Salary to a Foreign Account: When Your IBAN Must Count

Almost everyone who holds an account outside their home country knows the scene. You enter an IBAN on the new starter form that does not begin with the country code payroll expects, and the reply arrives: "We only pay into domestic accounts." Or it comes from the benefits office, the insurer, the gym. The reasons range from "the system won't take it" to "for security reasons".

Within the EU, and for payments in euro, that answer is in the great majority of cases simply unlawful. The rule sits in a regulation that binds every member state directly and Norway through the EEA Agreement, yet surprisingly few HR departments know it. Where it ends matters just as much, and for readers in the UK and the Nordics it ends sooner than many assume: euro payments only, accounts in the EU and the EEA only, and the UK has left the Union.

The rule: Article 9 of the SEPA Regulation

Regulation (EU) No 260/2012, the SEPA Regulation, governs credit transfers and direct debits in euro within the Union. Its Article 9 is headed "Payment accessibility" and consists of two sentences worth knowing.

Paragraph 1 addresses the one who pays: "A payer making a credit transfer to a payee holding a payment account located within the Union shall not specify the Member State in which that payment account is to be located, provided that the payment account is reachable in accordance with Article 3."

Paragraph 2 addresses the one who collects or receives money: whoever accepts a credit transfer or uses a direct debit may not specify either in which member state the payer's account is to be located.

In plain words: an employer paying your salary in euro may not insist that your account is held in its own country. Nor may it refuse a Lithuanian, Irish or Dutch IBAN just because it comes from another EU country. And anyone collecting from you by direct debit in euro may not demand that the account debited is a domestic one.

Whom the rule binds

Article 9 speaks of the "payer" and the "payee", without limiting itself to businesses. It therefore applies to anyone who sends euro credit transfers or collects euro direct debits:

employers paying salaries or wages,
public authorities paying out benefits, pensions or tax refunds,
landlords, insurers, energy suppliers and telecoms providers that collect by direct debit or accept payments,
online retailers offering direct debit as a payment method.

The European Commission sums it up on its citizens' portal Your Europe: if you pay bills, online purchases or taxes by SEPA credit transfer or direct debit, or receive tax refunds, unemployment benefit or other allowances that way, your account may not be refused because it is in a different EU country from your counterpart's. The same page carries the important limitation: this applies only if the counterpart accepts such transactions from domestic accounts. Whoever offers no direct debit at all does not have to introduce it for you.

The three conditions it can fail on

Article 9 is no blank cheque for any account anywhere in the world. Three conditions have to hold.

First: the account is in the EU or the EEA. The wording says "payment account located within the Union". Joint Committee Decision No 86/2013 took the regulation into the EEA Agreement, which reads references to the Union's territory as the territories of all its contracting parties. An account at a bank in another EU member state, or in Norway, Iceland or Liechtenstein, is therefore protected. An account in Switzerland, the United Kingdom, the USA or Singapore is not.

Second: it is about euro. Under Article 1 the regulation covers "credit transfer and direct debit transactions denominated in euro" where the payment service providers involved are located in the Union. A foreign currency account in dollars or francs does not fall under it, even at an EU bank. And a salary paid in pounds, Swedish kronor or Danish or Norwegian kroner is outside the rule from the start.

Third: the account is reachable. Article 9 refers to Article 3, which governs reachability under a Union-wide payment scheme. In practice, the bank holding the account must be reachable for SEPA credit transfers or direct debits. For ordinary banks in the EU and the EEA, that is the norm.

What Article 9 does not look at is the type of provider holding the account. An EU IBAN at an e-money institution is just as much a payment account as one at a traditional bank. Which providers come into question for whom is set out in our overview of neobanks.

What it means in the Nordics

Finland pays in euro, so the rule bites in full: a Finnish employer or public body paying you in euro may not turn down an IBAN from another EU or EEA country. Sweden and Denmark are EU members, and Your Europe states that banks in EU countries outside the euro area must apply the rule as well, but only to euro payments. Your salary in kronor, your Swedish tax refund, your Danish benefits: none of them is a euro transfer, so Article 9 does not reach them.

Norway is outside the EU but inside the EEA. Section 1-11 of the Financial Contracts Act (finansavtaleloven) makes the SEPA Regulation apply as Norwegian law, with the adaptations of Annex XII and Protocol 1 of the EEA Agreement. So a euro account at a Norwegian bank is protected when an EU payer sends you euro, while a salary in Norwegian kroner stays outside the rule.

Where the UK stands after Brexit

Since the UK left the Union, a GB IBAN is no longer an account "within the Union". An employer or authority in the EU may therefore refuse to pay euro into a UK account, and Article 9 gives you nothing to argue with. That holds even though, according to the European Payments Council's country list, the United Kingdom has remained part of the SEPA schemes' geographical scope since 1 February 2020. Technically a euro transfer to a UK bank works; legally there is no right to it.

