Opinion of the European Central Bank of 14 July 2009 on the taxation of the Banca d’Italia’s gold reserves (CON/2009/59)
Date: 2009-07-14
Institutions: European Central Bank
Subjects: Italy, central bank, foreign-exchange reserves, gold, national law, tax

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 14 July 2009  

on the taxation of the Banca d’Italia’s gold reserves 

(CON/2009/59) 

Introduction and legal basis 

On  26  June  2009  the  European  Central  Bank  (ECB)  received  a  letter  from  the  Italian  Minister  for 

Economic  Affairs  and  Finance  informing  the  ECB  that  on  the  same  day  an  important  package  of  legal 

provisions  would  be  approved  by  the  Council  of  Ministers,  containing  measures  aimed  inter  alia  at 

finding  the  necessary  resources  to  redress  the  current  public  finance  situation  (Decree-Law  No  78  of 

1 July  2009  containing  measures  on  the  crisis  and  prorogation  terms  and  on  the  Italian  participation  in 
international missions1, hereinafter the ‘Decree-Law’). The Italian Minister brought the ECB’s attention 

to  the  fact  that  Article  14  of  this  Decree-Law  relates  to  the  Banca  d’Italia.  The  Decree-Law  was 

subsequently presented to the Parliament for discussion and conversion into law within 60 days following 

publication in the Gazzetta Ufficiale della Repubblica Italiana (GU). The subject of this opinion is Article 

14 of the Decree-Law as published in the GU and presented for discussion to the Parliament (hereinafter 

the ‘draft article’), which is different in some elements from the text attached to the abovementioned letter 

from the Minister. 

The  ECB’s  competence  to  deliver  an  opinion  is  based  on  Article  105(4)  of  the  Treaty  establishing  the 

European Community 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  national  authorities  regarding  draft  legislative 
provisions2,  as  the  draft  article  relates  to  the  Banca  d’Italia.  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  
2  

Gazzetta Ufficiale della Repubblica Italiana No 150, 1.7.2009, p. 1. 
OJ L 189, 3.7.1998, p. 42.  

 
 
 
                                                 
1.  

Purpose of the Decree-Law 

While the Decree-Law has the very broad intention of increasing resources available to the State budget 
in the present financial conditions3, the draft article under assessment in this opinion specifically provides 

for  a  substitute  tax  of  6%  on  capital  gains  registered  in  the  balance  sheet  generated  from  the  price 
evaluation of stocks of precious metals for non-industrial use4. The ECB understands that the tax would 
apply also to the Banca d’Italia’s entire holdings of gold5, with the exception of the rate of gold stocks 

which  the  Banca  d’Italia  has  conferred  ‘in  fulfilment  of  obligations  deriving  from  membership  of  the 
European Communities’6. The ECB further understands that the economic benefit expected to be received 

by the State budget from the new tax would mainly be produced by payments to be made by the Banca 

d’Italia. 

2.   General observations 

2.1  Compliance with the consultation obligation 

The ECB received the Minister’s letter on 26 June 2009, the day on which the Italian Council of 

Ministers  approved  the  version  of  the  Decree-Law  subsequently  sent  to  the  Parliament.  In  this 

respect,  the  ECB  notes  that  Article  2(1)  of  Decision  98/415/EC  requires  national  authorities  to 

consult the ECB on draft legislative provisions concerning matters that fall within its competence. 

This applies in particular to the Decree-Law, since the draft article imposes financial obligations on 

the  Banca  d’Italia  and  therefore  constitutes  a  draft  legislative  provision  concerning  a  national 

central bank (NCB), on which the ECB must be consulted in accordance with the third indent of 

Article 2(1) of Decision 98/415/EC. This consultation obligation is not affected by the manner in 

which the draft article defines its addressees in general terms as holders of precious metals for non-

industrial purposes. The ECB understands in this context that the Banca d’Italia will be the main 

entity  affected  by  the  proposed  taxation  and  will  bear  a  major  part  of  the  newly  created  tax 

obligations.  

