Aug 8 (Reuters) – Italy is the latest European country
to hit banks with a windfall tax in a surprise move on their
profits, which have been bolstered by interest rate rises, to
help mortgage holders.
Below is a snapshot of windfall taxes or bank specific
duties across European countries:
CZECH REPUBLIC
The Czech lower house of parliament approved a 60% windfall
tax on energy firms and banks in November, aiming to raise $3.4
billion this year from profits deemed excessive to fund help for
people and firms hit by soaring electricity and gas prices.
FRANCE
President Emmanuel Macron said in March that companies with
more than 5,000 people should share more of their “exceptionally
high” profits with employees instead of buying back shares. But
he and Finance Minister Bruno Le Maire have ruled out the
possibility of a windfall tax.
That is because French banks are subject to an anti-usury
law that limits the pace of quarterly growth in loan prices.
France also has a popular regulated savings scheme, which
accounts for just under 20% of bank deposits, with an
inflation-linked return that adjusts more quickly than loan
rates.
GERMANY
For some of Germany’s biggest banks, net interest income has
risen between 50% and 70% from the lows of the pandemic era, but
a windfall tax has not been a topic for discussion under
pro-business Finance Minister Christian Lindner.
Germany’s finance ministry declined to comment on Italy’s
move in August but noted that tax increases are ruled out under
a German coalition government agreement.
HUNGARY
Hungary’s government has tweaked windfall taxes imposed on
key sectors of the economy in a decree published in June, saying
banks can reduce their 2024 windfall tax payments by up to 50%
if they increase their Hungarian government bond purchases.
It also imposed a new 13% “social tax” on certain types of
investments, including investment notes and interest rate gains
on bank deposits.
ITALY
Italy approved on Aug. 8 a one-off 40% tax on profits banks
reap from higher interest rates and it plans to use the proceeds
to help mortgage holders. It expects to collect less than 3
billion euros ($3.3 billion) from the tax, according to sources.
LITHUANIA
Lithuania’s parliament approved in May a windfall tax on the
banking industry’s net interest income for 2023 and 2024
following a sharp rise in European Central Bank interest rates.
The 60% levy on the part of net interest income that exceeds
the average of the previous four years by 50% is estimated to
raise 410 million euros ($451 million) for the government’s
budget, and will be used to boost the military.
SPAIN
Spain intends to raise 3 billion euros by 2024 from the
windfall tax on banks it approved last year which imposes a 4.8%
charge on their net interest income and net commissions above a
threshold of 800 million euros.
SWEDEN
The Swedish Government started in January last year a “risk
tax” for institutions with liabilities linked to Swedish
operations of more than 150 billion Swedish crowns ($14.1
billion) to strengthen public finances and create space to cover
the costs that a financial crisis could cause.
The tax was equal to equal 0.05% of liabilities in 2022 and
it increased to 0.06% in 2023.
It is expected to raise 6 billion Swedish crowns a year.
UK
Britain has not introduced a bank windfall tax, but since
2011 it has charged a bank levy introduced in response to the
financial crisis, which applies to the global balance sheet
assets of UK banks as well as assets belonging to the British
operations of foreign banks.
($1 = 0.9112 euros)
($1 = 10.6366 Swedish crowns)
(Compiled by Alessandro Parodi, Matteo Allievi, Olivier Sorgho,
Silvia Aloisi, Tom Sims, Holger Hansen; Additional reporting by
Marta Frckowiak; Editing by Alexander Smith)
