EU Rule Requires U.S. Banks to Be Licensed Locally to Keep EU Accounts
Starting January 11, 2027, a U.S. bank will need a locally authorized branch in the European Union to continue accepting deposits from or lending to customers who live there. The licensing duty falls on the bank. Nothing about your U.S. tax filing changes in January. Article 21c of Directive 2013/36/EU sets the requirement, added by the amending directive known as CRD VI, and published in the EU’s Official Journal in June 2024.
The rule covers deposits, loans, and mortgages, and leaves investment accounts alone. Contracts you signed before July 11, 2026, keep their protection. Your address, the product you hold, and the date you signed determine whether the rule applies to you.
Where You Live Decides If This Applies
The rule follows your address. Article 21c applies to any client “established or situated in the Union,” and citizenship never enters the test. A U.S. citizen living in Ohio is outside it, whichever bank holds the account, and a German national in Munich with a U.S. checking account is inside. So are an American in Lisbon, a green card holder in Dublin, and a retiree in Valencia drawing on U.S. savings.
Most Americans abroad have met the reverse, where a foreign bank turns down a U.S. applicant or a European broker closes its doors to U.S. clients. Here the pressure runs toward the U.S. bank, and the trigger is where you get your mail.
Deposits and Mortgages Are Covered
Three activities are covered, drawn from Annex I of the same directive. Lending is defined there to include consumer credit and credit agreements relating to immovable property, which would include a U.S. mortgage under the rule.
- Deposits: Checking and savings accounts. This one applies to any U.S. firm taking the deposit, not just banks.
- Lending: Personal loans, credit lines, and a home mortgage, but only where the U.S. firm would qualify as a credit institution in the EU.
- Guarantees and commitments: Letters of credit and similar undertakings, on that same condition.
Payment services, card issuance, currency trading, and custody do not appear on the list, so a U.S. debit card and an international wire transfer are unaffected.
Two Provisions Leave Brokerage Out
Two provisions remove investment business. Article 21c(4) and Article 47(2) both exclude the investment services in Annex I, Section A of the EU’s markets directive, along with “any accommodating ancillary services, such as related deposit taking or the granting of credit or loans” that support them. Your U.S. broker can continue holding a taxable account or an IRA, as can the cash sweep behind it.
Your Bank Has Three Options
Article 21c(1) tells member states to require a non-EU firm to “establish a branch in their territory and apply for authorization” in order to commence or continue those activities. That second verb is why an account you have held for years is part of this. The bank has three responses:
- Build a licensed branch: The European Banking Authority published final guidelines on authorizing these branches on July 7, 2026, so the process is now specified. It remains expensive.
- Use the reverse-solicitation exception: Narrow, and it covers only a product the customer sought without being approached.
- Stop serving customers who live in the EU: The realistic choice for a bank with few of them.
No major U.S. bank has published a policy for its EU-based customers yet. Nothing in the directive requires an account to close, either, and each bank is still deciding how to respond.
Asking First Buys a Narrow Exception
Article 21c(2) leaves out any service the client sought “at its own exclusive initiative.” If the bank approached you through a related company or an agent, the exception no longer applies. Article 21c(3) then limits it to the product you asked for, with one opening that most summaries miss: no branch is needed for anything “necessary for, or closely related to” that original product, including services added later. It will not stretch to something new.
Older Contracts Keep Their Protection
Article 21c(5) says the branch requirement applies “without prejudice to existing contracts that were entered into before July 11, 2026,” in order “to preserve clients’ acquired rights.” That date has already passed. Article 2(1) of the amending directive required member states to apply paragraph 5 from July 11, 2026, six months ahead of the requirement it limits.
A mortgage closed in 2019, and a savings account opened in 2004, both fall on the protected side. What the directive does not say is how far the protection stretches once a contract changes. A refinance, a new account at the same bank, or an added product each looks like a fresh contract carrying a date after the cutoff.
Moving the Money Changes What You File
None of this is a U.S. tax event by itself. The tax consequences apply only if the bank closes the account and the balance is transferred to a bank within the EU. Three things change then, and two come with a threshold.
- A foreign account now exists: FBAR filing applies once all your foreign accounts together top $10,000 at any point in the year, according to the IRS.
- The balance becomes a specified foreign asset: Form 8938 generally applies to amounts above $200,000 on the last day of the year or $300,000 at any time filing single from abroad, and $400,000 or $600,000 filing jointly, thresholds the IRS publishes for taxpayers living outside the country.
- The payer changes: Interest earned at an EU bank becomes foreign-source income because the IRS sources interest based on the payer’s residence. It stays taxable either way.
A New Account Abroad Means an FBAR
For FBAR, the location of the account decides, and the nationality of the bank has no bearing. An account at a U.S. branch stays outside the form; one at a bank in Spain is reportable, and so is one at a U.S. bank’s own branch abroad. The $10,000 test looks at the high point of the year, not the December balance, so moving $40,000 out of a U.S. bank in October creates a $40,000 maximum account value to report, even if the account is nearly empty by December.
Interest Turns Into Foreign Income
The same balance earning the same rate produces U.S.-source interest at a U.S. bank and foreign-source interest at a bank in the EU. Both are taxable. What changes is the foreign tax credit arithmetic. Where the EU country taxes that interest, the tax paid there becomes a creditable foreign tax, and the interest itself becomes foreign-source passive income, which is what the credit limitation is measured against. The credit generally needs both.
What to Do Before January 2027
- Ask your bank directly: Nothing requires it to write to you first, and our answer on keeping U.S. accounts after a move covers what usually happens next.
- Date every account and loan: Anything signed before July 11, 2026, has protection worth weighing before you replace it.
- Check the timing on a refinance: A new agreement would be dated after the cutoff, which is one factor alongside the rate and the terms.
- Arrange the deposit route: If a U.S. account closes, Social Security direct deposit to a foreign bank takes time to set up.
- Separate investment cash: The ancillary carve-out covers deposit taking that supports investment services, so a brokerage sweep is generally fine. A standalone savings account is a different product.
- Line up an alternative: Our guide to U.S. banks that work well for customers abroad covers the choice, and moving a large balance across borders has its own steps.
- Count the reporting first: Check what a new account adds, including whether a fintech account counts for FBAR.
Greenback has deep expertise in the reporting that follows a move like this.
Each Country Writes Its Own Version
Article 21c is part of a directive, not a regulation, so all 27 member states incorporate it into national law, and each supervisor issues its own authorizations. That is where the open questions land: whether an open-ended deposit agreement counts as a single existing contract indefinitely, how strictly a supervisor reads “own exclusive initiative,” and which U.S. banks build branches.
The European Banking Authority reviewed Article 21c in July 2025 and found no evidence for amending it, and no change to the January date has been proposed.
This article describes an EU directive that member states are still writing into national law, and the requirement it covers applies from January 11, 2027. All U.S. tax figures reflect rules in effect as of publication. The information here is for general informational purposes only and does not constitute tax, legal, or financial advice. Tax rules are complex and change frequently. Consult a qualified tax professional with expertise in cross-border reporting regarding your specific situation before taking any action.
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