EN ECB-PUBLIC 
 
 
OPINION OF THE EUROPEAN CENTRAL BANK  
of 26 November 2012  
on amendments to the Law on the financial transaction tax  
(CON/2012/94)  
 Introduction and legal basis  
On 12 November 2012, the European Central Bank  (ECB) received a request from the Hungarian 
Ministry for the National Economy for an opi nion on specific provisions of a draft law
1 amending 
taxation laws, including Law CXVI of 2012 on the financial transaction tax2 (hereinafter the ‘FTT Law’). 
On 19 November 2012, the ECB received an amende d version of the draft law from the Ministry 
(hereinafter the ‘draft law’), and on the same day the Hungarian Parliament adopted the draft law. The 
ECB has previously expressed its views on the FTT Law in Opinion CON/2012/593. 
The ECB’s competence to deliver an  opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and the third inde nt of Article 2(1) and Article 2(2) of Council 
Decision 98/415/EC of 29 June 1998 on the consu ltation of the European Central Bank by national 
authorities regarding draft legislative provisions4, as the draft law concerns the Magyar Nemzeti Bank 
(MNB) and its instruments of monetary policy. In accor dance with the first sentence of Article 17.5 of the 
Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.  
 1.  Purpose of the draft law  The draft law amends the FTT Law in the following manner: 
(i) the draft law excludes from the base of the fina ncial transaction tax (FTT) the issuance of MNB 
bills with a maturity of up to two weeks on th e primary market and the placement of overnight 
deposits with the MNB; 
(ii) from 1 January 2013, in addition to payment transactions already covered by the FTT Law
5, other 
transactions will also become subject to the FTT; inter alia,  loan repayments, fees and 
                                                      
1  Draft Law No T/8750, amending proposal No T/8750/77 subm itted by the Parliament’s Audit and Budget Committee and 
amending proposal No T/8750/101 submitted by the Minister for the National Economy. 
2  Published in Magyar Közlöny  2012/98 (VII. 23.). 
3  All ECB opinions are available on th e ECB’s website at www.ecb.europa.eu. 
4  OJ L 189, 3.7.1998, p. 42. 
5  I.e. outgoing transfers from accounts owned by  clients other than financial intermediaries. 
ECB-PUBLIC  
2 commissions charged by financial services provide rs, and credit card payments. At the same time, 
the draft law raises the applicable FTT rate from 0.1 to 0.2% of the amount of the transaction, 
leaving the HUF 6 000 per transaction cap in place; 
(iii) the provisions of the draft law concerning tran sactions with securities will come into force on the 
day following the adoption of a proposal of the European Commission for a Council directive on a common system of financial transaction tax, amending Directive 2008/7/EC
6. According to these 
provisions, the FTT will apply to all transactions  on securities, including derivatives transactions, 
whereby the FTT rate will be 0.01% on deriva tives transactions and 0.1% on other securities 
transactions without an applicable cap per tran saction. Transactions with any kind of security 
issued by the MNB as an instrument of monetary policy will be exempted from the FTT, including on secondary markets. Furthermore, the provisions of the FTT are not applicable to the MNB. However, even though the MNB is exempted from paying the FTT, account managers of 
counterparties to securities transactions with the MNB (hereinafter ‘counterparties’) will be liable 
to pay the FTT, if these transactions involve a change in the ownership of securities other than securities issued by the MNB. 
 2.  Breach of the consultation obligation The ECB received the request from the Ministry fo r an urgent consultation on the draft law on 
12 November 2012. The consultation request does not sp ecify a time by which the Hungarian authorities 
would like to receive the ECB’s opinion, but it refe rs to the fact that, for any taxation legislation, 
Hungarian law requires a 30-day intermediary peri od between its publication and entry into force. 
Therefore, according to the consultation request, th e draft law should be adopted and published by 
1 December 2012 for it to enter into force from 1 January 2013. A new version of the draft law was  
received by the ECB on 19 November 2012.  The consultation requests fail to mention when the 
Hungarian Parliament is scheduled to vote on the draf t law. The Hungarian Parliament adopted the draft 
law at its 19 November 2012 session. 
According to Article 4 of Decision 98/415/EC, the ECB mu st be consulted ‘at an appropriate stage’ in the 
legislative process. This implies that the consultation should take place at a point in the legislative process 
that affords the ECB sufficient time  to examine the draft legislative provisions and adopt its opinion. 
Following from the wording of Article 3(4) of Decision 98/415/EC, Member States are obliged to 
suspend the process for adoption of the draft legi slative provision pending submission of the ECB’s 
opinion to allow the relevant national authorities to  meaningfully deliberate the ECB’s opinion prior to 
adoption of the provisions.  
In this respect, the ECB once again stresses that even cases of particular urgency do not relieve national 
authorities from their duty to consult the ECB and to allow sufficient time to take into account its views 
                                                      
