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Why are Americans being turned away from German banks?

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Why are Americans being turned away from German banks?

The Local has heard reports of US citizens being refused bank accounts in Germany - or even having their accounts closed after they open them. Here's what's going on.


American customers have reported having headaches with German banking as a growing number of banks decide to exclude US passport holders from opening an account.

The latest bank to withhold access to its financial products is Kontist, a specialist online bank for freelancers that has partnered with Solarisbank. According to recent media reports, in the past few weeks, the neo-bank has sent out letters to American customers to inform them that their accounts are due to be closed. 


One US citizen, who works as a freelancer in North-Rhine Westphalia, said the move amounted to "perfectly legal discrimination" on the part of the companies involved.

"I was informed by Kontist/Solarisbank just a couple days ago that my freelancer account will be closed with effect on October 31st, 2021," she told The Local.

"I understand the complexity of the situation, but am still amazed that German legislation does not better protect Americans living in Germany when it comes to such matters. Conducting our personal and business affairs will become increasingly difficult if this trend continues."

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Earlier in the year, Solarisbank froze the account of a Switzerland-based customer because they believed he may still have US citizenship, even though he had previously renounced it.

In a Tweet that has now been deleted, they informed him that, "for legal reasons", he would need to send proof of his loss of US nationality in order to continuing banking with them.

"#Compliance was originally not meant to harm consumers with #discrimination" the former American tweeted back. 

Though the situation was later resolved after the man sent the company proof that he had renounced his citizenship, the move points to a worrying trend for American expats, who feel they are being unfairly shut out of the banking system. 


What's behind this?

By the looks of things, it all dates back to a piece of American legislation that was passed way back in 2010. This legislation is the Foreign Account Tax Compliance Act, or FATCA for short, and it obliges foreign banks to report back to the U.S. tax office on any assets held in these accounts by U.S. taxpayers. 

As American Expat Finantial News Journal (AXFNJ) has reported, banks were given a 'grace period' until 2019 - which was subsequently extended to 2020 - in order to get their houses in order before the legislation came into force.

Michael Ambuehl (L), state secretary of the Swiss Finance Department, and Don S. Beyer (R), US ambassador to Switzerland, exchange documents after signing the FACTA agreement, in Bern, Switzerland, in 2013. Photo: picture alliance / dpa | Peter Schneider

However, it seems that most non-US banks (and even some US-based ones) are still keen to avoid the additional hassle and cost of having to constantly update American government officials about the financial activities of their customers - and since the government can levy hefty fines to companies who don't comply with FATCA, many banks seem to think it just isn't worth the risk.

That's certainly the case for Augsburger Aktienbank, a Bavarian bank that announced in late December 2020 that it would be closing its doors to all US citizens due to the regulatory burdens of FATCA

The move even prompted dual German-American citizens to petition the German parliament to intervene in the issue, but so far, it seems nothing has been done.

Asked for comment on the situation, a spokesperson confirmed to The Local: "At the moment, US citizens can no longer open an account with Kontist, which we regret.

"We are thus following the legal requirements of FATCA. This is therefore not an arbitrary decision or discrimination by German providers. If customers submit a Proof of Lost Nationality to us, we can request the reactivation of their account."

Is this allowed? 

At the moment, it appears that it is - at least, for anyone who doesn't hold EU citizenship. While European Union legislation dictates that banks must provide a basic account to any EU citizen who requests one, which should mean that dual US/German citizens are entitled to receive banking services.

According to the European Commission's website, its Directive on Payment Accounts "gives people in the EU the right to a basic payment account regardless of a person's place of residence or financial situation."

Aside from this, Germany appears not to have a specific legal framework that would prevent this type of thing - a situation that those who have bank accounts closed find astounding.

"I'll never get my head around the fact that my freelance business account is being closed solely on the basis of my American citizenship," the North-Rhine Westphalia-based freelancer told AXFNJ.

"The combination of a heavy-handed FATCA and current German legislation leaves me absolutely vulnerable to what is tantamount to perfectly legal discrimination, based on my nationality.

"The exact same thing could happen to my German private bank account at any time. How is this even remotely acceptable?" 

EC legislation appears to protect European citizens from being denied a bank account - but not necessarily Americas. Photo: picture alliance / dpa | Mauritz Antin

There could be negotiations to improve the situation in the near future. In a resolution passed on July 5th, 2018, the EU unanimously called on both member states and the European Commission to go back to the negotiating table with the US government to change how FATCA is enforced. Once again, though, there doesn't appear to be any movement on this just yet. 

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What options do Americans have now? 

One option, as described by the NRW-based freelancer, is for Americans to simply to go "bank shopping" and find a bank that will accept them. 

Another option, according to AXFNJ, is to open a State Department Federal Credit Union (SDFCU) checking account. These accounts are specifically designed to enable expats to access basic banking and mortgage facilities. 


Comments (4)

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Anonymous 2021/09/23 02:15
This pisses me off to no end! I visit Germany often and have been forced to close my account making it much more difficult to make purchases wile on vacation in Germany. The US has gotten to big for its britches! Germany and other European Countries should tell the US to “pound sand where the sun doesn’t shine”. Not having access to an EC card is selfish and unfair to those who visit Deutschland on a regular basis. Honest Americans are being screwed by the LIBERAL US GOVERNMENT! I’m sick and tired of being under the US thumb. Maybe some bank in Germany could develop a Prepaid EC Card that can be purchased when entering the EU with USD and closed out when we leave the EU without getting raped by the Exchange kiosk.!!!!
Anonymous 2021/09/20 09:17
I'd like to add that US Green Card holders are also responsible for filing a US tax return every year as well. There is almost never any tax due because the US allows up to about $110,000 per individual in foreign income tax free. While this income (or more usually) is common in the US for STEM employees, it is uncommon in the EU. An American, or even a green card holder would likely pay no taxes to the US. Still, it's a hassle. I wonder what the banks are doing to green card holders. Scary. It is impossible to live in Germany and pay any bills without a bank account. It's lunacy on both sides.
  • Anonymous 2021/09/20 09:19
    $110,000. Not sure why it deleted my numbers. Hmmm.
Anonymous 2021/09/18 11:07
Using a SDFCU account isn't a real option. Without an EU account, it's virtually impossible to pay bills, and some freelance customers are reluctant to send money to an international account due to the difficulty and expense. (I'm also a freelancer and dual US/German citizen whose account was closed by Kontist).
Anonymous 2021/09/15 08:50
This article doesn't make clear that unlike many other countries, the US makes its citizens pay tax on their income even if the are not resident in the US. So if a US citizen earns money in Germany, they have to pay tax on it twice, to two different governments. To me this seems absurd. I can't really blame the banks for wanting to avoid the hassle and cost, not to mention the dubious task of reporting back to the US government on it citizens. Sadly this leaves ex-pat Americans with a difficult choice: give up your US passport or go home. Not a choice many other countries would ask its citizens to make.
  • Anonymous 2021/09/15 15:17
    This is not entirely true. I would brush up on Foreign Earned Income Exlusions, Foreign Tax Credit and double taxation treaties. While there are occasions you may need to pay twice, that doesn't apply to the majority of Americans living in Germany.
  • Anonymous 2021/09/15 10:52
    Thanks for your comment, Laurie. We'll look into this issue in more detail.

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