Why Americans are finding it more difficult to open bank accounts in France

Americans living in France are reporting increasing difficulties opening bank accounts here - and, in some cases, their banks are closing existing accounts down. 

Why Americans are finding it more difficult to open bank accounts in France
Photo: Fred Tanneau / AFP

In 2019, the president of the French banking association wrote to the country’s finance minister warning that up to 40,000 accounts belonging to US citizens might have to be closed down if France and the US could not come to an agreement on tax status.

Robert Earhart, who divides his time between Paris and Nice, told The Local at the time: “Opening an account was extremely difficult. I had to go through a friend who is a bank executive, who basically required one of his employees to open an account for me. This was after being turned down at five different banks.

“I had to fill out a 1099 form as well as a FATCA compliance form that was internal to the bank and I have to fill out a new 1099 form every year.

“Several times the bank has mentioned closing my account.”

ALSO READ French banks could be forced to close 40,000 accounts of ‘accidental Americans

The feared bonfire of the bank accounts appears not to have happened – but US citizens in France are reporting added difficulties with some French banks. 

BNP Paribas wrote to a ‘very limited’ number of customers who were US citizens earlier this year, warning them that their accounts would be closed within two months.

Another US citizen living in France – Barbara Lindsay – told us that opening a bank account was “more difficult than buying a house”.

And Dordogne-based American Connie Porter-Richard said that BNP Paribas closed her account “unceremoniously”. She had only been able to open an account in the first place “because I had an existing customer as a sponsor” she said.

And Philip Knowles, who lives in Perpignan, said that opening an account with a French bank as a US citizen “took a few weeks and required several pieces of documentation including our tax return and W-9 forms for each of us”.

They were also obliged to sign a document relating to their tax status and were specifically warned about FATCA rules and told they faced a €1,500 fine if they failed to return those signed documents.

What’s the problem?

It all dates back to a piece of American legislation known as the Foreign Account Tax Compliance Act, or FATCA for short, that obliges foreign banks to report back to the US tax office on any assets held in these accounts by US taxpayers. 

As American Expat Financial News Journal (AXFNJ) reported, banks were given a ‘grace period’ until 2019 – which was subsequently extended to 2020 – in order to get their houses in order before the legislation came into force.

However, it seems some non-US banks (and even some US-based ones) are keen to avoid the additional hassle and cost of having to constantly update American government officials about the financial activities of customers – and since the government can levy big fines to companies who don’t comply with FATCA, some banks seem to think it isn’t worth the risk.

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That appears to be the case for BNP Paribas, which wrote to what it described as ‘a very limited number’ of customers in March, telling them it was closing their accounts because they had failed to supply a US tax identification number (TIN), which meant they were not in compliance with FATCA.

In order to get a TIN: “You have to go to the American embassy, which has been closed since the beginning of the health crisis,” Fabien Lehagre, president of the Accidental Americans lobby group, representing French people who by an accident of birth are classed as US citizens, told Le Parisien at the time. “The banks are getting scared, the State has to act.”

So far, no other bank in France has warned American customers – accidental or otherwise – that their accounts would be closed because of this law. 

The Fédération bancaire française has said that it is aware of difficulties encountered by some clients, but has palmed off the issue, saying: “This problem must be solved by American authorities.”

Is this allowed? 

It appears so – at least, for anyone who doesn’t hold EU citizenship. 

European Union legislation says banks must provide a basic account to any EU citizen who requests one – that should mean dual US/French citizens are entitled to banking services.

According to the European Commission’s website, its Directive on Payment Accounts “gives people in the EU the right to a basic payment account regardless of a person’s place of residence or financial situation.”

French banks, meanwhile, are in discussion with the government in an effort to find a permanent solution to the FATCA issue – while the Ministry of Economy and Finance has said that “nothing justifies” closing bank accounts of American citizens in France “accidental or otherwise”.

The Ministry added that: “According to the doctrine of the French tax administration, the procedure covers the banks in the absence of a TIN and these only come under French law for the collection and transmission of information to the DGFiP.” 