The ECB considers that the draft article is not clear and raises concerns from the perspective of its 

compliance  with  Community  law.  The  ECB  trusts  that  its  comments  will  be  given  due 

3  

4  
5  

6  

The  letter  from  the  Minister  for  Economic  Affairs  and  Finance  refers  to  emergency  financial  needs  resulting  from  a 
recent earthquake in the Aquila province, while the Decree-Law provides for several crisis measures, as well as for other 
measures  involving  current  expenditure,  and states  that the income  of  the  new tax  will  be  one  of  the  financial  sources 
used to cover the decrease in income and increase in expenditure arising from these measures (see Article 16(1)(a) of the 
Decree-Law). 
Paragraph 1 of the draft article.  
On the Banca d’Italia’s subjection to taxation, see: (i) Article 73 of Decree of the President of the Republic No 917 of 
22 December  1986,  Gazzetta  Ufficiale  della  Repubblica  Italiana,  S.O.,  No  302,  31.12.1986  (the  Consolidated  Law  on 
Income Tax, the TUIR), as amended, relating to the entities subject to corporate income tax; (ii) Article 114 of TUIR, as 
amended,  specifically  relating  to  the  determination  of  the  Banca  d’Italia’s  income;  (iii)  Article  3  and  Article  6(7)  of 
Legislative  Decree  No  446  of  15  December  1997,  Gazzetta  Ufficiale  della  Repubblica  Italiana,  S.O.,  No  298, 
23.12.1997)  on  regional  tax  on  productive  activities,  as  amended.  As  regards  the  identification  of  precious  metals, 
including  gold,  see  Article  1  of  Legislative  Decree  No  251  of  22  May  1999,  in  Gazzetta  Ufficiale  della  Repubblica 
Italiana No 180, 3.8.1999, as referred to in the draft article. 
Paragraph 1 of the draft article. 

2 

 
 
 
                                                 
consideration by the Italian authorities and that the Italian Government will consult the ECB at an 

appropriate point in time on an amended version. Moreover, the ECB notes that Article 3(4) and 

Article 4 of Decision 98/415/EC require Member States to suspend the process of adoption of the 

draft legislative provision pending receipt of the ECB’s opinion. 

2.2  Treaty limitations for financial transfers by NCBs to the State budget 

The taxation provisions of the draft article would result in transfers of some of the Banca d’Italia’s 

financial resources to the State budget. Any such transfers of financial resources by an NCB to a 

Member State’s budget, either in the form of a profit distribution scheme or in any equivalent form, 

need to comply with the limitations imposed in this respect by the Treaty, and in particular with the 

principle  of  central  bank  independence  under  Article  108  and  with  the  prohibition  on  monetary 
financing in Article 101(1)7. Previous ECB opinions have clarified their implications8 and can be 

summarised as follows. 

(a)   Compliance with the central bank independence principle 

National  legal  provisions,  and  in  particular  NCB  statutes,  normally  prescribe  how  NCB 

profits  are  to  be  allocated.  In  the  absence  of  such  provisions,  the decision  on  allocation  of 

profits should be taken by the NCB’s decision-making bodies, and should not be subject to 

the discretion of third parties unless there is an express safeguard clause stating that this is 

without prejudice to the financial means necessary for carrying out the NCB’s tasks related 
to the European System of Central Banks (ESCB)9. Moreover, compliance with the principle 

of  central  bank  independence  under  Article  108  of  the  Treaty  includes  a  requirement  to 

ensure  the  central  bank’s  financial  independence.  To  ensure  such compliance,  the  Member 

States  should  establish  legal  frameworks  for  NCB  profit  distributions  which  allow  for  an 

arm’s  length  assessment  of  the  financial  needs  of  the  respective  NCB  to  be  appropriately 

taken into account. Such assessments should be based on the professional judgement of the 

relevant NCB’s independent decision-making body rather than on the financial needs of the 

State, so that the NCB does not become dependent for its finances on the Government, the 
Parliament  or  any  other  third  party10.  The  principle  of  central  bank  independence  requires 

that no third party should be able to exercise direct or indirect influence, not only over the 

performance  of  the  NCB’s  tasks,  but  also  over  its  ability,  both  operationally  in  terms  of 
manpower, and financially in terms of appropriate financial resources, to fulfil its mandate11, 

i.e. to perform their national tasks, to meet their international obligations and properly cover 

