EN ECB -PUBLIC 
 
 
 OPINION OF THE EUROPEAN CENTRAL BANK  
of 26 July 2013  
on measures to encourage long -term lending  
(CON/2013/ 55) 
 
Introduction and legal basis  
On 26 June 2013, the European Central Bank (ECB) received a request from the Nationale Bank van 
België/Banque Natio nale de Belgique (NBB), acting on behalf of the Belgian Ministry of Finance, for an 
opinion on a draft law containing various provisions relating to limited purpose loans for socially 
responsible projects (hereinafter the ‘draft law’).  
The ECB’s competenc e 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 indent of Article  2(1) of Council Decision 98/415/EC of 
29 June 1998 on the consultation of the European Central Bank by nat ional authorities regarding draft 
legislative provisions1, as the draft law relates to the NBB. In accordance 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  
1.1 The draft law aims to encourage long -term saving  by retail investors to facilitate  the collection by 
credit institutions of funds available for long- term lending to socially responsible projects and, 
thereby, to boost econom ic activity. To this end, following the entry into force of the draft law, 
certain types of savings certificates issued and fixed -term deposits collect ed by certain  credit 
institutions will benefit from a favourable tax treatment i.e. a reduction of the wi thholding tax rate 
from 25% to 15%2. This is subject to the credit institutions only using the collected funds to grant 
limited purpose loans, i.e. to finance eligible projects , in compliance with the conditions set out in 
the draft law .  
1.2 The benefit o f this specific tax regime is subject to conditions relating to: ( a) the savings 
certificates and fixed -term deposits , (b) the contracting credit institution , (c) the eligible 
                                                      
1  OJ L 189, 3.7.1998, p. 4.  
2  Articles 22 and 23 of the draft law, amending Article 171, 3° and Article 269 of the Belgian Income Tax Code.  
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2 beneficiaries of the limited purpose loans3, (d) the type of projects to be financed by such  loans4, 
and ( e) the effective allocation of the collected funds  to the financing of eligible projects5. In the 
event of a  breach of the allocation requirement s by the credit institution  concerned , the latter w ill 
have to pay to the tax authori ties 10% of the income paid or apportioned to the holders of the 
savings certificates or fixed -term deposits ; the investors will not be affected and will retain the 
benefit of the reduced withholding  tax6.  
1.3 The Financial Services and Markets Authority7 will be responsible for  the conditions relating to the 
collection of funds with investors , whilst the NBB will be responsible for monitoring the credit 
institution’s compliance with the specific accounting rules and the allocation requirements8. In this 
respect, the draft law establishes specific reporting requirements to ensure that the NBB has all the 
data necessary to verify compliance. Pursuant to the Explanatory Memorandum  to the draft law  
these tasks fall within the NBB’s current prudential supervisi on competences9. The draft law 
specifies that for the purpose of this new responsibility , the NBB may exercise all of the relevant 
powers it has pursuant to the Law of 22 February 1998 establishing the Organic Statute of the 
Nationale Bank van België/Banqu e Nationale de Belgique, and the special laws applicable to credit 
institutions10. 
 
2. General observations  
The draft law introduces measures of economic policy  by using a tax incentive  in the form of a reduced 
withholding tax rate.  As regards tax incentive s, it is essential to reduce the risk of abuse. Against this 
background, the ECB welcomes the clarifications made with respect to the criteria for eligible funding 
instruments  (i.e. savings certificates and term deposits)11. These clar ifications are in line  with the basic 
rationale stipulated in the Explanatory Memorandum , namely  that the purpose of the draft law is not for 
credit institutions to make an additional interest margin by way of a reduced rate12. 
                                                      
