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Potential bank problems for Americans

Here is a heads up for Americans living or considering living abroad. Americans are one of only 2 countries that tax their citizens abroad. One has to file annual US tax returns even if one owes no tax and despite filing and paying tax in their country of residency. This is nothing new.

What is new is that the IRS has implemented ever stricter regulations concerning investments and bank accounts abroad. One has to file an extra formula detailing all financial assets world-wide. And since a few years they have imposed regulations that require banks world-wide to report the holdings of all American persons (this includes both Americans and foreigners who live or work in America). Bank secrecy laws in many countries specifically disallow this in principle but the IRS has strong armed them to comply with their regulations. Yet this total transparency is no longer enough.

The result is that in Europe, it became virtually impossible to have an account except in a country where one has legal residency. Now many banks are refusing new American clients altogether. Others are saying that Americans can no longer have investments domiciled at their bank and even having a bank account for payment transfer is in question. I have residency in Germany and my long time bank, Commerzbank, informed me in Dec. 2017 that after the 1st of Jan. 2018 I could no longer have investments there and even a bank account is in question after 2018. Luckily I have an account at Santander Bank which agreed to a transfer of my investments. Santander has not implemented the same restrictions - as of yet – but told me that they have refused new American clients since 2016.

I have not gotten to read what the new regulations are but banks don’t want to take any risk. A couple of Swiss banks were fined hundreds of millions of dollars some years back on a claim of helping Americans to avoid taxes. The truth is that both the Swiss and German banks openly said that if one has some large amounts of money there are still legal ways around the regulations. The result is that the real potential cheaters are still getting away with tax avoidance while the little guys are being punished – often for no reason. The writing is on the wall that eventually no banks in Germany will allow American clients at all. And one needs a bank account to run any kind of business, even when one is self-employed. It’s virtually an obligation in Germany to have a bank account – only now the banks are saying it’s not their problem. For the time being, Americans living abroad are scrambling to find solutions, while new expats might find it difficult to open an account at all.

As far as investments go, brokerages will face the same constraints as banks.  So if banks like Santander follows suit like Commerzbank, one will be left with stashing their money under a mattress, buying gold or property. I myself have had enough of the American system and am giving up my US citizenship for German.  To do so one has to fulfill a lot of requirements – one cannot just suddenly immigrate to Germany and take citizenship. And it takes time. In Stuttgart the authorities said the process will take app. 6 – 12 months. And even if one is no longer American, they are considered a US person by the IRS I they have a residency or job in America. Thus they will still have the same problems with the banks!

I will be interested to see how this goes for you - the process, the costs! I wish I could give up my US citizenship...I have more reasons to be a German citizen than American. Thanks for the heads up; I'll check with my bank too.

Hi Tom,

Thanks very much for this.  This is a very important piece of information; I've suggested it gets pinned to the top of the Forum.

I should add that having a second passport, for those who manage this, also doesn't help with the bank situation as long as one of them is American.

I don’t want to go too much into the process on this thread as it is really a separate subject but to get a German passport, an American has to give up their US one. One has to fulfill a lot of requirements and document many things but the cost is not such a factor. I paid 25 Euro for the citizenship test (Einbürgerungstest) and 120 Euro for the German for immigrants test (Deutsch-Test für Zuwanderer) to be done at the Volkshochschule. Both of these are actually quite easy for someone like myself who has lived in Germany so long. But it is hard to get an appointment for the exams, all being filled months in advance. Some weeks after putting in my official application to become a citizen, I got a bill for 127 Euros from the immigration office but I think this is only half of what one eventually has to pay.

Documentation needed include passport, birth certificate, marriage certificate (if married) registration of address, tax returns, proof of participation in the German social security system, educational diplomas. As requested I also presented proof of my financial assets including the deed to my apartment. Most of these they said they didn’t need at the beginning so I assume they might only come in to consideration if one’s income is in question. One has to sign that they have not been involved in any serious crimes or anti-social or terrorist movements. They will check with the police about such things. Another thing was to declare that one has never received any form of social assistance - otherwise it seems one is disqualified!

How are American citizens working in Germany supposed to get paid if they cannot have a German bank account anymore. I have never heard such an absurd situation!

