Spanish Treasury bills became remarkably popular among retail savers when their yields returned to attractive levels, offering a low-risk alternative backed directly by the Spanish State, with a purchase process accessible to any individual.
What a Treasury bill is
It's a short-term public debt instrument issued by the Spanish Treasury, through which the State raises money from retail and institutional investors, committing to repay the invested amount on a set maturity date. They're issued at different terms: 3, 6, 9, and 12 months are the most common.
How the return works
Unlike a bank deposit, where you receive the principal plus interest explicitly, Treasury bills work through discounting: you buy them below their face value, and at maturity you receive the full face value. The difference between the purchase price and the face value received at maturity is your return.
For example, if you buy a 6-month bill for €980 and receive €1,000 at maturity, your return over those 6 months is €20, which works out to an approximate annualized return of 4% (the exact annualized calculation requires adjusting for the actual term in days).
How to buy them directly
You can buy Treasury bills in two main ways:
- Directly from the Spanish Treasury, through its online platform or in person at the Bank of Spain, generally with a low management fee.
- Through your bank or broker, which may apply additional intermediation fees, sometimes significantly higher than the direct route.
Buying directly from the Treasury tends to be the cheapest option in terms of fees for an individual who doesn't need extra management services.
The tax treatment of Treasury bills
Returns earned are taxed under income tax (IRPF) as investment income, within the savings tax base, the same as interest from a bank deposit. One notable difference is that, unlike bank deposits, returns on Treasury bills are not subject to withholding tax at the time of payment, which doesn't mean they're exempt: they still must be declared on your tax return, just without that automatic withholding being applied upfront.
Risk of Treasury bills
They're considered one of the lowest-risk assets available to individual investors, since they're backed by the Spanish State. This doesn't mean zero risk (there is, in theory, sovereign default risk, extremely unlikely under normal circumstances), but it does mean a considerably lower risk profile than nearly all other investment alternatives available to individuals.
Compare this return with other alternatives
Our compound interest calculator lets you project how your savings would grow by periodically reinvesting in short-term fixed-income instruments like Treasury bills, so you can compare the result with other savings or investment alternatives.