FATCA and What it Practically means for your German Bank Relationship from the German Legal Perspective

This article is exclusively reaching out to Americans living in Germany. Americans living elsewhere outside the States might consider the results as applicable for them but not typically the argumentation. Non-Americans are not addressed.

This article wants to answer some questions on FATCA and the current activities of international German banks. To get background information on FATCA please visit the blog of the non-profit organization American Citizens Abroad by clicking this sentence. Recently Americans have received a brush off from their German banks. This article will discuss if that should be and what the consequences of it are.

My bank requested that I transfer my funds to another bank because they do not want to deal with IRS formalities. I am reluctant to do so! May the bank give notice on the contract?

Generally banks may not demand that you shift your deposits or save money in this or that way. The bank is typically obliged to provide its financial strategy and to pursue this strategy. When you then close a contract to invest in that fund or open such savings account, your bank has the obligation to provide you with it. Normally only when you agree can you be expected to switch. However, the STCs of banks usually have a clause that they have the right to give ordinarily notice to any and all accounts.

Grand! My bank gave notice on my account and depot. Now what? Can I not demand that they not end their "engagement" with me?

Sorry but you have no right to demand whether the bank ends the contractual relationship with you. These STCs are generally valid and the bank without having or giving a special reason may give notice on partial or complete engagement. What may not happen though is that you have to do it overnight. The bank is required to consider your interests also. Therefore, they will generously give you time to switch.

How long is this "generous time"?

This can actually only be answered in the individual case, because it depends on how much business you are doing with the bank. The more business interaction between you and your bank, the more time you are to receive. You are to be allowed so much time for you to reasonably quickly process the switch. When you have trouble switching, then you will have to actively show your efforts to your current bank so that they still keep your account.

Since they can cancel, what are "my interests" in this situation that the bank wants to close the account?

Due to the bank's obligation, they have to reasonably prevent damages like recognition of losses, tax disadvantages.

An American wants to open an account in Germany but the bank refuses because he is an American.

Disregarding whatever real excuse the bank has to deny you an account, you have no right to force a bank to open an account for you. Privately held banks have no obligation to contract with you. Public savings banks (Sparkassen) in several federal states have an obligation to contract with you. These are

  • Bayern (§5 II SpkO - Bavaria),
  • Brandenburg (§5 SpkVO - Brandenburg),
  • Nordrhein-Westfahlen (§5 II SpkVO - Northrhine-Westfalia,
  • Sachsen-Anhalt (§5 SpkVO - Saxony-Anhalt).


If I remember correctly, nobody is supposed to be disadvantaged by one's origins in Germany. So, isn't this action of a bank, i.e. turning down an American just because she is an American, something illegal because it is disadvantageous?

Yes, this sounds like an infringement of antidiscrimination rules. This will be very complicated to prove because most companies have become very sensitive to personal denials. When "bank services" can be understood as "bulk business" then denying you such business because you are an American infringes §19 AGG.

Do bank services qualify as "bulk services"?

This is to be answered with a clear "yes" and a clear "no". It depends on what service was rendered and if an identity played a significant role. This will always be the case when opening an account without any credit function. The opposite, i.e. absolutely personal service, will be making saving strategies come about. Any bank product that is to meet your very personal needs does not qualify as a bank service. As of now, there is no precedent to determine whether or not small loans to (American) consumers (often advertised as "spring loan or similar") or other non-individual loans still qualify as a bulk service. In such cases, typically no personal consultation is needed or offered - sort of like a loan over the counter. When you, as an American, are refused such loan or an account because you are an American then that is illegal.

I'm a dual citizen of the U.S. and Germany. When I applied to open my account, I only disclosed my German citizenship. Is that a problem?

Seen from the German legal perspective, you acted correctly. Pursuant to §5 I 2 EGBGB, persons also having the German citizenship, will be considered as Germans. In other words, there is nothing for you to do. Besides, banks only have the possibility for one entry on "citizenship". When you have identified yourself as a German (disregarding any other citizenships you have), they will ask no further.

Interesting what you just mentioned, though I am a dual citizen of America and another country but not Germany. How does that effect me?

German law could not care less, which foreign citizenship you have. It is hardly relevant in this discussion.

Heck, when I first got to Germany I only had American citizenship and now I have dual. I was informed by my bank that they want to cancel my contract because they do not want to meddle with the IRS. Can I legally work around this issue, that I "re-identify" myself as a citizen of another country?

Seen purely from the legal side, the bank has to have a clear understanding of your identity! There is no way around that detail. However, when you can prove that you also have a passport of another country and disclose this to your bank consultant, he may legally switch your entry to this other citizenship. Though we have no experience whether banks are technically able to retroactively change the database entry "citizenship" from one country to another.