6  COM(2011) 594 final. 
ECB-PUBLIC  
3 in accordance with Decision 98/415/EC. The Hungar ian Government should have postponed the final 
vote on the draft law until such time that would have allowed for a proper consultation with the ECB, as 
well as due consideration of the ECB Opinion. Fu rthermore, the ECB would appreciate the Ministry 
honouring its obligation to consult the ECB in due time in the future.  
 3.  Impact of the FTT on MNB’s tasks and functions 3.1 The ultimate objective of monetary policy in Hungary  is achieving and maintaining price stability 
in line with the Treaty, the Statute of the Europ ean System of Central Banks and of the European 
Central Bank (hereinafter the ‘Statute of the ESCB’) and the Law on the MNB
7. As part of its 
monetary policy framework , the MNB issues MNB bills and cond ucts open market operations, thus 
affecting banking sector liquidity and hence the wider spectrum of interest rates.  
With regard to the MNB’s performance of its task  to define and implemen t monetary policy, the 
Hungarian authorities must respect the principle of central bank independence referred to in 
Article 130 of the Treaty and Article 7 of the Statute of the ESCB. Measures that directly or indirectly influence the MNB’s means and inst ruments necessary for achieving price stability 
independently of any other authority are not in line with the Treaty requirements for functional independence.  
While the principle of central bank independe nce does not preclude the imposition of taxes on 
certain transactions in which a national central  bank can be involved (e.g. tax on real estate 
purchases, VAT related to purchased goods and services) , such taxes must be imposed in a manner 
that does not interfere with the pursuit of a natio nal central bank’s objectives. In this respect, the 
ECB makes the following specific observations. 
3.2 Application of the tax on transacti ons to which the MNB is a party  
The ECB welcomes that the Hungarian authorities have taken into account Opinion CON/2012/59, 
by excluding from the base for taxa tion the issuance of MNB bills with a maturity of up to two 
weeks on the primary market and the placemen t of overnight deposits with the MNB.  
The exemption of transactions with any kind of security issued by the MN B as an instrument of 
monetary policy, including on secondary market s, is also commendable, as it safeguards an 
important aspect of the MNB’s functional independence. 
At the same time, according to the Law on the MNB, the issuance of securities is just one of a 
range of monetary policy instruments available to  the MNB. Therefore, the range of monetary 
policy instruments includes further transactions th at will be subject to the FTT. In particular, 
counterparties to securities transactions with th e MNB, initiated by the MNB to achieve its 
monetary policy objectives, will be liable to pa y the FTT on such transactions, if they involve a 
                                                      
7  Law CCVIII of 2011 on the Magyar Nemzeti Bank. 
ECB-PUBLIC  
4 change in the ownership of securities other than  securities issued by th e MNB, for example, 
counterparties to collateralised liquidity-providing operations of the MNB, where the collateral is 
not MNB-issued securities. In this respect, the ECB considers that the imposition of the FTT on 
counterparties to the MNB’s monetary policy transactions has a similarly negative impact on the central bank’s capacity to set independently the c onditions of such transactions in line with the 
intended monetary policy objectives, as if the cen tral bank itself was liable to pay the FTT. This 
negative impact resulting from the imposition of an  FTT on securities transactions with the MNB is 
not in line with the MNB’s functional independence.  
The ECB therefore recommends that the Hungarian  government further exempts from the payment 
of the FTT all counterparties to transactions with  the MNB, initiated by the MNB to achieve its 
monetary policy objectives; i.e. counterparties to  transactions with securities that have not been 
issued by the MNB. 
 
This opinion will be published on the ECB’s website.    Done at Frankfurt am Main, 26 November 2012.  
 
[signed] 
 
The President of the ECB  
Mario DRAGHI