Opening a foreign currency account abroad

A few weeks back, I finished up a translation project for an agency based over in Austria—well, they're actually located in a similar part of Europe, let's just say a major European hub. When the payment finally hit my account, I actually went into a bit of a shock—I was looking at a $19.50 deduction for some sort of processing fee. What really threw me for a loop, though, was that when I worked with a different agency from the same region previously, I never saw a charge like that. Both transfers were handled using a standard Routing Number and SWIFT code. My bank—I'm with Bank of America—couldn't really give me a straight answer as to why this happened. From everything I understand, you shouldn't be seeing extra fees just for using a Routing Number and SWIFT.

Anyway, I managed to clear things up with the agency, and they've agreed to send the difference over via PayPal. They did suggest that I should look into opening an account within the European Union to avoid this headache in the future. So, I've been wondering—is it actually possible to open a checking account in the European Union entirely online? If that's a no-go, would I need to physically fly over to Austria to set one up? I did stumble upon a few articles online suggesting that you might need a work permit to do that kind of thing.

Thanks so much for any insight you can share!

www.loyalbank.com

I really hope this isn't some shady ad. Honestly? I’ve had nothing but great experiences with them.

They hit you with those fees because the sender’s bank asked to split up the transaction costs—honestly, next time just tell the person sending the money to cover the whole thing so you don't get squeezed like that!

If you're looking to open an account in Austria, all you really need is a passport. Just a heads-up though, banking fees over there can be way higher than what we're used to back home.

Thanks so much for getting back to me! I took a look at the website—super helpful, by the way—and I was wondering about the logistics of the paperwork. Specifically, do they need the signed documents sent over via snail mail or fax, or is it okay to just scan them and send them digitally?

Amanda Moore8 said:A few weeks back, I finished up a translation project for an agency based over in Austria—well, they're actually located in a similar part of Europe, let's just say a major European hub. When the payment finally hit my account, I actually went into a bit of a shock—I was looking at a $19.50 deduction for some sort of processing fee. What really threw me for a loop, though, was that when I worked with a different agency from the same region previously, I never saw a charge like that. Both transfers were handled using a standard Routing Number and SWIFT code. My bank—I'm with Bank of America—couldn't really give me a straight answer as to why this happened. From everything I understand, you shouldn't be seeing extra fees just for using a Routing Number and SWIFT.

Anyway, I managed to clear things up with the agency, and they've agreed to send the difference over via PayPal. They did suggest that I should look into opening an account within the European Union to avoid this headache in the future. So, I've been wondering—is it actually possible to open a checking account in the European Union entirely online? If that's a no-go, would I need to physically fly over to Austria to set one up? I did stumble upon a few articles online suggesting that you might need a work permit to do that kind of thing.

Thanks so much for any insight you can share!

I’m honestly not even sure if you’re allowed to hold a foreign account (or keep money in one) anymore. They actually changed some of the rules recently, but you didn't even ask about that. 🙂.

You should really look into opening an account abroad; it’s actually pretty cheap to do. The key is to find somewhere within the Eurozone because transactions across the European Union are basically free—in most cases, moving money from Austria is seamless.

You might find the best rates over at an online bank like Ally; you can always drop by a JP Morgan Chase branch if you need to handle things in person.

Ovo It looks completely free.

So, basically, you transfer the cash to that account, then hit up any ATM in Canada and pull out the money totally fee-free. But if you decide to grab it back here in the States, you're looking at a $1.82 flat fee plus a 0.75% cut of whatever amount you withdraw.

Does anyone happen to know what the deal is when someone from abroad sends money to an Intel card? Like, do you have to report those transfers anywhere, and is there any kind of tax implication I should be worried about?

I just copied this straight from the U.S. Code

Resident Deposit Activities

Section 29.

The Federal Reserve sets the specific rules regarding how residents—excluding banks, obviously—are allowed to open accounts and hold funds in foreign jurisdictions.

Here are the requirements:

Honestly, I have no clue what kind of regulatory hammer is going to drop on me if I actually manage to pull this off and open a foreign currency account without getting the green light from the Federal Reserve first.

Terry Rogers2 said:Does anyone happen to know what the deal is when someone from abroad sends money to an Intel card? Like, do you have to report those transfers anywhere, and is there any kind of tax implication I should be worried about?

I’m assuming you’re talking about a foreign currency account here... 🙂

When dealing with international transfers, the most important thing is that the sender writes a proper memo on the wire instruction. And I mean "proper" in the sense that they should just list it as a gift or personal help. If they do that, you're golden—the cash hits your standard account and you don't have to report a single cent to the IRS.

But! If they get specific and write something like "rent payment" or "freelance fees," then that money has to go into a specific foreign exchange account, and suddenly the IRS is breathing down your neck demanding their cut for the government's coffers. 😉

Kimberly Nguyen said:I’m assuming you’re talking about a foreign currency account here... 🙂

When dealing with international transfers, the most important thing is that the sender writes a proper memo on the wire instruction. And I mean "proper" in the sense that they should just list it as a gift or personal help. If they do that, you're golden—the cash hits your standard account and you don't have to report a single cent to the IRS.

