Brokerage account outside the EU: what you can open abroad and what CRD VI does not ban

From 11 January 2027, banks from outside the European Economic Area may offer accounts and loans to people resident in the EU only through a licensed branch. Plenty of investors conclude that a brokerage account outside the EU now has an expiry date as well. It does not. The directive that brings in the new branch requirement expressly leaves investment services out. A broker outside the EU answers to a different rulebook, one that is older, better known and in places stricter than most people assume.

A word on who this concerns. The EU rules below bind readers resident in an EU member state, which includes Sweden, Denmark and Finland. The United Kingdom is outside the EU, and CRD VI does not bind UK residents. British readers are covered by UK rules on overseas firms, which this article does not set out; the parts on investor protection and on anonymity still apply to them in full. Norway and Iceland are members of the European Economic Area rather than the EU, and EU financial rules reach them through the EEA Agreement on its own timetable.

What CRD VI covers, and what it leaves alone

Directive (EU) 2024/1619, known as CRD VI, inserts a new Article 21c into the EU's banking directive. It requires member states to make firms from third countries set up a branch with its own authorisation before they start or continue banking business in that member state. The business in question is the set of core banking services named in recital 5 of the directive: taking deposits, lending, and guarantees.

When it bites is set out in Article 2 of the directive. Member states apply the rules on Article 21c from 11 January 2027. One part came earlier: the protection of existing contracts in Article 21c(5) has applied since 11 July 2026. It provides that the branch requirement leaves untouched contracts concluded before that date.

For investors the decisive passage is paragraph 4 of the same article. The branch requirement does not apply to services and activities listed in Section A of Annex I to Directive 2014/65/EU, that is MiFID II, including any ancillary services such as related deposit-taking or the granting of credit, where these serve the provision of those investment services. The rewritten Article 47(2) of the banking directive repeats the same boundary. Receiving and transmitting orders, executing them, portfolio management and investment advice are all such services.

Put simply: CRD VI is aimed at the bank account, not the brokerage account. How the rule works on the bank account, and why residence decides everything there, is set out in the article on CRD VI and EU residents.

Recital 6 of the directive also makes clear that EU residents remain free to use banking services outside the Union. The rule is addressed to institutions, not to you as a client. Nobody forbids you to open or hold a brokerage account abroad.

The cash account: where investing and banking meet

Every brokerage account comes with a cash account, where dividends arrive, purchases are debited and sale proceeds are credited. That is exactly the case Article 21c(4) has in mind with related deposit-taking. As long as the money sits there to settle securities business, it belongs to the investment service and falls outside the branch requirement. The same goes for credit that serves trading, such as a securities-backed loan against the portfolio.

The line is crossed where the cash account turns into a current account. Anyone who has a salary paid into their broker's account, pays rent from it or uses it as their main account is moving away from investment business and into deposit-taking. Whether a broker from a third country allows that is its own decision, and from 2027 the directive gives it good reasons to be careful.

A broker outside the EU: which rules apply instead

An investor resident in the EU who goes to a broker outside the EU lands under MiFID II and MiFIR. That framework distinguishes by type of client.

Retail clients and professional clients on request. Under Article 39 MiFID II, a member state may require a third-country firm that intends to provide investment services to these clients in its territory to establish a branch there. The word is "may": the directive leaves the choice to each state. Private investors fall into this group.

Eligible counterparties and per se professional clients. Under Article 46 MiFIR, a third-country firm may serve these clients across the Union without a branch if it is listed in the register of the European Securities and Markets Authority, ESMA. It is listed only once the Commission has recognised the legal and supervisory framework of its home country as equivalent. That route is not open to a private investor.

For the private investor, then, one door remains above all: your own initiative.

Reverse solicitation: what "on your own initiative" really means

Article 42 MiFID II deals with the case the industry calls reverse solicitation. Where a retail or professional client established in the Union initiates at its own exclusive initiative the provision of a service by a third-country firm, the authorisation requirement under Article 39 does not apply. That includes relationships directly linked to that service.

Three limits sit right next to it:

• Active marketing destroys the exemption. Where the third-country firm solicits clients in the Union itself, through an affiliated entity or through any other person acting on its behalf, the service does not count as provided at the client's initiative.
• No new product categories. Under Article 42(2), your initiative does not entitle the firm to market new categories of investment products or services to you other than through a branch, where national law requires one.
• Facts count, not forms. What decides is how the contact actually came about.

How strictly supervisors read this shows in a public statement by ESMA of 13 January 2021, issued as the Brexit transition period ended. ESMA criticised firms that used general clauses in their terms and conditions or "I agree" pop-ups in which the client confirms that every transaction is at their own initiative. Such clauses change nothing. Every means of communication has to be looked at: press releases, online advertising, brochures, phone calls and meetings in person, whether they come from the firm itself or from someone acting for it. ESMA also reminded firms without the required authorisation that they face administrative or criminal proceedings.

CRD VI carries the same logic over to banking. Article 21c(2)(a) exempts clients who approach the third-country firm at their own exclusive initiative, and paragraph 3 again bars using that route to market other product categories. So anyone who wants a full bank account at the same house alongside the brokerage account should not count on it simply running along from 2027.