I have dual citizenship--US and Turkish. I will be starting a job in March in Germany. Now I wonder if I should get my work permit on my Turkish passport and not use my American passport so that I can open up a bank account as a Turkish citizen. Who would have ever thought my Turkish passport would be preferable to my American one.

Thank you for this very valuable information!

I really think you are overreacting. Maybe for foreign investments it's a huge issue, but I just moved to Germany in November. A couple weeks ago I opened an account with Deutsche Bank without a single issue. We just had to fill out an extra form that the bank sends to the IRS.

snyildiz :

I have dual citizenship--US and Turkish. I will be starting a job in March in Germany. Now I wonder if I should get my work permit on my Turkish passport and not use my American passport so that I can open up a bank account as a Turkish citizen. Who would have ever thought my Turkish passport would be preferable to my American one.

That would be possibly be illegal, as an American citizen you must comply with FATCA and disclose your accounts if you meet the threshold, so the bank will still know about your American citizenship.  There's no hiding....

Like Romaniac mentions, you cannot hide that you are an American citizen - even if you have an additional passport. Everyone is now required to sign statements at all German banks whether or not you are a US person. As far as JMBerry's statement - no I am not overreacting. FACT - some banks are no longer taking US clients. FACT - some are no longer allowing one to have a "Depot" which is an account for investments. That Deutsche Bank still allows Americans to open accounts is good to know but do they allow one to hold investments and how long will they allow American clients? Many of the regulations that have developed over recent years were once considered impossible according to my Commerzbank advisor. The only banks world-wide that can guarantee any kind of privacy are ones with no dealings with the US or US banks.

Every resident in Germany has the right to have a bank account. Banks are actually not allowed to deny you one. But that does not mean they won't try - and if in the end you force them to accept you as a customer, you'll only get a limited "Basiskonto" (forget about loans, overdraft, interest or investment opportunities) and they will take fees for it. This is my experience helping refugees and other "financially challenged" people. It's interesting that the USA authorities force their citizens into this category when abroad!

This is a relief to hear. Deutsche Bank seems to be the best option, at least for now. Thanks!

beppi :

Every resident in Germany has the right to have a bank account. Banks are actually not allowed to deny you one. But that does not mean they won't try - and if in the end you force them to accept you as a customer, you'll only get a limited "Basiskonto" (forget about loans, overdraft, interest or investment opportunities) and they will take fees for it. This is my experience helping refugees and other "financially challenged" people. It's interesting that the USA authorities force their citizens into this category when abroad!

Good to note that banks cannot discriminate based on nationality  :top:

As for the "authorities force their citizens into this category when abroad!", perhaps it wouldn't have come to that if so many people weren't tax evading criminals, hiding assets abroad in offshore accounts.  The USA lost some $450 billion last year in lost taxes, granted not all by expats.  I did see an article recently though that mentioned USA has appx 9 million expats, and only 1.1m have filed FBAR forms with the IRS, so compliance is still lacking....which goes in line with what Tom already said.  As a side note, Romania will also tax global income of it's citizens starting next year.  Looks like this trend could spread....

romaniac :

As a side note, Romania will also tax global income of it's citizens starting next year.  Looks like this trend could spread....

Taxing world income of its residents is what most countries do (at least in Europe).
Taxing non-residents, which the USA attempts, is a different matter, especially if it comes with a reluctance to have bilateral tax treaties to reduce the chance of double taxation.

A problem is that German banks complying with US regulations are violating German law. Even as a resident of Germany, Americans are forced to sign an agreement with banks to have their financial records reported to the US tax authorities. This is a violation of German bank secrecy laws but the banks and governments are going along with it. Theoretically, US authorities have no jurisdiction outside of the US. But most banks have some dealings either directly with the US or US banks. If they don’t cooperate then this is over. And Santander told me they are taking no new American clients since 2016. So they ARE finding ways around those laws that supposedly guarantee one a basic account. And who is going to have the time and money to sue a bank?