But! If they get specific and write something like "rent payment" or "freelance fees," then that money has to go into a specific foreign exchange account, and suddenly the IRS is breathing down your neck demanding their cut for the government's coffers. 😉

So, if I've got this straight, you only owe taxes if the money hits a foreign currency checking account, but if it goes straight onto an Intel card linked to a Bank of America account, there's no tax due? That's how I'm reading it! 👍

I honestly have no clue which specific card brands each bank uses for a particular account type, so don't ask me that.

A standard checking account in USD => no taxes applied here.
A specialized foreign currency savings account => you're looking at taxes on that.

But look, it’s not about just handing someone a routing number for a checking account; it’s about exactly what I laid out in my previous post.

So, I’ve been using that card to pull my winnings from online betting sites, but honestly? I have absolutely no clue what they actually write on the bank statement once the transaction hits! 😢

Kimberly Nguyen said:I just copied this straight from the U.S. Code

Resident Deposit Activities

Section 29.

The Federal Reserve sets the specific rules regarding how residents—excluding banks, obviously—are allowed to open accounts and hold funds in foreign jurisdictions.

Here are the requirements:

Honestly, I have no clue what kind of regulatory hammer is going to drop on me if I actually manage to pull this off and open a foreign currency account without getting the green light from the Federal Reserve first.

None. The Federal Reserve isn't going to magically stumble upon your business; they only find out if you volunteer the information. That whole regulation feels pretty hollow when you think about it. Let’s be real—your bank isn't going to start snitching on their clients to the government.

To the OP: Every single SWIFT transfer comes with fees, and those costs scale with the amount you're moving. When you set up a payment, you usually have the option to charge the fees to the sender, the recipient, or split them down the middle. Like > mentioned, just be explicit in your contract and state that the sender covers everything. To give you an idea, here is how the contracts look when foreigners send money to me:
"Transfer payments must be made via BANK-TO-BANK TRANSFER ONLY and must be net of all bank charges"

Robin Rodriguez5 said:None. The Federal Reserve isn't going to magically stumble upon your business; they only find out if you volunteer the information. That whole regulation feels pretty hollow when you think about it. Let’s be real—your bank isn't going to start snitching on their clients to the government.

To the OP: Every single SWIFT transfer comes with fees, and those costs scale with the amount you're moving. When you set up a payment, you usually have the option to charge the fees to the sender, the recipient, or split them down the middle. Like > mentioned, just be explicit in your contract and state that the sender covers everything. To give you an idea, here is how the contracts look when foreigners send money to me:
"Transfer payments must be made via BANK-TO-BANK TRANSFER ONLY and must be net of all bank charges"

That’s exactly what I was thinking... it reminds me of so many other useless legal provisions we have floating around in our books that are absolutely impossible to enforce in the real world...

My apologies in advance if this question has already been covered.

I was wondering if it’s actually possible to open a foreign currency account abroad—say, over in Canada—without having to jump through all those hoops with the Federal Reserve or various government agencies.

I think I even heard somewhere that our laws might actually prohibit it.

By January 1st, 2010, you really ought to check in with the Federal Reserve—otherwise, you’re looking at a pretty massive fine if they catch you off guard.

Hey,
Can anyone tell me if I can just head over to Canada and open a foreign currency account? I’ve got a buddy there who said he could let me use his address so my PIN and everything else gets sent to him without any issues. But what I really need to know is whether I can walk into a bank in Canada using just my American documents to open an account without needing citizenship, a work visa, or anything like that. I basically need this for PayPal, because as you guys all know, we Americans aren't able to receive money through it... thanks so much everyone
D.K.

Yeah, you just need to grab your tax ID from the IRS.

I’m not claiming to be an expert here, but if you look at the logic...

A tax ID is essentially what you need if you're filing as a taxpayer in Canada.
My take is that anyone should be able to walk into a bank and open a non-resident account without much fuss.

And what exactly do you mean by a foreign currency account? They use the Euro in Canada.🙂

So, I'm going to be receiving US dollars through PayPal, so I was thinking about opening a dedicated USD account... but then again, if I end up withdrawing cash from ATMs over in Canada, won't they just convert everything straight into Euros? I feel like I could lose a massive chunk of change on those conversion fees if that happens...

Gerald Thomas11 said:I’m not claiming to be an expert here, but if you look at the logic...

A tax ID is essentially what you need if you're filing as a taxpayer in Canada.
My take is that anyone should be able to walk into a bank and open a non-resident account without much fuss.

And what exactly do you mean by a foreign currency account? They use the Euro in Canada.🙂

That’s true. I had my account set up before they passed that law, but once it went into effect, I had to go back and provide my tax ID. You really think the IRS isn't going to care about suspicious transactions moving through your account?

Taylor Hill25 said:So, I'm going to be receiving US dollars through PayPal, so I was thinking about opening a dedicated USD account... but then again, if I end up withdrawing cash from ATMs over in Canada, won't they just convert everything straight into Euros? I feel like I could lose a massive chunk of change on those conversion fees if that happens...

If you're planning on hitting an ATM in Austria (though you could just use your card or find an ATM in the US), you might be able to go into a branch and withdraw actual dollars.
Just keep in mind, if we're talking "a lot of money," you're definitely going to end up on the IRS's radar.