Aug 8 (Reuters) – Italy is the latest European country to hit banks with a tax on extraordinary profits in a surprise move on its profits, which have been boosted by interest rate increases, to help mortgage holders.
Below is a snapshot of taxes on windfall profits or specific banking duties in European countries:
The lower house of the Czech parliament approved a 60% tax on extraordinary profits on energy companies and banks in November, aiming to raise $3.4 billion this year from profits deemed excessive to finance aid to people and businesses affected by rising electricity and gas prices.
President Emmanuel Macron said in March that companies with more than 5,000 people should share more of their “exceptionally high” profits with employees rather than buying back shares. But he and Finance Minister Bruno Le Maire have ruled out the possibility of a windfall tax.
This is because French banks are subject to an anti-usury law that limits the rate 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 lending rates.
For some of Germany’s largest banks, net interest income has risen 50% to 70% from pandemic-era lows, but a windfall tax has not been a topic of 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’s government overhauled windfall taxes imposed on key sectors of the economy in a decree published in June, saying banks can reduce their windfall tax payments for 2024 by up to 50% if they increase their bond purchases. of the Hungarian government.
It also imposed a new 13% “social tax” on certain types of investments, including investment notes and interest rate earnings on bank deposits. ITALY
Italy approved a single payment of 40% on August 8 income tax Banks benefit from higher interest rates and plan to use the proceeds to help mortgage holders. According to sources, it hopes to collect less than 3 billion euros ($3.3 billion) from the tax.
Lithuania’s parliament in May approved a windfall tax on net interest income from the banking sector for 2023 and 2024 following a sharp increase in interest rates by the European Central Bank.
The 60% levy on the portion of net interest income that exceeds the previous four-year average by 50% is estimated to raise €410 million ($451 million) for the government budget and will be used to boost the army.
Spain aims to raise 3,000 million euros until 2024 from tax on extraordinary profits to the banks that it approved last year and that imposes a charge of 4.8% on their net income from interest and net fees above a threshold of 800 million euros.
In January of last year, the Swedish Government began 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 room to cover the costs that a financial crisis could cause.
The tax was equivalent to 0.05% of liabilities in 2022 and increased to 0.06% in 2023.
It is expected to raise 6 billion Swedish crowns a year.
Britain has not introduced a tax on banks’ windfall profits, but since 2011 it has levied a bank tax introduced in response to the financial crisis, which applies to the overall balance sheet assets of UK banks as well as assets belonging to the British operations of foreign banks.
(1 dollar = 0.9112 euros)
($1 = 10.6366 Swedish krona)
Compiled by Alessandro Parodi, Matteo Allievi, Olivier Sorgho, Silvia Aloisi, Tom Sims, Holger Hansen; Additional reporting by Marta Frąckowiak; Edition by Alexander Smith
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