This post will be a bit different from others, mostly because I will let you know right off the bat that I don’t have all the answers on this topic. It is something that I had no idea would be so difficult before I got to Italy, though, so it is something I wanted to share with everyone.
And that something is… it is incredibly hard to open an Italian bank account as an American citizen!
Americans complain a lot on expat forums and Facebook groups about how the bureaucracy in Italy can be downright infuriating at times. And, while they’re not totally wrong, I usually try to balance things out by letting everyone know that it’s usually just a matter of gathering paperwork, showing up to appointments (and more appointments, and more appointments…) on time and having a bit of patience. But this is one case in which I really found myself getting frustrated, not just with Italy’s system, but with the U.S.’s as well.
It took me months (I’m not exaggerating) to finally get to a point where I could save my own money in Italy, and I still don’t even have my own bank account! Here’s a look at why it was so difficult.
Many Italian Banks Don’t Want American Customers
This sounds like discrimination, right? It’s not that simple, but I was still furious when I found this out. I was applying for a joint bank account with my husband a year after I moved to Italy, a year during which I kept having to use my husband’s money to pay for things because the exchange rate between euros and dollars was so bad that I would lose a lot of money on each transaction. I hadn’t been able to use my own money freely since I had been in the country (also because my American bank didn’t want to cooperate with me on anything even remotely resembling an international transaction), and I was ready to just move my money here and go on a good old fashioned shopping spree. My husband found a multi-currency bank account where we could deposit both US dollars (USD) and euros, and we thought we were all set.
But when it came time to add my name to the account, the bank blocked it. They said it was impossible for an American citizen and an Italian one to open an account together, regardless of whether they’re married or not, and regardless of whether the American has all the proper documents and fiscal code, etc. to allow her to reside in Italy.
The reason for this, it turned out, was exactly what I wrote in the heading of this section: many Italian banks don’t want American customers. And if they do allow them, they have a whole other set of rules they must abide by, so it is impossible to have a joint account with both names on it.
There are a lot of them who will make an exception about accepting American clients, but there are also many of them who will refuse to let an American open an account with them. But, as bad as this sounds, the banks aren’t doing this to be mean. There is actually an annoyingly reasonable reason for this.
Why Is It So Hard for American Open an Italian Bank Account?
The short answer to this question is: it’s just too much trouble.
What a lot of people don’t know is that, as long as you are an American citizen, you will always have to pay taxes in America. I am still learning about the tax system and how it works if you are an American citizen living abroad (I’ll write a post on that once I figure it out), but what is clear is that, even if you move away from the U.S. and never return, even for a visit, even if you don’t work there, even if you were born in the U.S. and left the next day and never went back, you are still locked into the American tax system.
No matter where you go or how long you are there, the IRS will look for you, they will find you, and they will tax you.
Liam Neeson jokes aside, it really is oddly dramatic. There is an agreement called the Foreign Account Tax Compliance Act (better known as the FATCA) that requires Italian banks to send information to the Internal Revenue Service (better known as the IRS) about their American clients to avoid tax evasion by said Americans. This information includes your personal info, your account balance, how much you put in and withdraw, and other details about the account itself. It may also be responsible for applying a 30% withholding tax.
Instead of the individual account holder reporting these things to the IRS, it is up to the bank. And, as you could imagine, this involves a ton of paperwork, especially when someone is just opening an account. And this is regardless of whether you are planning to put euros or dollars into that account: it all must be accounted for according to the IRS’s rules.
So, understandably, this isn’t something that every bank is willing or able to do.
As I said from the start, I don’t have a good answer for this. But I will say that I understand now why everyone in the American expat groups is always going on and on about services like Wise, Revolut, and N26, all of which can serve as a type of international, online-only bank account (depending on how you use them). While these charge you a fee to do just about anything, in the end they may just be less trouble than trying to figure out how to migrate your USD from a U.S. bank account to an Italian one.
At the moment I am using the multi-currency account from Wise myself, but I’m not making an official recommendation on it because nothing is really giving me the freedom I was looking for with my money! (And also it is taking me months to move my not-very-impressive life savings overseas where I can actually use it because my particular U.S. bank has a very low transfer limit per month.)
If I find a better answer, I will let you know. But in the meantime, just know that if you have trouble opening a bank account in Italy, you’re not alone!
This post is for Americans who are planning to stay a long time in Italy and are looking for a more permanent place to save/exchange/transfer/etc. their money. If you are just visiting Italy, you don’t have to worry about this: you can use a service like Wise or Paypal to change your USD to euros when you need them, or in most cases you can even do it with a debit card at an ATM (or use the debit card directly when making a purchase, depending on the policies of the bank who gave it to you).
So if I scared you, don’t worry! It’s easy if you’re just passing through. But if you plan to live in Italy and you want to more easily use your money without paying a bunch of fees every time you buy something or make a transfer, this is something you have to think about.
Have you had a similar experience with Italian banking? Or a different one? Do you have any advice on the subject? Let us know in the comments!