Reader question: Do I need to open a local bank account when moving to Austria?

One of the first issues people face when moving into a new country is whether or not to open a new bank account in their new country or if they can use either their home accounts or international online accounts.

Even long-term foreign residents started asking similar questions once new companies started offering online bank accounts that were not necessarily based in Austria, but could be opened by any resident in the alpine country

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These online bank options are great choices for foreign residents. They are simple to use, have websites and apps in several languages, and usually offer a free option, with no monthly fees regardless of income. Unfortunately, however, none of the major ones (N26, Revolut, or Wise) have accounts with local Austrian IBANs (International Bank Account Number).

Does it make a difference? For example, can people keep or open an international bank account while living in Austria, or do they have to open an account in a local bank?

Non-EU bank accounts

It makes a huge difference depending on whether your bank account is from an EU country. However, in all circumstances, you are allowed to keep the account open, have money in it and make transactions using it.

It is just necessary to remember that Austria taxes your universal income if you are a tax resident in the country. So any income or relevant transaction should be added to your yearly tax returns.

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Still, keeping only a bank account outside the European Union and living in Austria will be next to impossible. Of course, it's impractical when thinking about currency exchange, but most establishments and organisations will also not accept transfers from outside of the EU or make them.

So whether you want to pay for your rent or receive government assistance, it's unlikely you'll be allowed to do it via an international (non-EU) transaction.

What about an EU account?

Technically, having only a euro (but not Austrian) account is possible. The Single Euro Payments Area (SEPA) is a European Union initiative to simplify bank transfers. All 27 EU members are a part of it, plus other countries, including the United Kingdom, Norway, and Switzerland.

The system allows for fast and secure transfers between the SEPA countries.

One of the agreement's goals is to extend the freedom of movement in the European Union, allowing its residents to keep a single euro-denominated bank account and a single set of payment instruments.

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So, you can use your bank account in a eurozone country for everything, including receiving salaries and buying things, in Austria. This is why international and online banks such as Wise or N26 have their IBANs based in Belgium, Germany or Denmark but can be used all over the eurozone.

Does it work in practice?

In practice, though, there is something known as "IBAN discrimination". This is when an employer or company refuses to accept your SEPA IBAN for euro payments or direct debits. This is illegal under the SEPA agreement but happens often.

It's not uncommon to find stories of people who have tried to sign up for a service or utility, such as paying for a mobile plan, for example, but were denied because their IBAN identification, though it was from a euro country, did not start with AT - was not from Austria.

For example, on various Facebook groups of immigrants in Austria, it is easy to find people who had their payments denied because their bank accounts weren't Austrian. "Always ask your employer if they accept your bank account. I had one that especially wanted an Austrian IBAN", wrote one foreign resident.

What should I do then?

Since not accepting a SEPA bank account is illegal, you can complain directly to the company or employer. In some cases, simply mentioning that IBAN discrimination violates the SEPA agreement and showing the official documents (including article 9 of the SEPA agreement) is enough to solve issues.

However, it can get more complicated than that. For example, some outdated company systems won't allow new customers or employees to be registered with a bank account from abroad - the "AT" option comes pre-filled and can't be changed.

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Or it may be simply too tricky to talk in German to the utility provider to explain SEPA rules or demand something from your new employer. It's essential to know your rights, and in Austria, you can also file a complaint with the competent national authority, the Financial Market Authority (FMA).

Other things can be tried in the meantime. In some cases, for example, some gym memberships are possible to sign up to and pay upfront with cash. Another workaround is to use the bank account of a partner or someone you trust. Finally, there are many utility companies in Austria, so if one phone company won't accept your IBAN, maybe another will.

Of course, these solutions are far from perfect but may allow you to keep your non-Austrian or international euro account.

If the headache is just too much to handle, or if you prefer the advantages of having a local bank where you can visit, you can also open an Austrian bank account and keep both.

Here is our guide on what you need to know about opening a bank account in Austria.