7  

8  

9  
10  
11  

As also reflected respectively in Article 7 and Article 21.1 of the Statute of the European System of Central Banks and of 
the European Central Bank (hereinafter the ‘ESCB Statute’). 
See, e.g. paragraph 6 of ECB Opinion CON/99/16, paragraphs 3.2 and 3.3 of ECB Opinion CON/2008/82, paragraphs 2.2 
and 2.4 of ECB Opinion CON/2009/53 and further opinions quoted in the footnotes below. See also ECB’s Convergence 
Report December 2006, pp. 27-30; ECB’s Convergence Report May 2007, pp. 19-23; ECB’s Convergence Report May 
2008, pp. 20-25. All documents available on the ECB’s website at www.ecb.europa.eu. 
See paragraph 2.3 of ECB Opinion CON/2009/26 and the ECB’s Convergence Report May 2008, p. 20. 
See, e.g. paragraph 8 of ECB Opinion CON/2003/22 and paragraph 3.3 of ECB Opinion CON/2009/53. 
See,  e.g.  paragraph  2.2  of  Opinion  CON/2008/9,  paragraph  3.3.1  of  Opinion  CON/2008/10,  paragraph  3.3  of  Opinion 
CON/2008/20 and the ECB’s Convergence Report May 2008, pp. 20-21. 

3 

 
 
                                                 
their  administrative  and  operational  expenses12.  Having  sufficient  financial  means  ensures 

that the central bank will always and in all circumstances have at its disposal the necessary 

resources to conduct monetary policy. Indeed, it is of utmost importance to allow a sufficient 

provision of reserves during years of profits to allow the central bank to face possible losses 

without  weakening  its  financial  means  to  implement  its  monetary  policy.  Similarly,  as 

regards  financial  provisions  or  buffers,  the  NCB  must  also  be  free  to  independently  create 
financial  provisions  to  safeguard  the  real  value  of  its  capital  and  assets13.  Furthermore, 

Articles  28.1  and  30.4  of  the  Statute  of  the  ESCB  provide  for  calls  on  the  NCBs  to  make 

contributions  to  the  capital  of  the  ECB  and  to  make  transfers  of  foreign  reserves.  The 

principle of financial independence requires that compliance with these provisions leaves an 
NCB’s ability to perform its functions unimpaired14.  

(b)   Compliance with the monetary financing prohibition 

The  provisions  on  central  bank  profit  distributions  must  also  comply  with  the  monetary 

financing  prohibition  laid  down  in  Article  101(1)  of  the  Treaty  and  in  Council  Regulation 

(EC)  No  3603/93  of  13  December  1993  specifying  definitions  for  the  application  of  the 
prohibitions referred to in Articles 104 [now 101] and 104b(1) [now 103(1)] of the Treaty15. 

Those  provisions  prohibit  central  bank  (ECB  or  NCB)  credit  facilities  in  favour  of 

Community  institutions  or  bodies  or  in  favour  of  the  Member  States  or  their  public  sector 

bodies, as well as direct central bank purchases of debt instruments from such entities. With 

a view to preserving the integrity of the central bank’s balance sheet, the monetary financing 

prohibition is of key importance to ensuring the primary monetary policy objective of price 
stability16,  which  must  not  be  impeded.  Therefore,  the  prohibition  must  be  interpreted 
extensively to ensure its strict application17. Even if Article 101(1) refers literally to ‘credit 

facilities’,  i.e.  with  the  obligation  to  repay  such  credit,  this  prohibition  may  also  apply  a 

fortiori to other forms of funding, i.e. without the obligation to repay, since Article 101 of 

the  Treaty  has  the  overall  aim  of  public  finance  discipline  and  of  prohibiting  NCBs  from 

financing  the  public  sector.  This  implies  that  both  the  ultimate  objective  and  the  spirit  of 
these provisions must be taken into account in their interpretation18. In this respect, to ensure 

that  the  distribution  of  central  bank  profits  to  the  State  fully  complies  with  the  monetary 

financing  prohibition,  it  is  of  crucial  importance  that  the  schedule  for  central  bank  profit 

