Surplus profits, not just Italy: how does it work in Europe?

Surplus profits, not just Italy: how does it work in Europe?

In Italy, following the approval of the Omnibus Asset/Investment Decree, the debate continues on the tax on bank surplus profits. There are those who laud the measure decided by the government and there are those who warn of possible consequences on the consumer front, considering it an excellent way to find resources for the community. already remember The Bank of Italy has stepped into the fray against an increase in current accounts, with Assounti expected to lose 491.3 million per year. which could affect 47.7 million Italian current account holders due to a possible increase in card and current account fees and says it is ready to report to antitrust banks that decide to raise costs to the detriment of users . looking to europe The issue is being discussed in other countries as well, while in some countries the tax is already a reality.

Spain has already raised 1.45 billion

Spain was the first country to ask banks and utilities to play their part Taxing surplus profits with a target of raising €3 billion by 2024. The socialist-led Spanish government imposed a tax of 4.8% of banks’ income for two years, arguing that rising interest rates had resulted in exorbitant profits for the sector. Interest and commission. The first tranche was paid in February and major Spanish banks have so far paid 637.1 million euros (in total, the Sanchez government has raised 1.45 billion euros). The Spanish Ministry of Finance has predicted the annual collection of two temporary taxes (implemented in 2023 and 2024) will exceed 2.9 billion euros, respectively, to tax arbitrage margins and income from unregulated activities in Spain. The tax on surplus profits in Spain aims to finance the state’s contribution to households and businesses, but the measure has not been welcomed by some institutions, including BankInter and Abanka, who have threatened to appeal to the Constitutional Court. The tax cost Caixa Bank to 373 million euros, or 44% of the net profit of 855 million euros recorded in the first quarter. For Sabadell, which owns British bank TSB but has most of its assets in Spain, the outlay was 157 million euros, equivalent to 77% of first-quarter profit. At Banco Santander, which has huge international operations, the cost of the first tranche was about 10% of its first quarter profit. “We are always happy to pay our fair share of taxes, but this should apply to all sectors, not just banks,” he said. FT Chief Financial Officer Jose Garcia Cantera,

60% tax in the Czech Republic

A 60% tax on profits of banks exceeding 120% of average annual turnover in the Czech Republic between 2018 and 2021 was approved by the lower house of parliament last November. The target is to raise around 3.5 billion euros to provide support to households and businesses affected by rising electricity and gas prices.

Moves to the Armed Forces in Lithuania

For the two-year period 2023-2024, the Lithuanian parliament last May approved a 60% tax on the portion of net income from bank interest, which is 50% higher than the average of the previous four years. The country aims to raise 410 million euros to strengthen the armed forces.

Excess profits are also taxed in Hungary.

Tax changes on excess profits across sectors The key to the economy was introduced by the Orban government in June., If banks increased their purchases of domestic government bonds, they could reduce their tax burden by up to 50% in 2024. In addition, a new “social tax” of 13% has been introduced on certain types of investments, including earnings on bank deposit interest rates.

swedish model

In Sweden, the governmentrisk taxFor institutions with liabilities related to domestic operations in excess of 150 billion SEK ($14.1 billion). The money raised will be used to strengthen public finances and create space to cover the costs of a potential financial crisis. The tax is 0.05% of liabilities in 2022 and increases to 0.06% in 2023. Stockholm plans to collect SEK 6 billion per year.

Hypotheses on the table in the United Kingdom

In the UK, the possibility of taxing profit margins is also being considered after banks were accused of “profiteering” and last month, the financial regulator called on banks to accelerate efforts to improve access to their best savings rates. Where did you go?

The majority in Belgium is divided

In Belgium, an initiative launched in Italy to tax bank excess profits splits the coalition supporting the government. Within the so-called Vivaldi majority, as we read in the local press today, the measure is favored by the leftists of the PS and the ecologists of the Ecolo, it is rejected by the French-speaking liberals of the MR while the Christian-CD&V’s Democrats and Flemish Liberals (Open VDL), refrain from any comment. Meanwhile, the National Banking Federation (FabelFin) distanced itself from the project, calling the idea “illusory” that banks making billions in profits could contribute more than others to easing national public finance difficulties. . Like many other EU countries, Belgium also imposes a tax on excess profits generated by companies in the energy sector. After the war in Ukraine, but so far the issue of similar intervention in banks has not been addressed. This should happen when parliamentary work resumes after the summer break when it is expected that some of the proposals put forth by socialists and ecologists in this regard will be discussed.

Debate rages in Switzerland

The tax on bank surplus profits imposed by the Giorgia Meloni government in Italy is also being discussed in Switzerland. According to the financial information portal Finuse, in the first half of the year, the revenue from interest operations received by Swiss credit institutions operating in traditional sectors sometimes quadruples compared to the same period in 2022, in view of the rise in interest rates. , This also Swiss National Bank (SNB) paid 3.3 billion interest to banks on their sight deposit accounts in January-June, In this scenario, the hypothesis of a special tax on profits is again on the table in Switzerland, which has already been the subject of a heated debate last autumn in connection with the huge profits of the energy sector, which has already attracted state support some time ago. Had also taken support of According to the Swiss Bankers Association (SBA), so-called “windfall taxes” usually aren’t very sensible. “For the companies concerned, they create considerable legal and planning uncertainty and spoil the attractiveness of the business location,” the organization told Furthermore, profits from interest-bearing activity are already burdened with ordinary taxes on profits, underlines the ASB.





Leave a Reply

Your email address will not be published. Required fields are marked *