EN ECB-PUBLIC 
 
 
 OPINION OF THE EUROPEAN CENTRAL BANK  
of 30 October 2014  
on a specific tax benefit gran ted to financial institutions 
(CON/2014/77) 
 
Introduction and legal basis  
On 1 October 2014, the European Central Bank (ECB) received a request from the Hungarian Ministry of 
National Economy (hereinafter the ‘consulting authority’) for an opinion on a draft law amending Law 
LIX of 2006 on a special and annuity tax to improve the balance of public finances (hereinafter the ‘draft 
law’). On 21 October 2014, the consulting authority submitted the draft law1 to the Hungarian Parliament 
for adoption in the Parliamentary procedure. 
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 sixth indent of Article 2(1) of Council Decision 98/415/EC2, 
as the draft law relates to rules applicable to financia l institutions insofar as they materially influence the 
stability of financial institutions and markets. In accord ance 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 Hungarian Government intends to partially comp ensate Hungarian financial institutions for any 
losses their related undertakings operating in Ukraine have suffered as a direct result of the crisis in 
Ukraine, through a tax benefit scheme introduced un der the draft law (hereinafter the ‘scheme’). The 
scheme allows those financial institutions to decrea se their bank tax liability that would otherwise be 
payable under Law LIX of 2006. Portfolio investment s are outside the scope of the scheme, as it only 
covers the loss in value of the relate d undertaking operating in Ukraine.  
Under the draft law, a financial institution could de crease its tax liability for th e year 2014, payable in 
2015, by the amount of the loss in value of its Ukrainian related undertaking up to a maximum of 5 billion forints
3. Any unused part of the available benefit c ould not be carried forw ard to subsequent tax 
years or applied retrospectively. Furthermore, if an y of the losses incurred by a participating financial 
institution are recovered in subsequent years, the fi nancial institution will have to repay the corresponding 
amount of the benefit. 
                                                            
1  See Article 51 of draft law No T/1705, available on the website of the Hungarian Parliament: www.parlament.hu. 
2  Council Decision 98/415/EC of 29 June 1998 on the consultation of the European Central Bank by national authorities 
regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42). 
3  Approximately 17 million euro. 
ECB-PUBLIC  
2  
2. Observations 2.1 Although the scheme is of general applicatio n, it is anticipated that only a limited number of 
financial institutions will be eligible to  participate in the scheme. Furthermore, any losses incurred 
by such financial institutions as a result of losses incurred by their related undertakings in Ukraine 
are not expected to be substantial. It seems unlik ely at the present time that this scheme, being 
temporary and limited in scope, would significan tly influence the overall stability of financial 
institutions and markets in Hungary. 
2.2 These observations are without prejudice to any assessment by other Union institutions with regard 
to compliance with Union law on competition and State aid.  
 
This opinion will be published on the ECB’s website.   
Done at Frankfurt am Main, 30 October 2014. 
 
[signed] 
 
The President of the ECB 
Mario DRAGHI