3  Article 2, 5° of the draft law. In addition, the income generated by the financed proje ct must be subject to taxes in 
Belgium (Article 2, 9° of the draft law, Explanatory Memorandum p. 8).  
4  The eligible projects must have a socio -economic dimension; the concrete eligibility criteria will be defined in a Royal 
Decree (Article 8 of the draf t law).  
5  Articles 5, 9 and 10 of the draft law. Specific accounting rules are established to allow identification of the savings 
collected by the credit institution and their subsequent allocation (Article 6 of the draft law). The allocation of the funds  
may occur indirectly, through an interbank loan, provided that the credit institution receiving such a loan directly 
provides the funds to the financing of an eligible project (Article 5 of the draft law).  
6  Article 24 of the draft law and commentary in the Explanatory Memorandum, p. 22.  
7  Articles 16 to 19 of the draft law, and commentary in the Explanatory Memorandum, p. 20.  
8  Article 12 to 15 of the draft law.  
9  Commentary of Chapter IV of the draft law in the Explanatory Memorandum, p. 18.  
10  Article 12 of the draft law.  
11  Under Article 2, 1° of the draft law, the savings certificates are defined as non -equity securities referred to in Article 16, 
§1, 6° of the Law of 16 June 2006 concerning public offers of investment instruments and admission of investment 
instruments for trading on regulated markets. Article 4 of the draft law lays down a number of additional conditions to be met by these instruments, as well as by eligible fixed term deposits (e.g. minimum maturity of 5 years, coverage by a 
deposit guarantee scheme, and alignment with the market rate). See commentary on Article 4 in the Explanatory 
Memorandum, p. 10.  
12  See commentary on Article 4 in the Explanatory Memorandum, esp. p. 13.  
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3  
3. Specific observations  
3.1 The ECB understands that the main purpose of the monitoring task entrusted to the NBB under the 
draft law is to ensure that the tax incentive is not diverted from its original aim, which is to foster 
the financing of eligible projects13. Since the draft law provides for the NBB  to be fully reimbursed 
for the costs incurred in carrying out this  new task  by a contribution from credit institution s14, it 
does not directly raise concerns regarding monetary financing or financial independence15. 
3.2 However , the draft law would raise concerns regarding compliance with the prohibition on 
privileged access under Article 124 of the Treaty and Council Regulation (EC) No 3604/93 of 
13 December 1993 specifying definitions for the application of the prohibition of privileged access 
referred to in Article 104a of the Treaty16 if the tax advantages  establishe d for the benefit of  
persons that acquire savings certificates from  or place term deposits with  credit institutions had  the 
effect of putting  private and public institution s on an unequal footi ng, for instance , by encouraging 
credit institutions to lend to public sector borrowers or to buy Belgian public sector bonds . 
Although there are no such immediate concerns due to the generic character of the draft law17, the 
ECB underlines that full compli ance with the prohibition on privileged access  will need to be 
ensured in the actual  implementation of the draft law, inter alia , when defining the criteria for 
eligible projects18 and for sufficiently liquid and low -risk assets19.    
3.3 The rationale under lying this new responsibility primarily concerns tax considerations . Given that 
the NBB has no competence in respect of fiscal matters20 when carrying out its prudential 
supervisory tasks, the objectives and criteria that will assist the NBB in using its su pervisory 
powers for the purpose of monitoring the draft law should be clarified, to avoid conflict of interest 
with its supervisory tasks .  
Further more,  the obligation to professional secrecy21 prevent s the NBB from notifying the Ministry 
for Finance of any breach of the provisions that it is responsible for monitoring under the draft law. 
                                                      
13  Commentary on Article 6 and Chapter IV of the draft  law in the Explanatory Memorandum, p. 14 and 18.  
14  Article 15 of the draft law, see  Opinion CON/2012/35.  All ECB opinions are published on the ECB’s website at 
www.ecb.europa.eu.  
15  With respect to the task of creat ing a central register of bank account numbers  see Opinions  CON/2011/30 and 
CON/2011/98.  
16  OJ L 332, 31.12.1993, p. 4– 6. 
17  Article 2, 5° of the draft law defines the eligible borrowers as a government, government institution or a company, 
whether or not within the framework of a collaboration agreement. Credit for individuals falls outside the scope of the 
draft law (commentary on Article 2, 4° of the draft law in the Explanatory Memorandum, p. 5).  
18 Article 8 of the draft law; these criteria will be laid down in an implementing Royal Decree.  
19  A Royal Decree will implement Article 10(3) of the draft law, which lays down that the collected funds must be invested in sufficiently liquid and low -risk assets, generating a yield in line with market rates, pending their allocation to the 
financing of an eligible project.  
20  Article 36/4 of the Law of 22 February 1998.  
21  Article 35 of the Law of 22 February 1998.  
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4 In this respect, the NBB only has the powers to denounce criminal offences to the judicial 
authorities22, or to notify information to statutory auditors23. 
3.4  Credit inst itution s granting interbank loans with the funds collected under the favourable tax 
regime  will be required to ascertain the final allocation  of the funds to the financing of an eligible 
project24. The ECB believes that this is best achieved by including a relevant  requirement in the 
terms and conditions of the interbank loans, restricting the use of the funds received to eligible  
projects.  
 
This opinion will be published on the ECB’s website.  
 
 
Done at Frankfurt am Main, 26 July 2013.  
 
[signed]   
The President of t he ECB  
Mario DRAGHI  
                                                      
22  Article 36/13, 2° of the Law of 22 February 1998, and Article 20 of the draft law, defining the breaches of Articles 5, 6, 
9, 10 and 11 of the draft law as criminal offences.  
23  Article 36/14, § 1, 9° of the Law of 22 February 1998.  
24  Articles 5, 8 and 10 of the draft law .