“Anyone legally residing inthe EUshould have the right toopen abasic payment account, and this right should not bedenied ongrounds ofnationality orplace ofresidence, ” reads adirective adopted bythe European Parliament in2014.Inthis article, wewill explain what abasic account is, what financial transactions itinvolves, and what requirements you need tomeet toopen one, and also— why isitsoimportant.
EUlegislation onthe basic account
In2013, astudy was conducted inthe European Union regarding the use offinancial services. The survey showed that about 58 million consumers over the age of15, which is12% ofthe EUpopulation, donot have asingle bank account.
Another study showed that consumers found itdifficult tocompare offers and prices for payment accounts from different banks. And even when the comparison appeared possible, switching from anexisting payment account toanother seemed complicated and unreliable. Sometimes EUconsumers could not open apayment account inamember state where they were non-residents.
The need for the unification ofthe rules for the execution ofcertain banking services and the simplification ofrelated procedures became clear.
Ittook alittle less than ayear for EUMPs towork through these issues, and onApril 15, 2014, the European Parliament adopted aDirective designed tomake iteasier for EUcitizens and legal residents toaccess financial services.
“This directive isall about empowering users ofcommon standard payment services. Guaranteeing access tobasic accounts toall consumers, including tomigrants and mobile citizens, will stimulate economic modernization, facilitate free movement and help the most disadvantaged inour societies”, said lead MEP Jürgen Klute (GUE/NGL, DE).
EUregulations onthe basic bank account
The adopted directive covered three main areas:
- free and easy access topayment accounts even for non-residents ofthe country;
- comparability ofservice fees;
- ability toswitch toanother credit institution oropen another account inanother country.
After approval bythe European Parliament, the new rules were tobeadopted bythe EUmember states, and then incorporated into their national legislation within 2 years.
Bank account inEurope in2023
Atthe moment, the recommendations ofthe European Parliament onthe basic payment account are valid inall countries oftheEU. This iswhat they wrote about the introduced rules inFrance in2023.
The right toanaccount allows you touse acertain number ofbanking services free ofcharge, asdetermined bylaw. This list isthe same inall establishments.
The bank appointed bythe Bank ofFrance toopen anaccount isobliged toprovide, free ofcharge, whether you are anindividual oralegal entity and domiciled inFrance, twelve services, referred toas“basic banking services”:
- opening, servicing and closing anaccount;
- one address change per year;
- issuance ofstatements (RIB) inaccordance with the needs ofthe owner;
- direct debit ofbank transfers;
- monthly sending ofareport onperformed transactions;
- cashing ofchecks and transfers;
- payments bySEPA direct debit, SEPA interbank payment order (TIP Sepa) orSEPA bank transfer, the latter can bemade atthe cash desk orremotely;
- online advice;
- depositing and withdrawing cash atthe cash desk;
- apayment card with systematic authorization, i.e. each payment orwithdrawal from itmust beauthorized bythe issuing bank, inparticular, allowing online payments and cash withdrawals inthe European Union;
- two bank checks per month orother equivalent means ofpayment offering the same services;
- carrying out cash transactions.
Basic services donot include the issuance ofacheckbook oranoverdraft facility. But the bank may provide additional services that are already subject tothe same tariff conditions asfor other customers.
Although, the functions and conditions ofbasic accounts differ significantly not only among the member states, but also from bank tobank within the same country. The reason isthe various interpretations ofthe term “account with basic functions”.
Insome countries, there isalmost nodifference between the standard and basic accounts, sothe same services are offered for these accounts. This isthe case inFinland, Greece, Latvia, Luxembourg, the Netherlands and Sweden. Other countries provide only alimited range ofservices and number oftransactions, asrequired bynationallaw. This applies toBelgium, Italy, Poland.
Inthe first cases, member states considered the characteristics ofastandard bank account sufficient tomeet the basic needs ofconsumers. Inthe latter, anaccount with basic functions was seen asanadhoc product. Asaresult, the level ofservice available for this type ofaccount varies considerably. Basic accounts inItaly have the least opportunities, with only alimited number ofoperations available.