Open a brokerage account abroad: how it works in practice

If you want to open a brokerage account abroad, you meet the legal framework at two points above all: access and paperwork.

Access. A third-country broker without a branch in your country may not court you. If an international provider runs its own company in a member state for EU clients, you become a client of that EU company: with European investor protection, but no longer with an account outside the EU. Anyone deliberately looking for a brokerage account with a firm outside the EU ends up with providers that accept EU clients who come to them on their own initiative, or with private banks and wealth managers in third countries, which usually ask for far higher minimum investments. An overview of international providers and their conditions is in the broker directory.

Paperwork. Expect the same questions from a serious broker outside the EU as from one inside it: passport, proof of address, source of wealth, tax residence and tax identification number. The questions about your experience with securities serve to classify you as a retail or professional client, and that classification decides which of the rules above apply to you.

Transfer. If you want to take existing holdings with you, you do not necessarily have to sell them. What a move of residence means for an existing portfolio is covered in the article on moving your portfolio to a new country.

How safe is a brokerage account outside the EU?

This is the difference many people overlook. In the EU, Directive 97/9/EC requires every member state to run an investor compensation scheme. It steps in when an investment firm cannot return its clients' money or instruments. Cover is at least 20,000 euros per investor (the directive says ECU 20,000; the euro replaced the ECU one for one). States may make the investor bear part of the loss, provided at least 90% of the claim is paid up to that amount, and they may grant more protection than the minimum.

With a broker outside the EU, that scheme does not apply. What applies is the scheme of the broker's home country, if there is one. ESMA says so expressly in its 2021 statement: anyone using a firm not authorised under EU and member state law may lose the investor compensation protection of Directive 97/9/EC.

The same logic runs the other way for British readers. The UK's Financial Services Compensation Scheme covers investments up to £85,000 per eligible person, per firm, and only where the firm is authorised by the FCA or the PRA. A broker outside the UK without that authorisation sits outside it.

That need not be a drawback. In the United States, for example, the statutory Securities Investor Protection Corporation, SIPC, protects customers of its member firms up to 500,000 US dollars, of which at most 250,000 US dollars in cash. US residence or citizenship is not required: a customer from abroad is treated like an American one. SIPC is equally clear about what it does not do. It protects only the custody function, meaning the return of the securities and cash that should have been in your account when the firm failed. It does not cover falling prices.

For any other country the same check applies: which supervisor is responsible, is there a statutory compensation scheme, up to what amount, is there a separate limit for cash, and does it cover clients who are not resident there. The answers are on the websites of the supervisor or the compensation scheme, not in the broker's brochure.

One practical point follows from the SIPC figures alone: cash is covered less well than securities. Anyone holding larger sums therefore checks how much of it really needs to sit in the cash account.

An anonymous brokerage account: does such a thing still exist?

No. No regulated institution in the EU offers an anonymous brokerage account. Article 10(1) of Directive (EU) 2015/849 requires member states to prohibit their credit and financial institutions from keeping anonymous accounts or anonymous passbooks. Existing anonymous accounts had to be brought under full customer due diligence before any further use.

An offer that promises you a brokerage account without a name is either not a regulated offer or simply misdescribed. A broker outside the EU that takes you on at your own initiative will also check who you are and where your money comes from. What remains legal on anonymity, and what banks report, is set out in the piece on the anonymous account myth.

What does exist legally is discretion: a brokerage account with a custodian that is not based in your country of residence and releases your data only on a legal basis. That is not a hiding place from the tax authorities. Holding a brokerage account abroad is legal, and your tax liability in your country of residence stays exactly where it was, wherever the account sits. We never help anyone hide anything.

Bank account and brokerage account: two questions, two answers

For planning up to January 2027, that means for an EU resident:

• The brokerage account with a broker outside the EU remains possible under CRD VI, for people resident in the EU too. It depends on MiFID II, on your own initiative and on the broker's own acceptance rules.
• The bank account with a bank outside the European Economic Area is the part that gets tight for EU residents from 11 January 2027. The routes there are described in the article on how to open a bank account abroad.
• The cash account sits in between: exempt from the branch requirement as long as it serves securities trading, exposed as soon as it is used as a current account.

Anyone who wants both, a brokerage account and a bank account outside the EU, plans the two separately and in the right order.

Before you sign

Five questions settle whether a broker outside the EU suits you:

1. Does the provider have a company in the EU or the UK, and would you become its client there? Then you have that jurisdiction's protection, but not an account outside it.
2. Did you come of your own accord? Keep a record of how the contact began. A provider that approaches you is acting outside the exemption.
3. Which compensation scheme applies, up to what limit, and does it cover you? Check with the supervisor of the broker's home country.
4. Where is the cash held? Find out where the cash account is kept and how it is protected.
5. Who deals with tax? Find out whether the broker withholds anything for your country of residence or whether the whole return, to HMRC or your Nordic tax agency, is down to you.

Which combination of bank account and brokerage account suits your residence, your assets and your plans is something we work out with you in a free consultation.

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