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.

What are the results of FATCA

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. Bulk services 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 typically 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. However, since FATCA has been implemented into German law in the mean time, you will have to clearly identify yourself with a TIN number when applicable. 

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!



This article has been written in response to numerous articles on ACA – American Citizens Abroad  
regarding FATCA

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