However, the introduction ofthe new rules increased the share ofEUcitizens having atleast one account by5.4% since 2011 and reached 92.4% in2017. Although, this degree varies depending onthe country, from 58% inRomania to100% inDenmark, Finland, the Netherlands and Sweden.
How toopen abank account inEurope
Anyone legally residing inone ofthe EUcountries has the right toopen abasic payment account (basic bank account). Banks cannot refuse this just because the applicant does not reside inthe country ofthe institution.
IMPORTANT! This right does not apply toother types ofbank accounts, such assavings accounts.
Abasic payment account isanaccount that covers standard transactions used ineveryday life, such as:
- deposits,
- cash withdrawals,
- receiving and making payments.
Itshould also include apayment card that can beused for cash withdrawals and both online and in-store purchases.
Where possible, the credit institution should provide access toonline banking services. However, they donot always have toinclude anoverdraft orline ofcredit.
Insome EUcountries, banks may still charge anannual account service fee.
When banks can refuse toopen abank account
Abank may refuse toopen anaccount ifthe applicant does not comply with the EUregulations onmoney laundering and terrorist financing.
Insome EUcountries, banks may refuse ifasimilar account isalready opened inanother bank inthe same country.
Ifthe applicant isapplying for abasic bank account outside the country inwhich they live, banks insome EUcountries may berequired toprove a“genuine interest” indoing so.
For example, ifyou work for acompany based inCroatia but continue tolive inHungary, you can open abasic bank account inCroatia for day-to-day expenses inaddition tothe one inHungary. Find asuitable Croatian bank and ask them toopen anaccount foryou. The bank will not beable torefuse you just because you donot live inthe country.
Conditions for opening abank account inEurope
Before opening anaccount, acredit institution must provide adocument stating the basic fees and any associated fees for services offered. The Fee Information Document isstandardized and can beused tocompare costs for services across institutions.
Also, the bank must provide anextract explaining the fees atleast once ayear. This “fee report” must also contain information about interest rates.
Transfer between banks
The conditions ofthe basic account suggest the possibility tomove from one bank toanother inthe same EUcountry. The new bank should help with the transition, which isalso part ofthe rules.
Ifyou want toswitch banks, tell the new bank you want toswitch and transfer your regular payments tothe new account.
The new bank must ensure that the previous credit institution transfers data and cancels all standing payment orders, and isalso obliged to:
- inform third parties, i.e. employer, social security and utility providers, that the account has been changed;
- set upnew scheduled payments;
- move the corresponding direct debit tothe new account.
Ifthe applicant incurs costs during the transition procedure because the bank missed adeadline (for example, tocancel apayment) ormade amistake, the financial institution must reimburse the costs. Claims can beaddressed tothe out-of-court dispute resolution system.
Protection ofbank accounts inthe EU
EUrules guarantee that inthe event ofbankruptcy, money will beprotected uptoalimit of100,000 euros orthe equivalent amount inlocal currency. This limit isvalid for each client. This means that ifauser has multiple accounts with the same bank, the cumulative limit of€100,000 applies.
Incase ofajoint account with apartner, the limit applies toeveryone. Funds inexcess ofthe €100,000 will also beprotected insome other cases for alimited time, such as:
- money received from the sale ofprivate residential real estate;
- money received inconnection with aparticular event, such asmarriage, divorce, retirement, dismissal, staff cuts, disability, ordeath ofafamily member;
- money received from insurance benefits orcompensation for criminal injuries orwrongful convictions.
- Inthese cases, amounts over €100,000 stay protected within 3-12 months after the money iscredited.
Documents needed toopen abank account inEurope
- Copy ofavalid identity document issued bythe relevant authority and containing the holder’s photograph.
- Proof ofresidence.
- The bank may require anaffidavit inwhich the applicant has toconfirm that they donot have anaccount with another credit institution inthe country.
