Like most countries, each country within the EU has controls on how — and if — its banks can establish accounts for non-residents and for businesses located outside the country. This is designed to prevent money laundering (and other international criminal activity).
Regulations may vary not only by specific country within the EU, but by regions within each respective country. All these factors may affect the requirements for opening business accounts for foreign companies.
Furthermore, most commercial banks will have internal policies that govern how they handle accounts from overseas customers — both to comply with law, and to protect the bank against potential fraud or other possible losses. These policies may also be different in each bank and change at any time based upon economic and terrorist activity.
The best approach is to directly contact the bank in the specific country of the EU and the region of that country in which you will be opening the account and ask about their current policies and procedures.
But before we get into the specifics of bank accounts, let’s review the advantages that the EU has to offer. The general intent of the European Union (EU) is to establish a single market in which the trading of goods and services is more standardized across all member states of the EU. With the introduction of a single currency (the euro) combined with standard rules to equalize taxation among EU countries trading barriers and the general cost of doing business is mitigated. In addition, EU residents/citizens are able to more freely move between other member countries, thereby increasing available workforce for businesses. Of course, perhaps the biggest advantage is introducing yourself to the largest international single market in the world.
So what will it take for you to get started? Below we provide an overview of some of the general requirements. Although not intended to be a comprehensive list, we want you to be aware of the most pertinent factors.
- You may need a physical EU business address
Regardless of whether your business dictates the need for a factory or warehouse or office in the EU, you will need to have a physical address, of some sort, to establish your business and your EU bank account. The “of some sort” varies based upon country and the type of business you are formulating and your bank’s specific requirements.
Some countries (such as Germany, Spain and Ireland) require establishing a physical presence and in some cases, hiring of local personnel. This can be accomplished through virtual offices which obviously adds to your monthly overhead.
Many countries allow the use of the offices of an attorney, a Registered Agent, notary, or other specified representative of the company, as accepted by each respective EU country.
- Your business must be registered within an EU country
How you formulate your business will be an overall driving factor for all downstream requirements for setting up a bank account. There are numerous options and they vary from country to country, all 28 of them. Therefore, you must consider the type of business you are formulating for your chosen EU country. These may include, but are not limited to:
- Sole trader (running your own business as an individual or self-employed).
- LLC, Partnership, merchant account, mergers, acquisitions.
- Societas Europaea (SE), a type of public LLC which may offer downstream benefits.
Note that many, but not all, EU countries use a notary system – thereby increasing the time to formulate a business. Germany, Spain, Portugal and Italy utilize a notary system. Some countries require a minimal capital investment which often varies based upon your company formation. Some countries may require proof of specific skills or knowledge, or a business plan. Other factors include evaluating the VAT structure of each country and whether or not there are any additional taxation rules specific to the types of products/services you are buying/selling.
- You may need to open an EU bank account in person
Someone has to present your credentials to the bank when establishing your account. Whether or not you personally need to do so will vary based upon the EU country and the bank itself. You need to contact the bank to determine whether or not they accept authorized representatives, and if so, who is considered an authorized representative.
This is required to verify your identity, and to allow the bank to validate the documents and information needed to open your account. You will need an official photo ID, proof of home or business address, bank statements from your home country bank, and perhaps other verification. Ask the bank for details.
- You will need a tax identification number within an EU country
Upon registration of your business with the appropriate government agency of a specific country, you will be issued a tax identification number, which is required by the bank, and your business, for reporting information to the tax authority of each EU country. Herein lies an example of how the type of business you formulate can affect downstream requirements. If you establish your business as an SE, you can use your company registration in one EU country with other EU countries without having to establish a separate tax identification number.