What new EU banking law means for foreigners in Germany

Having bank accounts in non-EU countries could be about to get more complicated for German residents, due to the EU’s Capital Requirements Directive, Article 21(c).

It’s not uncommon for foreigners living in Germany to keep one or more bank accounts in their country of origin – often these were opened when the person was still a resident, and maintained after they moved to Germany. 

They can be vital to keep up with financial affairs such as taxes in the home country, and are especially important for pensioners as some pensions cannot be paid into a bank account in another country.

But some changes are on the horizon, due to the implementation of the EU directive.

What does the directive say?

The Capital Requirements Directive (CRD6) will require non-EU banks, financial institutions and other entities who provide ‘core banking services’ in an EU country to establish an authorised local branch. 

Core banking services are defined as taking deposits, providing loans or credit guarantees. Find the full text of the law here

What does it mean for residents in Germany who have accounts in a non-EU country?

If you have an account with a bank in a non-EU country, they will have to either set up a local branch in Germany, or enter into an agreement with a local subsidiary in order to continue providing services to Germany-based clients, unless one of the exemptions applies (more on those below).

In practical terms, this means that residents in Germany who have an account with a bank outside the EU may soon be receiving letters asking them to provide an address in the country where the bank account is based.

Other banks may inform their EU-based clients that they cannot keep their account open.

How is this different to Germany’s current law?

The new directive is a standardising law, aimed at ensuring that all EU countries have the same rules when it comes to dealing with non-EU banks or financial organisations.

At present, it is up to individual member states to decide on the rules.

Under current German law, you’re allowed to hold a foreign bank account but you must declare any interest or foreign-earned income to the tax office (Finanzamt). 

However, some banks do not allow residents who live abroad to hold accounts. Following Brexit, some Brits living in Germany found their UK banks closed their account. 

The new EU directive seems to have prompted many banks and financial institutions outside Germany to update or revise their policies when it comes to dealing with customers in the EU.

READ ALSO: ‘Avoid German banks’ – Your best tips for banking in Germany

When does it come into force?

The directive was passed in July 2024, and EU member states were then given an implementation period.

Countries were required to add the directive into their national laws by January 10th, 2026, with a start date of January 11th, 2027 at the latest.

Germany has opted for the January 11th, 2027 start date.

However, a ‘grandfathering’ clause came into effect on July 11th, 2026 which means that contracts signed before this date are exempt from some aspects of the new law.

The combination of the July date and the January 11th full start date means that banks are now starting to notify customers about the changes.

Are there exemptions?

Yes, there are two important exemptions to the new directive.

The first is ‘reverse solicitation’. The restrictions will not apply where an EU client has approached the non-EU bank/lender at their “own exclusive initiative”. 

The second is the grandfather clause mentioned above – that a contract entered signed before July 11th 2026 should not be covered by the new legislation.

That should give non-EU banks ample cover to continue dealing with EU-based clients. However, it may be that some banks either take a conservative approach to interpreting the legislation, or simply decide that it is too complicated to continue to deal with clients in the EU.

That may explain why some people have already received letters stating that they cannot continue to hold their account.

There are other exemptions around inter-group contracts and dealings between banks that are aimed largely at businesses, rather than individuals.

What are the alternatives?

For those whose banks are threatening to close their accounts, there are two options: find a bank that has branches in both your home country and in France or internet banks.

Internet banks offer a practical option for people dealing with financial matters in more than one country – banks like Wise or Revolut offer accounts in multiple currencies and – crucially – provide both an EU account number and an account number in the UK/US/non-EU country.

READ ALSO: Eight of the best mobile banks for foreign residents in Germany

Having an EU and a non-EU account number satisfies authorities/pension providers who require a local bank account. The disadvantage to these accounts, however, is that they do not provide all of the same services as a bank (eg a cheque book), while they don’t have a bricks-and-mortar presence for those who prefer face-to-face appointments.

With reporting by Rachel Loxton