Tax on Bank's Surplus Profits: ECB comes in the way.  What happened?

Tax on Bank’s Surplus Profits: ECB comes in the way. What happened?

European Central Bank is preparing to Controversy concept of planting tax on bank profits, An idea born by Premier Georgia Meloni to raise the resources needed to implement the measures of the budget law, but which would not generate much revenue, which would be calculated at a billion or so. But why did the ECB come in between? See also Moody’s criticisms here.


According to Corriere della Sera, the ECB will be sending a Letter to the Italian government within “a few weeks”about the beginning of September, in which Criticism Tax Which will have an impact on Italian banking institutions.

In ECB, first of all, Answer the fact that the new tax was announced without prior notice to the Bank of Italy and the ECB, as required by European regulations. The formal request for consultation is actually envisaged by the decision of the European Council of 29 June 1998, which requires the ECB to be consulted in cases where states intend to impose rules on these institutions and national banks affecting the stability of financial markets. Let’s decide. , Therefore there is a procedural flaw in declaring a willingness to impose additional taxation beforehand in the market place.

Eurotower then believes that excess profits are taxed. Can weaken banks National and the Italian economyimpact on debt and therefore its establishment would be risky for Italy and the benefits should be carefully evaluated in relation to the distorting effects.

Explanation of MEF

actually the ministry of economy has Already denied As per routine, the ECB was not consulted earlier. Minister Giancarlo Giorgetti In fact, he specified that he had “Sent to ECB President Christine Lagarde on 10 AugustRequest for “assessment within the competence of the European Central Bank” in relation to the provision of extraordinary levies to banks provided for by Article 26 of Decree 104 of 10/8/23, date of publication in the Official Gazette. Council of Ministers last August 7″

What is excess profit tax?

By whom is excess profit taxed?Article 26 of Decree 104/2023better known as by order for allwhich provides extraordinary tax of 40% On the surplus of interest revenue accruing in 2022 and 2023 as compared to 2021, following a progressive increase in interest rates as decided by the ECB. basically a interest income tax for both the years.

Tax will be applicable if the amount of interest margin is At least 5% more in first year and at least 10% more in second year,

la tassa However, it cannot exceed 0.1% of the total assets relating to the financial year already running on 1 January 2023.

Some mitigating factors are studied

The majority is now slightly reconsidering this tax, which risks making banks operating in Italy less competitive and is therefore being studied specifically as a mitigating factor. reduction hypothesis of tax from tax base. A measure which will reduce the tax in respect of the initial amount. second guess exclude small banks from taxationWhich are not under the control of ECB.

What is its value in terms of revenue?

Based on some rough estimates, the revenue from the tax would be a little over a billion. In fact, the weight of the extract in “pure” form can be approximately 1.9 billion euro, but scope will drop to 1.3 billion of the euro in terms of deductibleWith a single-digit impact on earnings per share (i.e. less than 10%) or a modest decline in Cet1 capital requirement.