Foreign Bank Accounts in Germany: What the New EU Law Means for You

Introduction

If you live in Germany but still have a bank account open in your home country — or in any other country — you are far from alone. Millions of expats and immigrants maintain foreign accounts for practical reasons: sending money to family, managing property abroad, receiving pension payments, or simply as a financial safety net. For years, the rules around this have been relatively stable. That is about to change. A new EU law on banking is set to come into force next year, and it introduces updated obligations and potential restrictions for people holding foreign bank accounts while residing in Germany. Here is what you need to know.

Why People Keep Foreign Bank Accounts

Before diving into the legal changes, it is worth acknowledging why this matters to so many people in the expat community.

Common reasons foreign residents in Germany keep accounts abroad include:

• Remittances and family support: Sending regular money to parents, children, or a spouse in another country is easier from a local account in that currency.
• Property ownership: Managing rent income or mortgage payments on property in another country often requires a local bank account there.
• Pensions and income: Some foreign pensions or freelance income may be paid directly into a home-country account.
• Currency hedging: Holding savings in a foreign currency can make sense depending on exchange rate expectations.
• Transition and security: Many people who have recently moved to Germany keep a foreign account as a backup while they settle in.

None of these are inherently problematic, but they do come with legal obligations — and those obligations are changing.

What the New EU Banking Law Changes

The incoming EU regulation introduces greater transparency and standardisation around how accounts held outside a resident's country of tax residence are reported and regulated. The key points relevant to expats in Germany include:

Automatic information exchange. The EU has been progressively expanding the Common Reporting Standard (CRS), which means banks in participating countries automatically share account information with tax authorities in the account holder's country of residence. Germany's tax authority (Finanzamt) may therefore already receive data about your foreign account. The new law reinforces and expands this framework, making it harder to have an undeclared foreign account go unnoticed.

Declaration requirements. Germany already requires residents to declare foreign bank accounts and assets above certain thresholds in their annual tax return (Steuererklärung). The new EU law may standardise and tighten these requirements across member states. If you have not been declaring a foreign account, this is the time to regularise your situation — ideally with the help of a tax adviser (Steuerberater).

Restrictions for non-EU accounts. The rules are more complex for accounts held outside the EU — for example, in the UK (post-Brexit), the US, or non-EEA countries. Access, reporting, and permissibility may vary. The new law may introduce additional requirements or due diligence steps for residents holding accounts in countries outside the EU regulatory framework.

Bank-side obligations. Foreign banks operating in the EU, or serving EU residents, will face stricter compliance requirements. In practice, this could mean your foreign bank asks you for updated documentation proving your residency status in Germany — or in some cases, may ask you to close the account if they cannot comply with the new rules.

What You Should Do Now

The key is to be proactive rather than reactive. Here is a practical approach:

1. List all foreign accounts you hold. Include the country, bank name, approximate balance, and the purpose of the account.
2. Check whether you have been declaring them. If your German tax return has not included foreign accounts and assets, consult a Steuerberater to assess your exposure and correct the situation voluntarily before the new law takes effect.
3. Contact your foreign bank. Ask whether they are aware of the new EU requirements and what, if anything, they will ask of you. Some banks outside the EU have chosen to close accounts held by EU residents rather than deal with compliance costs.
4. Review remittance practices. If you regularly transfer money abroad, make sure these transfers are documented and consistent with your declared income and tax filings in Germany.
5. Get professional advice. For anyone with significant assets abroad, or a complex financial situation across multiple countries, a tax adviser with international experience is strongly recommended. This is not an area where general online guidance is sufficient.

Frequently Asked Questions

Is it legal to have a bank account in another country while living in Germany?

Yes, in most cases it is completely legal. Germany does not prohibit residents from holding foreign bank accounts. The obligation is to declare them correctly for tax purposes and comply with reporting requirements. Problems arise when accounts are undeclared or used to conceal income or assets.

Will my foreign bank close my account because I live in Germany?

This is possible, particularly with banks outside the EU that have decided it is not cost-effective to meet EU regulatory requirements for non-resident customers. It has already happened to some expats with UK banks post-Brexit, for example. Contact your bank directly to ask about their current policy, and do not wait until you receive a closure notice.

Does this affect non-EU expats in Germany — for example, people from India, the US, or Brazil?

Yes. The German tax obligation to declare foreign assets applies to all tax residents in Germany, regardless of nationality. The new EU law also applies to anyone resident in Germany, not only EU citizens. Non-EU expats with accounts in their home countries should follow the same steps as anyone else: declare properly and seek advice if in doubt.

Conclusion and Next Steps

The coming EU banking law is a prompt to get your financial house in order if you have not already done so. Having a foreign bank account is not a problem — but having an undeclared one, or being caught off guard when your foreign bank asks for documentation, can create real headaches.

The single most useful step you can take right now is to book a consultation with a Steuerberater who has experience with expat and cross-border finances. Make sure your tax returns reflect all your accounts and assets. And contact your foreign bank to understand whether they will require anything from you before the new rules come into force.

Source: The Local Germany