Spanish Treasury bills: no tax withheld, you declare it yourself

Spanish Treasury bills: the tax office withholds nothing, you declare it yourself

Do you buy Spanish Treasury bills (Letras del Tesoro) and expect your bank to withhold tax as it does with a deposit? It doesn't happen. Returns on government debt carry no withholding at source: they are declared as a capital gain under the savings base, and it is up to the taxpayer to include them in their tax return. The question that opens the conversation is exactly that: does the bank automatically take the 19%, or is it on you? The short answer is the latter.

What commission does the bank charge for buying Treasury bills?

The starting point of the calculation is 0.60% on the earnings from the management. That percentage is added to what the product already costs, and here comes the first misunderstanding: the bill does not pay a 3% coupon on one thousand euros. It is bought at a discount. A 1,000-euro bill with a nine-month maturity and a 3% yield is purchased for about 977.5 euros and repays 1,000 at maturity. The real gain is 22.5 euros, not 300.

The 19% tax rate applies to that figure, and on top of that you have to add the Treasury's fees —0.15% with a minimum of 0.9 euros and a maximum of 200— plus whatever the financial institution charges. The full calculation, item by item, leaves a margin that surprises those expecting something else.

When do you declare Treasury bills on your tax return?

The criterion used is the maturity date, not the purchase date. If the bill matures in 2025, it is declared in the 2026 filing campaign, leaving a year to set aside the money for the tax. Anyone who bought a few months ago and earned about 16 euros in returns will need to check the redemption date to know which tax year to include it in.

There is disagreement over whether it appears in the draft return. Some argue that government debt bought directly on the Treasury's website does show up; others warn that it is worth checking and adding manually if it doesn't. The advice that keeps coming up is to buy on the Treasury's own page rather than through a bank, to avoid fees and to make sure the data reaches the tax office (Agencia Tributaria) cleanly.

The bank offer worth scrutinising

A proposal from one institution appears, offering custody at 0.05% and all other charges at 0%. It sounds good until you start wondering about the fine print. The question left hanging —how the bills will trade in a future auction— has no possible answer: nobody knows what interest rate will come out.

The consensus, if there is one, is that the product is simple and cheap when bought directly, and that the mess arrives when you insert a middleman that informs neither the tax office nor the client. For a few euros of gain, the bureaucracy eats the return.

In the end, the Treasury bill is that safe haven everyone recommends and nobody wants to declare. A 19% that is not withheld, a commission dressed up as a service, and a draft return that sometimes appears and sometimes doesn't. Fiscal peace of mind, like interest, also comes at a price.