Gee, after reading all this, I do believe that I was illegally discriminated. What are my rights?

You have the right to be reimbursed for damages and if this discrimination lasts in the future then also its forbearance (§21 AGG). Typical damages will be the reduced interest you will be receiving now, or the costs for opening a new depot or account.

N.B. Just switching your citizenships at your German bank does not exempt you from disclosing your foreign bank accounts to the Department of Treasury or from submitting a tax return to the Internal Revenue Service! The only legal result from switching your citizenships with your bank is that you do might not have to shift your investment "because of" your American citizenship.


Do you need help with restructing your investments? Check out LG2G's Business Directory with selected Financial Service Providers that do not mind serving Americans...


This article has been written by request of ACA – American Citizens Abroad and in the function as their Country Contact for Berlin, Germany

ACA – American Citizens Abroad

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Money and Payment in Germany

"Money makes the world go around, the world go around..." Wasn't it that what Liza Minelli once sung? The same is true in Germany. However, Germans have their special customs when it comes to paying. This page will introduce you to the most important traits.


My electricity supplier asked me to pay by "Lastschriftverfahren". I know this means direct debit, but how does it work?

Money and Payment in Germany

No reason to worry! Paying by “Lastschrift” or direct debit is a convenient way to pay one’s bills. Participation in this pro­cedure will allow the electricity supplier to directly collect from your account. Now, take this literally. That company will transfer money from your ac­count to theirs. You are not to do anything anymore to pay the bill. This prac­tical side has some distinct advantages. You will never again pay late because it is up to your supplier to make sure he gets paid. The drawback to this is that the supplier can easily collect too much. But if they do, you have six weeks to countermand the transfer. So check your account statements at least once a month. N.B. direct debit is very common in Germany. No one can force you to get in on it, but big companies for basic supplies like water, natural gas, electricity expect you to either use direct debit or pay in advance. Sometimes they even give you discounts for direct debiting. Common phrasing is “zahlen per/mit Lastschrift”, (paying by direct debit).    

What is an EC card? Is that another kind of credit card like VISA®, MasterCard®, AmEx® or Diner’s Card®?

No, not at all! An EC card is a synonym for electronic cash. When paying with this card you will allow that company to directly debit your account. The EC-card is a remnant of the old eurocheque system and is nowadays often called MaestroCard. Until 2004, you could pay with an Eurocheck and present the EC-card to prove you owned the check. Two features of this check made it popular. Up to a certain amount, the checks were guaranteed, and they were accepted all over Europe. However, since checks in general have lost prestige as a method of payment, and since the EC-card grew even more popular, the checks were simply abolished. The remaining card itself is still accepted all over Euroland. No one looks twice, if an Austrian pays with his EC card in Greece or Italy. 

What does it imply to pay “with my signature”? Will I have really paid without spending any money in the end?

Paying with your signature is actually a comfortable way to pay. When entering your card into the reader this machine will print your bank details on the cash register slip and then you sign it. While you wait for the machine to start printing, your bank will contacted to find out if your card has been barred. Your signature acknowledges that the payment as printed is okay and that this sum can be directly debited from your account. One or two days later, your account will be debited. The advantage for you as the customer is that you have the right to countermand this direct debit. This disadvantage for the honest business is that they will have to initiate collecting proceedings. Since this procedure is insecure and very troublesome for many tradespersons, this system has been abolished at the end of 2006. However, there is still an interim period during which shops will still accept this way of paying.

What is paying with my card's PIN? What are the implications with this method?

The electronic cash method checks already in the shop if your account has enough credit for the transaction. This is sure payment for the shop. However, you as the customer may not contradict this deduction. Banks can return the debit if your account lacks sufficient credit at the time your purchase is to be booked from your account.

Specimens of the EC Symbols

EC-Scheck (now abolished)

pay with your signature

Pay with your PIN

just sign to
pay with your PIN


Paying with PayPal

When paying with PayPal is there anything special to consider?

Read the fine print on the PayPal website carefully, even if this requires you to do the clicks and read dozens of pages! Only when you know all the details will you really be able meet them, PayPal promises protection but only transactions via eBay Germany, Austria and Switzerland will be covered. When purchasing outside of these countries there will be no protection even if the merchandise has been paid for via PayPal.

Paying with paypal

What are special conditions when receiving the purchased goods?

The goods must be forwarded by a parcel service. Personal pick-ups or other shipping methods are taboo. The trade in cars and electronically sent data (text, music, etc.) are generally not protected. Be always aware that PayPal only promises protective services as a matter of goodwill; you can never successfully seek legal recourse.

Hints for Buyers

What am I to do when I get an empty parcel or the items are defect?