And Romaniac’s statement about the US losing taxes echoes the rationalizations of such laws. But few if any of us Expats are cheating on taxes. There is foreign earned income exclusion for the first 102,100 dollars (as of 2017) and locally paid taxes can be written off as a tax credit. So most US expats have to file annually but actually have no tax liability. The Americans hiding their money off shore to evade taxes are not expats. Any sensible laws to stop this would not attack Americans with foreign residency - but they do!

And the FBAR has to do with financial assets rather than income. Even when one properly reports their income, the IRS is demanding detail about people’s every asset. I comply and have always filed my FBAR but I don’t see that it has any legal standing. It’s nobody’s business where I put my money after I have earned it and paid tax on it. And the bottom line is that the increasingly strict regulations are causing problems for millions and doing ZERO to stop the real tax evaders. Both banks in Germany and Switzerland have told me it’s still possible to set up legal entities to avoid the regulations. I was quoted 250,000 Euros by a German bank and 10 million Swiss Francs by a Swiss one. I don’t have those kinds of assets so I never pursued finding out about the details.
Another issue brought up by my Santander advisor is the cost of compliance for many expats. He said he has a number of clients who already gave up their American citizenship. They were small business owners and could not afford the cost of an extra international accountant to keep a double set of books, one for Germany and one for the IRS. Until now, I have managed to file my US tax returns myself but I studied finance and as a performer don’t have as strict book keeping requirements.

It has yet to come to a point that Americans cannot have an account at all but most of us will try to save and invest something for retirement. Some US expats, or ones only temporarily overseas, might maintain relationships with US brokers and banks where they could continue to transfer their money to. But for those of us living permanently outside of the US are not in a good position to do this. Why should my options to invest my already taxed money where I live be limited just so the IRS can make a fraudulent show about stopping tax cheaters?

A list of "safe banks" would be beneficial in this thread. Does anyone know of an independent bank or a bank that has found a loophole in order to not comply with this? Perhaps a smaller franchise that is independent?

The only "loopholes" for not complying with FATCA are either not having any dealings with the USA and USA companies, or rejecting all USA clients. The latter is obviously more attractive for the banks.

Well said, TominStuttgart. It's all a show to pretend that the U.S. government is fighting tax evasion. So, they put honest citizens (and permanent residents!) who live and work abroad on the chopping block making their lives incredibly difficult and precarious so the true tax evaders can continue unhindered.

Here is an online article who went into this dynamic in depth: https://beanstocksworld.wordpress.com/2 … -paradise/

It's truly disgusting how the U.S. treats its citizens abroad, but since expats form a small voter bloc nobody besides the victims cares.

Hello Tom,

I have read your post and have some questions.
First, I am a U.S. citizen with an E.U. blue resident card. I have a bank account in an E.U. member state.
Could you suggest a bank I may try to open an account, so that I have ready for my future employment ?
Can you recommend a site where I may search for work ? I speak only English and will be signing up for A1 class.

I am New York State Licensed Massage Therapist. For the last two years I have worked in a call center in Sofia.
Regards,
Lucas

I can only summarize what I and others have already posted. Santander Bank still allows American clients to hold investments but they say they are no longer accepting new American clients.

Commerzbank no longer allows American clients to hold investments. They allow a normal bank account but have put it in question if this will continue after 2018. I don't know their policy on new American clients.

An American has posted that they recently opened an account at Deutsche Bank but didn't mention if investments are also allowed.

Beyond this I can't say other than to say the trend is rather negative. Banks don't seem to think it is worth the risk to offer full services to Americans anymore. One would hope that some banks will continue to allow at least basic accounts. This is theoretically required by German law but many of the American provisions being adhered to are already in violation of German and/or EU law. But what is one to do; sue a bank just to get an account? Good luck with that.

I have now been in Berlin for a week, and after having done my Anmeldung I successfully opened up a bank account as an American citizen. I was told by another American citizen friend that the only place where she could open up an account was Berlin Sparkasse. I directly went to this bank, made an appointment and the next day opened up an account. So my suggestion to American citizens coming to Berlin (or any other city) is to not waste your time with other banks--try Sparkasse. And it was a rather pleasant experience, with the bank employee even uploading the bank software onto my phone for me so that I can do mobile online banking (another tip: get a German phone number as soon as you can--you will need a number for the bank account).

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