The UK kept its own version of the regulation. On legislation.gov.uk, Article 9 now protects accounts in a "qualifying area", defined as the EEA states, the United Kingdom and Gibraltar. But the UK version covers only euro transactions in which at least one payment service provider is located in the UK, so it never touches a salary paid in sterling. Its enforcement rules, the Payments in Euro (Credit Transfers and Direct Debits) Regulations 2012, aim the FCA's monitoring and complaints arrangements at payment service providers, not at employers, and the Financial Services and Markets Act 2023 lists the UK version for revocation. Do not build your payroll plans on it.

How to push back

Start with a friendly note. Technically there is no reason for the refusal: that is the whole point of SEPA, that a euro transfer to another member state runs exactly like a domestic one. A short sentence is enough as an opener: "Under Article 9(1) of Regulation (EU) No 260/2012, you may not specify the Member State in which my payment account is located. Please pay my salary into the IBAN I have given you."

If that does not help, there are supervisory and complaint routes, because Article 10 of the regulation obliges member states to designate competent authorities and Article 11 requires penalties that are "effective, proportionate and dissuasive".

According to Your Europe, you complain to the competent authority in the country of your counterpart. The Commission's list of competent authorities, based on member states' updates as of November 2020, names for Finland the Financial Supervisory Authority (FIN-FSA), competent both for banks and for payers such as companies and public bodies. For Denmark it names the Danish Financial Supervisory Authority for banks and the Danish Competition and Consumer Authority for companies and public authorities. For Sweden it names Finansinspektionen. For an employer in any other EU country, the same list names the authority there.

Before you take any of these routes, gather what an authority will want to see:

the refusal in writing, by email or letter, with the sentence that only domestic accounts are accepted,
proof that your account is in an EU or EEA country and can receive euro transfers via SEPA, for example an account confirmation from your bank showing IBAN and BIC,
evidence that the counterpart offers the same payment method domestically, for example because it pays every other employee by credit transfer.

With these three items the case is usually clear. Without them it is your word against theirs, and an HR department can easily recast a verbal refusal later as a misunderstanding.

The Commission also collects reports of IBAN discrimination, to follow how such cases develop across the Union and which ones reach the national authorities.

When the account is outside the EU and the EEA

Here it gets honestly uncomfortable. For an account outside the protected area, and that includes a UK account seen from the EU, there is no right to have your employer pay into it. It may do so voluntarily; it does not have to. The same goes for authorities. Whoever wants salary or benefits paid straight into an account overseas negotiates, rather than invoking a right.

The usual answer is a two-tier structure: the salary lands in an account in the currency and country your employer pays from, and you pass on whatever is meant to sit outside. What happens when a home bank starts to close accounts of people who have moved abroad is covered in Nordic banks closing expat accounts. The role a stable address plays is described in Nomad banking and the address problem.

The special case of Switzerland

Swiss accounts carry an often misunderstood peculiarity. Switzerland takes part in SEPA. According to the Swiss financial market infrastructure SIX, SEPA covers 41 European countries, and Swiss financial institutions can join the SEPA credit transfer and direct debit schemes. Euro payments between Switzerland and the EU therefore run technically just as they do within the EU.

The SEPA Regulation still does not apply in Switzerland. SEPA is a payment scheme of the banks; the regulation is EU law. SIX itself points out that the EU's price rules can only be applied to orders within or between EU and EEA member countries. For Article 9 this means:

An employer in the EU or the EEA does not have to pay into an account in Switzerland. The account is not "within the Union".
An employer in Switzerland is not bound by Article 9. Whether it pays wages into an account in the EU is a matter of agreement.
Anyone living in Switzerland or the UK who holds a euro account at a bank in the EU is protected against euro payers in the EU. What counts is where the account is held, not where you live.

For anyone working across borders, the practical upshot is: the right follows the location of the account. If you want euro income from the EU to reach an account of your own on which you can rely legally, you need a euro account in the EU or the EEA.

What the rule does not solve

Article 9 stops you from being turned away because of the country code in your IBAN. It does not force anyone to open an account for you. People living abroad rarely fail at the salary payment; they fail earlier, at the account opening itself, because banks want to see residence, a tax number and proof of address. Which routes exist when your own bank no longer plays along is explained in Opening a bank account abroad.

And one more point many people confuse: the free choice of the account's country changes nothing about your tax position. If you are tax resident in the UK or a Nordic country, interest on an account in Lithuania or Ireland is taxable at home just like interest at the bank round the corner. Opening and holding the account is legal; the income stays taxable where you live. If you move money to another country for better interest, the sober assessment is in Fixed deposits outside your country.

Within the EU and the EEA, the country code of your euro IBAN is no reason for a refusal. Outside them, and for every payment outside the euro, it can be, and you should set up your accounts with that in mind before the first payslip arrives.

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