- Other supporting documents may berequested bythe bank, inparticular tocomply with the obligations tocombat money laundering and financing ofterrorism.
Inmost cases, personal presence isrequired. But sometimes you can open abank account online. Itisbest toclarify this possibility with the credit institution itself.
Timeframes ofaccount opening inthe EU
Timeframes vary bycountry, but applications can beprocessed within 10 business days.
How toopen anaccount inthe EUfor amigrant
Any person aged 18 orover and holding avalid passport orother form ofnational identity card isentitled toopen anaccount with aEuropean bank.
Residents ofcertain third countries can only apply with apassport and proof ofaddress, others will require more documents.
According tothe digital bank N26, Slovenia allows account opening even for foreign tourists who donot have anofficial place ofresidence, while Scandinavia has stricter rules.
For example, toopen abank account inSlovenia, aforeigner will need:
- foreign passport,
- Slovenian tax number (davčna številka),
- foreign tax number for non-residents.
You can apply for aSlovenian tax number byfilling out form DR-02 and sending ittothe tax office bymail orinperson.
Toopen anaccount, you can submit your documents tothe branch, upload them online orshow them inavideo chat, depending onthe method ofverifying your identity inaparticular institution.
Inour blog, you can find articles onthe ways for migrants toopen abank account inFrance, Latvia, Sweden, the UK, etc. And here iswhat the German Federal Financial Supervisory Authority writes about opening abasic bank account (basiskonto).
Any consumer legally residing inthe European Union has the right toconclude abasic account agreement. This also applies tohomeless persons and asylum seekers. Persons without aresidence permit who cannot bedeported for legal orfactual reasons (eligible persons) also have this right.
Toopen anaccount, itisenough tospecify apostal address inGermany. Itisnot required tospecify the place ofresidence inthe home country.
Every German bank that offers payment accounts toconsumers can also provide accounts with basic services.
Documents needed toopen abasic account inGermany
- completed application form, which can befound onthe website ofthe selected bank,
- ID,
- postal address.
Inorder toopen anaccount, you need toprint out the documents and bring them toyour appointment. The bank officer will ask afew questions and confirm the identity ofthe applicant. Ifeverything isfine, after afew days, the confirmation, bank card, PIN and other necessary documents will bemailed toyou.
IBAN and International Money Transfers
Inaddition tothe internal national number, EUbank accounts also have aninternational identification number— IBAN, which isused for international money transfers. Usually, the IBAN, which consists of29 characters, can befound onyour standard bank statement.
This opportunity isespecially important for foreigners who come tothe EUtowork orpermanent residence. While working inEurope, they often send money torelatives tosupport them financially.
KoronaPay transfers with IBAN
KoronaPay international money transfer service allows you tosend money transfers from Europe tothe countries ofEastern Europe, the Caucasus and Central Asia using your IBAN. Inthe countries ofdestination, the transfer can bereceived incash orcredited toacard. You will find all the details inthe Korona mobile app.
KoronaPay has aEuropean license for cross-border transfers and works not only with bank accounts, but also with Visa and MasterCard.
With Korona app, you can send money transfers tomost destinations with nofees, which makes the service sopopular. You can read the reviews onthe widely known Trustpilot review platform.
The Korona app has 17.5M downloads. You can follow the link here toinstall itonyour device. Itisfree and very simple touse.
Inconclusion, afew years after the EUstarted working onbasic financial services for its residents, alarge-scale study was conducted, which showed that there were still some gaps and nuances inthe provision ofbanking services resulting from the specifics ofeach country. Therefore, adjustments tothe adopted norms and further work inthis direction can beexpected inthe coming years. All ofthis suggests that basic banking services will continue todevelop, making the lives ofEUcitizens and residents more comfortable.
Inour blog, weregularly write about emigration toEuropean countries and the specifics oflife inthe EU, aswell asabout beneficial money transfers. You can see the topics ofall our articles here.