When a package arrives empty or a wrong resp. a defective product is delivered, it has to be witnessed. A person must confirm this in writing and must be available for questions from PayPal. This requirement will also come in handy, in case you should go to court afterwards - for whatever reason. Therefore, never open a package alone! Have defects of the product confirmed by a retailer in writing. Yes, you will have to first cover these extra costs yourself. When buying from a commercial dealer, it is generally easier to return the goods in accordance with statutory rules on warranty and guarantee than to make use of the PayPal buyer protection.

Great, I ordered a bunch of stuff and it didn't arrive during the normally expected time. After making use of the PayPal protection, the parcel did finally come. The stupid vendor had transposed my house numbers. After my buddy and I opened the package, we found out that everything is only junk! I was screwed twice! Everything is broken. Now I'm gonna demand my money back.

Good idea but it will not work. Only one(!) request for buyer protection per transaction is possible. Never apply for it too early for goods not (yet) delivered. When a little later the defective product arrives, the reason of complaint will be decided against you and the second complaint (because of faulty goods) will be definitely excluded.


Tips for Sellers

When finishing the package, I noticed that the buyer has provided a different address on eBay than registered with PayPal. Which address am I to use?

The shipping method must provide proof that the goods actually arrived (registered letter or parcel shipping with Internet tracking). The goods must be delivered to the address of the customer as registered with PayPal. When the buyer provided a different address on eBay, this one must be ignored. To avoid probable complaints best contact the buyer and inform them on this and get clarification. It is not your job to instruct the buyer on PayPal rights and duties but to make sure that they really receive the purchased goods.

Arrggh! I just noticed that the money I received was now debited out of my PayPal account. Even though I kindly asked, they refused. I threatened them with my lawyer and they did not respond. Grr. Do I have any chance to sue PayPal to find out why they reimbursed the buyer?

Forget suing PayPal! Whether the buyer is entitled to refunding or not will be decided not by you but by PayPal and the credit card company or the bank. The seller receives no information from PayPal, as to why such a subsequent cancellation of the credit card payment was entitled. A direct credit card transaction or a direct debit, i.e. not via PayPal, offers much more security. However, eBay does not allow either.



If you want or need an account that is safe from your creditor, then what you need is a "P-Konto". Read more to a Pfändungsschutzkonto below!

I heard that I can keep my funds safe from any creditor that wants to sue me. Tell me something about it.

Since 2010, you are entitled to have one so-called “P-Konto”. This stands for “Pfändungsschutzkonto (account exempt from attachment)”. The lawmaker intends to protect the existential minimum funds for living and simultaneously ease the work of courts and their bailiffs, as well as the work for banks having to comply with court orders of attachments.

© Unclesam @ FotaliaHelp my account has been frozen! How can I get such creditor safe account?

When your account is already attached, the process still remains the same. You have to apply for such an account at your bank. You can even demand that this conversion be done within four working days.

How much is exempted? I guess I can now rest assured that I can pay my rent and have something to eat.

Here “exemption” means having an account guaranteeing you to always have at least € 985.15 per month safe from your creditors (§850 c ZPO). The practical affect from such account is that you can still  participate in transferring funds from and to your account. You can also transfer your rent and withdraw your monthly allowance.

Gee, that’s not at lot of money for a household of four. I alone could roughly make ends meet, but not with my wife and kids. What’s their protection?

That’s true, indeed! This basic value of € 985.15 is only for a single adult without any alimony or support commitments. This exemption value can be raised, when you can objectively show that more is needed. Just like in your case. For the first child you get € 307.76 extra and € 206.56 for the second child. Talk to your bank about this.

What about me? I have a chronicle disease that alone costs me € 200 per month.

An exemption for such expenses can also be granted.

How do I show that I have a greater need?

You can use the following to prove your expenses:

  •   notices of Familienkasse on child benefits,
  •   employer,
  •   welfare agency,
  •   etc.
Hey, that’s cool, so I apply for such P-Konto not only for my main account, but also for all my accounts.

Sorry, to disappoint you, but such account can only be given once. For this reason banks are permitted to report to and / or check out an existing P-Konto with SCHUFA.

It sounds too good to be true that all my liquidity issues will be solved. What are the lawmaker’s goals and the advantages of such concept?

Parliament wants to better secure the minimum living wage. Therefore the P-account has the following advantages compared to the previous law:

  •   The protection against an attachment will be automatically applied; you don’t have to fight in court.
  •   You can maintain your normal payment duties via your bank account and are not dependent on cash.
  •   Since it does not matter, if the exempted amount is fully spent or not, you can save for larger regular payments that are due less often in the year (e.g. insurance premiums, taxes).
  •   Less red tape for all participants. Previously, freelancers were privileged with this security. Now it is independent of which kind of money is entering the account.
  •   Income from self-employment as well as voluntary contributions of other people is also protected.