How Banking and Payments Work in the EU

A Guide for Freelancers and E-Sellers

True to one of its original goals, the growth of the European Union has clearly helped to streamline and simplify the task of doing business between countries in the EU, and even doing business from outside the EU.

Taken as a whole, the EU has become one of the largest economies in the world by a number of different measures, alongside China and the US.

In some ways the EU functions much like a single country, where goods, services, people, and funds can move across borders with relatively few obstacles — all under a set of common rules and regulations, and (mostly) a single currency. A company in Belgium, for example, can do business with a company in Spain about as easily as they can with partners just across town. And it is relatively common for a person a resident of Slovenia, let’s say, to take a full-time position in Hungary.

That said, however, the EU still comprises 28 individual countries, each with their own business cultures and traditions, and each maintaining a great deal of control over the details of how things work within their own borders.

The European banking system, for example, operates under a central organization, but it is far from a monolith, and there are sharp differences in practices from country to country, which can complicate matters for individuals and companies looking to do business in the EU.


It’s important to remember that of the 28 countries in the EU, the euro is the official currency in only 19 of them.

There are seven EU members — Bulgaria, Croatia, Czech Republic, Hungary, Poland, Romania, and Sweden — who continue to use their traditional currencies for various reasons. And Denmark and the UK (which has voted to leave the EU) have so far opted out of adopting the euro.

To be sure, opening a EU bank account does simplify things when working across borders; the euro you receive from a customer in France arrive in your bank account in Germany as the same euro, with no currency conversion rates involved. (There may be fees for wiring funds from a customer’s bank to yours, but not exchange rate fees.)

But if you’re a freelancer in the Netherlands, and you receive payment in krona from a customer in Sweden, the current krona/euro exchange rate will apply. This rate may vary. And it may also involve additional exchange fees at your bank.

Similarly, if you have a business in the USA, and receive payments in euro from a client in Italy, it will be subject to whatever the dollar/euro exchange rate is at the time. That may work in your favor, or not, depending on current conditions.

All this will matter when setting prices or quoting fees for doing work in the EU.


Individuals and small firms that want to do business in the EU typically look to open a local bank account where their customers and clients are, as a way to receive and handle payments for their goods and services. The difficulty lies in choosing where to open the account, and which bank to use.

If you plan to do business in just one EU country, it may be best to open an account in that country. But if you’ll be serving customers throughout the EU, and perhaps in different currencies, it may be prudent to open an account in one of the larger multi-national banks that operate throughout the EU.

Note that while the European Central Bank does supervise banking in the EU in a general way, individual banks actually operate under the laws and regulations of each country — which can be quite different. What’s more, each bank typically sets its own fees, practices, and policies.

That can be especially important when you are looking to establish a bank account if you are not a citizen or resident of an EU country; that is where banks vary widely in their requirements and interest in providing accounts to foreigners.


In general, if you reside in an EU country, it is relatively easy to open account there, even if you are not a citizen of that country, or of any EU country.

For example, if you are a US citizen who lives and works in Italy, Italian banks will typically provide a special non-resident account, so long as you have an address in Italy. These accounts may have different fees and other limitations. The situation becomes more complicated if you don’t actually reside in Italy at all.

Banks in the UK (still a member of the EU at the time of publication) generally make it difficult for non-residents and non-citizens to establish a bank account in the UK , mainly due to strict regulations against fraud and money laundering.

Hungary, on the other hand, is generally considered much more liberal in allowing foreigners—whether residents or not—to open bank accounts. US citizens and residents, however, may face more resistance, as the US Foreign Tax Compliance Act technically requires the bank to identify and report on accounts held by US citizens.

Estonia has a rather enterprising banking system that allows foreigners to set up an ‘e-residency’ in Estonia which can lead to an official EU-based business, with banking and even credit cards. Much of the process can be done remotely; there are initial set-up fees as well as ongoing monthly fees for the accounts. The program, so far, is not available to US residents.


Provided you can satisfy the requirements for the individual bank, opening a personal bank account is generally less complicated than opening a business account.

Depending on the nature of your business, as well as your legal and accounting needs, a personal account may be enough to allow you to receive payments from your EU customers, or to pay the occasional supplier or subcontractor. (This all assumes the bank is willing to open an account for you, as a non-resident, non-citizen.)

If your customers are individuals or small firms, using a personal account may present no problems. On the other hand, if your customers are large corporations, note that for tax and accounting reasons, they may be reluctant to pay into individuals’ personal accounts, rather than business entities. It is best to investigate this fully, in the country where you expect to do business.

The alternative would be to try to open a business bank account, which entails far more paperwork, documentation, and expense. The laws vary widely from country to county.

In some EU countries, for example, you may have to formally establish a subsidiary or branch of your company in that country before you are eligible to open a business bank account. In addition you may be required to deposit capital in the country where you will be operating.

All this setup typically requires the services of a local legal counsel or a firm specializing in forming businesses. And establishing a company may make it subject to local corporate income taxes, which may affect your profitability and require ongoing services of an in-country account.


With the complexity and uncertainty involved in setting up a bank in the EU, more and more freelancers, independent professionals and e-sellers are opting to rely on global payment platforms for doing business with customers in the EU.

A global payment solution such as Payoneer allows an individual to receive payments from a customer anywhere in the EU (or in 200 countries for that matter), without the need for a remote bank account in the EU at all.

Instead, you simply set up an account on the Payoneer platform, which can be done online, regardless of where you are physically located. The account is typically active in about a day, and is linked to your usual bank account in your home country.

Then, through the online platform, you can send electronic invoices to customers anywhere in the EU, who have the option of paying you via electronic check, direct deposit, or a credit card. The funds then flow into your usual bank account.

The advantage is, a single payment account essentially allows you to do business anywhere in the EU, as well as in other countries worldwide, without having to manage multiple bank accounts across the globe.