That appears to suggest that French banks would be protected from US sanctions in cases of breaches. But it seems some banks aren’t willing to take the chance.

What happens now?

At a government level, where these things can be thrashed out, not much appears to be happening, though there may be activity behind the scenes.

In a resolution passed on July 5th, 2018, the EU unanimously called on both member states and the European Commission to go back to the negotiating table with the US government to change how FATCA is enforced. 

What options do Americans have in the meantime? 

Until such time as things are sorted by the powers that be, it’s a case of carry on regardless.

One option is for Americans to go “bank shopping” and find a bank that will accept them. The experience of Local users suggests that some French banks, at least, are still open to US customers. 

READ ALSO Everything you need to know about setting up a bank account

Another option, according to AXFNJ, is to open a State Department Federal Credit Union (SDFCU) checking account. These accounts are specifically designed to enable expats to access basic banking and mortgage facilities. 

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Courtier: Should you hire a broker when buying property in France?

If you're researching the French property market, you might have come across mentions of 'courtiers' - here's what they do and whether they are necessary.

Courtier: Should you hire a broker when buying property in France?

The French ‘courtier‘ is usually translated as a broker, and the Notaires Association describes their role like this: “the broker is a true intermediary in banking operations. His/her role is to negotiate the best rates for you, but not only that: they will also find the most advantageous financing conditions for the realisation of your project.”

Essentially they act as an intermediary between you and the banks, so they’re only required if you need a mortgage or a loan in order to buy your French property. 

Their job is to research the best deals for you and then to help you put together your application and ensure that all your paperwork is correct – unlike the notaire, instructing a courtier is not a required part of the process, so the decision on whether to instruct one is up to you. 

So is it worth it?

Among French buyers, around 30 percent of mortgages are obtained using the services of a courtier, and this rises to 60 percent among young, first-time buyers, who generally find it harder to access credit.

Some of things to consider are your level of French and confidence in negotiating French bureaucracy, your financial situation (since French mortgage lenders tend to be stricter than those in the UK or US) and whether you currently live in France or not (since there are extra hoops to jump through for overseas buyers).

READ ALSO Is now a good time to buy a home in France?

“Things have changed,” Trevor Leggett, group president of Leggett International estate agents, told The Local. “It’s now more important than ever to work closely with a reputable broker.

“In France it is all paper-based, very old-school and extremely bureaucratic, a different world entirely to the UK. Preparing the client “dossier” so that it will be accepted is an art form.”

READ ALSO MAP: Where in France can you buy property for less than €100k?

He advised non-resident international clients, particularly, who may not be au fait with the French system to seek the help of a broker who knows the ropes.

“The question is no longer really about savings,” he said. “It is about finding a bank that can actually lend to the client profile, interests rate are secondary. 

“It occasionally happens that one bank can be played off against another, or to shop around, but it’s a rare event nowadays.”

READ ALSO Revealed: The ‘hidden’ extra costs when buying property in France

And he had no hesitation in recommending that prospective buyers find a broker to sort out the financing.

“The lending market has tightened for international buyers and a good one is worth their weight in gold,” he said.

READ ALSO EXPLAINED: Time-frame for buying and selling property in France

In France, you make an offer on a property and then you begin the mortgage process (while in the UK it’s the other way round) so problems in getting your mortgage approved could lead to you losing your dream property.

“[Using a courtier] can be the difference between buying and not,” added Trevor.

“It’s not just any possible language barrier – but understanding the process and the different players in the market.”

How much?

The cost of hiring a courtier is borne by the buyer – but how much do they charge?

The courtier usually charges a percentage of the total mortgage amount – fees must be fixed in advance and are only payable once your mortgage application has been approved. 

Fees vary between different areas and different businesses, but the average fee is €2,000, which amounts to around one percent of the purchase price.

Many brokers set a minimum amount – around €1,500 – for smaller loans, and take a percentage of larger loans, so how much you pay depends on your property budget.