBVA have requested a copy of my US Tax Return, which I do not believe is required under Spanish law. I have provided them with a Declaración De Residencia Fiscal as well as my US SSN (TIN) and a copy of the most recent rental agreement showing the monthly rent being charged.

Has anyone encountered this in dealing with banks in Spain? Is there a treaty or agreement between the US and Spain under which they can request a copy of my US tax return?
TedSwippet
Posts: 5166
Joined: Mon Jun 04, 2007 4:19 pm
Location: UK

Re: US Citizen with Spanish BBVA Account - Question

Post by TedSwippet »

Welcome.
jhg wrote: Mon Feb 14, 2022 5:05 pm Has anyone encountered this in dealing with banks in Spain? Is there a treaty or agreement between the US and Spain under which they can request a copy of my US tax return?
Perhaps not specifically with Spain, but I have seen the occasional report of non-US banks asking for copies of US tax returns in a couple of places (Switzerland, perhaps?). The culprit is undoubtedly FATCA. This is unilateral and extraterritorial US tax law applied to non-US banks under threat of extreme sanctions.

FATCA requires non-US banks to report activities of US person clients to the IRS, either directly or through their home country's tax authorities. Strictly, it really only requires them to identify US person account holders before reporting account activities to the US -- typically via something like a W-9 or equivalent -- but because the penalties applied by the US for non-compliance are beyond draconian, banks may go further than this. At the extreme, and not least because FATCA makes the costs of servicing accounts for US persons vastly higher than for any of their other customers, some non-US banks simply point-blank refuse any accounts for US citizens and other US persons, and will summarily close the accounts of any current US person customers.

So ... there is very likely no law or regulation that would require you to send this bank a copy of your US tax return; it appears that they are taking a purely commercial decision here. However, if you do not do as requested, there is risk that they will respond by restricting or even closing your account. Does the letter they sent specify what they will do if you don't comply, or is it left merely threateningly vague?
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