Opening a bank account in Luxembourg – who can do it?
You need a bank account when you decide to live or manage a business in Luxembourg. It is an essential element that will be required in many of your daily activities. They include, for example, online shopping, paying taxes or collecting savings. How do you open a bank account in Luxembourg? Who can do it and why would you do it at all?
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Why would you need to open a bank account in Luxembourg?
Besides the fact that Luxembourg is a European tax haven, opening a bank account there is a basic need for some. Especially for those who want to settle in this country for some reason. You will need a Luxembourg bank account if you want to rent an apartment, and even for such a simple activity as officially registering in Luxembourg. Obviously, without a bank account in Luxembourg you will not take out a loan. Furthermore, without such an account you will not register a company in Luxembourg.
Limited payments with cash in Luxembourg
There is one more thing you need to be aware of. When you are in Luxembourg on a daily basis, you will face severe restrictions on cash payments. EUR 500 banknotes are not accepted practically anywhere, and sellers are less and less willing to accept EUR 200 banknotes as well. In smaller shops and service points, problems may arise even when trying to pay with EUR 100 banknote. For this reason, having a payment card becomes a necessity if you think about living comfortably in Luxembourg.
The banking system in Luxembourg
When you are looking for the right bank to open an account in Luxembourg, you will need to be aware of how the banking system works in general. What makes it different from other countries is the huge disproportion between the banking sector and other economic sectors. The assets of Luxembourg banks alone are over 22 times greater than the value of the country’s GDP. Just to give you an idea, compare Cyprus where assets are “only” 7.5 times greater than the country’s GDP. This clearly shows the scale of the financial activity we are dealing with.
The beginnings of banking in Luxembourg
You should also be aware that the banking sector itself is one of the oldest branches of the economy in this country. It dates back to 1856 and at that time it was not important on a global scale. It gained such significance relatively recently, today being a true international financial centre.
The types of banking institutions functioning in this small country result directly from the structure of the local banking sector. The system itself has two levels and consists of the central bank (ie Banque Centrale du Luxembourg) and credit institutions, which amounted to 143 in 2015. Banks can also be divided depending on the type of activity. There are significantly more banks that are universal, but the number of banks in charge of bond issuing has been increasing continuously. There are also numerous cooperative banks affiliated with Raiffeisen Banque. It is also worth knowing that Bank Secrecy has been made a lot less strict in 2017, and Luxembourg banks are therefore required to provide some information to the European authorities.
Which bank should you choose to open an account in Luxembourg?
An interesting fact is that despite such a well-developed banking sector in Luxembourg, finding an institution that offers services to private individuals is not easy at all. This type of offer is very limited due to the fact that Luxembourgish banks mainly serve companies and public institutions. In general, the following banks are the most popular among individuals:
1. Post Bank.
2. Banque du Luxembourg.
3. Banque et Caisse d’Epargne de l’Etat, abbreviated as BCEE.
4. BNP Paribas.
Banks in Luxembourg are generally open from 8.15 a.m. to 5.00 p.m. However, to avoid queues, it is best not to get things done between noon and 2 p.m., because that’s when there is a lunch break and not all desks will be available.
Before deciding to choose a bank in Luxembourg…
Although the offer of banks serving individual customers is not too large, it is worth analysing their services in detail. It is also recommended to read reviews about each bank and that you can easily find on the Internet. Members of an online forum regarding this subject do not recommend using the Dexia or BCEE offer.
Customer service is the primary subject of complaints and comments but this may vary depending on the branch. What you should definitely focus on are all kinds of commissions and fees for transfers, having a payment card or the method of sending confirmation of transfers. While in most cases a standard account printout is sufficient, for example, a Luxembourg health insurance fund will require an original, which some banks will send you by post.
Opening a bank account in Luxembourg
Now that you’ve learnt when to visit a bank to open an account in Luxembourg, it’s time to move on to the formal issues. The entire process is very simple, and the bank itself will not require a lot of information from you. However, you should prepare documents such as: proof of residence in Luxembourg, ID card and an employment contract. If you are not employed in this country, the bank will require you to show your sources of income.
Can a Luxembourg bank refuse to open a bank account for you? Generally, the answer is ‘no’ as long as you are registered in that country. You will almost certainly be refused if you do not have an official registration. This may also be the case if you already have a basic bank account with another institution in Luxembourg. If you meet all the key conditions, a Luxembourg bank should not find a reason to refuse to open an account for you.
Translation of documents and a bank account in Luxembourg
Translation of documents remains a separate issue. The bank will not require many of them, and if so, they will usually be in one of the official languages. Keep in mind that there are as many as 3 official languages in this country and, interestingly, not every bank will issue documents in three language versions. There are situations when you will only receive regulations and a contract in German, for instance. If you don’t know this language, then for a better understanding of the conditions of keeping an account at a Luxembourg bank, it is a good idea to translate such documents. Although the situation mentioned above is quite rare, it is worth preparing for them.
What to keep in mind when deciding to open a bank account in Luxembourg
Having your own bank account in Luxembourg is essential in daily life for such ordinary things as payments in shops because you will not be able to pay everywhere by cash with a nominal value higher than EU 50. You can pay with your card almost everywhere, which is also possible even at stalls selling products. However, before you choose an offer of a specific bank, make sure you read some reviews of its customers. Despite the strong banking sector in Luxembourg, only a few such institutions provide services to private individuals. The difference in offers can be significant, as can the differences in the quality of customer service. The procedure of opening of a bank account itself is not complicated and you will only need a registration confirmation and an employment contract or another confirmation of your sources of income.
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