Filenews 27 August 2023 - by Eleftheria Paizanou
Counted on the fingers of one hand are the EU member states that tax banks' superprofits resulting from successive increases in lending rates by the European Central Bank (ECB).
In the wake of information about the possible imposition by the Ministry of Finance of a one-off tax on banks' windfall profits, as well as the strong reactions to banks in Cyprus, it is interesting to see the handling of the same issue by other EU countries.
The taxation of banks' superprofits is also under discussion in the parliaments of Bulgaria, France, Estonia, Latvia, Lithuania and Poland, where draft laws are pending. The services of the Cypriot Parliament conducted an investigation on the taxation of superprofits and support measures for borrowers in EU countries, at the request of AKEL Secretary General Stefanos Stefanou.
The European Centre for Parliamentary Research and Documentation (ECPRD) sent to the Cypriot Parliament the responses of 19 countries. According to the survey, Spain imposes a temporary tax of 4.8% on bank profits derived from net interest and commissions for the years 2023 and 2024.
In Hungary, a Decree introduced a super-tax imposed on credit institutions and financial corporations, calculated on the basis of their net turnover and set at a rate of 10% for 2022 and 8% for 2023. In Portugal there is no windfall tax, but the law provides for a solidarity tax from the banking sector to boost the financing of the Social Insurance Fund. In Austria, following the 2008-2009 financial crisis, a special tax on banks (Stabilitätsabgabe) was introduced, which is still in force but at a reduced rate. In 2022, revenues from this tax amounted to 124,000,000 euros (0.03% of GDP).
They discuss it elsewhere
In other countries, although there is no windfall tax on banks, they are considering imposing it. In Bulgaria, a draft law was prepared, which was put to public consultation by the Ministry of Finance. In France, the government has not tabled any legislation, but left-wing lawmakers have tabled legislative proposals in parliament to impose levies on the super-profits of large profitable companies. Lithuania's Parliament is considering such wide-ranging legislation, and in April it adopted a bill on the temporary taxation of banks' excess profits of 60% on net interest income exceeding 50% of the average of these revenues for four financial years. Poland and Latvia are also discussing the scope and method of imposing a tax on banks' excess profits.
Support measures for borrowers
In addition, measures to relieve vulnerable households in relation to loan repayments have recently been taken in several EU countries. According to the survey of the Cypriot Parliament, in France, in order to deal with the consequences of the increase in lending rates, the interest rate on housing loans is revised monthly, instead of every quarter. In Greece, banks have introduced a 12-month personal borrower support programme, which provides protection against future interest rate increases. At the same time, the expansion of income and property criteria for inclusion in the subsidy program for housing loan instalments was announced, while the loan program "My House" offers low-interest or interest-free loans for the acquisition of a first home to people aged 25-39.
Spain has protection measures in place for vulnerable households that spend more than 50% of their income to repay their loans, such as a reduction in the interest rate and an extension of the repayment period, which can reach up to 40 years.
In Luxembourg, the "Solidarity Package 3.0" includes measures to support borrowers, such as increasing the discount for property registration and transfer fees and adjusting mortgage interest ceilings depending on the borrower's residence.
In Poland, credit holidays are provided, allowing the suspension of the loan instalment for up to 8 months, and there is also the Borrower Support Fund, which provides financial assistance to borrowers in an unfavourable financial situation, with the possibility of setting a new loan interest rate to continue repayment.
In Portugal, exceptional support is provided to families for subletting the rent of a primary residence and a credit agreement for the acquisition or construction of a permanent residence.