12  

13  

14  

15  
16 
17 
18 

See, e.g. in particular paragraph 6 of Opinion CON/2003/22, paragraph 2.3 of Opinion CON/2009/26, paragraph 2.2 of 
Opinion CON/2009/53 and the ECB Convergence Report May 2008, p. 20. 
See, e.g. paragraph 3.3 of Opinion CON/2009/26, paragraph 3.2 of Opinion CON/2009/53 and the ECB’s Convergence 
Report May 2008, p. 21. 
See ECB’s Convergence Report May 2008, p. 20. Moreover, Article 33.2 of the Statute of the ESCB provides that in the 
event of a loss incurred by the ECB which cannot be fully offset against the general reserve fund, the ECB’s Governing 
Council may decide to offset the remaining loss against the monetary income of the relevant financial year in proportion 
and up to the amounts allocated to the NCBs. 
OJ L 332, 31.12.1993, p. 1. 
Article 105(1) of the Treaty and Article 2 of the Statute of the ESCB. 
See ECB’s Convergence Report May 2008, p. 22. 
See paragraph 9 of ECB Opinion CON/2003/27. 

4 

 
                                                 
distributions, in full or through instalments, do not imply advances on future or provisional 

profits but only result in the central bank distributing profits that are fully realised, accounted 

for and audited, which in turn requires due calculation of profits and losses for the relevant 
reporting period19. 

3. 

Taxation of the Banca d’Italia notional gains related to gold reserves 

3.1   Definition of the tax base  

The draft article provides that the taxation liabilities it introduces will be calculated as a proportion 

of  the  ‘capital  gains  registered  in  the  balance  sheet  generated  from  the  fiscal  year-end  price 

evaluation of stocks of precious metals’. The ECB notes in this respect that typically capital gain 

taxes  are  levied  on  the  amounts  of  realised  profit  resulting  from  the  sale  of  an  asset  or  from  the 

dividend  payments,  i.e.  the  tax  base  is  the  value  of  the  profits  generated  through  actual  cash 
flows20. The Decree-Law instead provides for a taxation liability to be calculated by reference to 

the amount of the notional gain resulting from the change in the valuation of the assets (precious 

metals  holdings),  as  registered  in  the  asset  holder’s  balance  sheet.  From  the  perspective  of  the 

Banca d’Italia’s potential taxation liability in respect of its gold reserves, such a definition of the 

tax base raises the following concerns.  

3.2  First,  under  the  Decree-Law,  the  Banca  d’Italia  would  make  financial  distributions  to  the  State 

budget  of  the  amounts  calculated  as  a  proportion  of  notional  gains  achieved  with  respect  to  the 

Banca d’Italia’s gold reserves. In this regard, the ECB considers that the amount to be transferred 
to the State under the proposed new taxation is still uncertain21. Moreover, the Banca d’Italia may 

potentially  never  realise  such  notional  gains,  which  may  either  be  a  result  of  its  management 

strategy not to sell any of its gold reserves, or a result of subsequent negative price developments, 
or other limitations22 preventing the Banca d’Italia from achieving a profit from its gold sales that 

would correspond to the notional gains used for the tax base calculation. In view of such factors, 

the  tax  payments  to  be  made  by  the  Banca  d’Italia  under  the  Decree-Law  would  have  no 

relationship with the amount of the Banca d’Italia’s realised profits, if any, actually earned in the 

respective periods. If these profits were lower than the preceding tax payments, the Banca d’Italia 

would need to decrease its resources to make the required payments, which may eventually weaken 

its  financial  position.  This  would  also  constrain  the  Banca  d’Italia’s  capacity  to  implement 

appropriate management strategies in relation to its gold reserves since, instead of targeting optimal 

19  

20  

21  
22  

See e.g. paragraph 3.3 of Opinion CON/2008/82, paragraph 2.4 of Opinion CON/2009/26, and paragraph 2.4 of Opinion 
CON/2009/53. 
See e.g. judgment of the Court of Justice of 9 December 2004 in Case C-219/03 Commission v Spain (OJ C 31, 5.2.2005, 
p. 3) and judgment of the Court of Justice of 14 November 2006 in Case C-513/04 Bernadette Morres v Belgische Staat 
(OJ C 326, 30.12.2006, p. 6). 
For instance, the wording of the draft article does not allow the total amount for 2009/2010 to be ascertained. 
See in particular the ‘Joint Statement on Gold’ of 8 March 2004, available on the ECB’s website at www.ecb.europa.eu. 
Although the amounts that may be payable by the Banca d’Italia are difficult to ascertain, they could be substantial and 
would have an impact on the Banca d’Italia’s gold reserves.  

5 

 
 
                                                 
realisation of its central bank tasks, it would need to mitigate the financial risks of the arising tax 

liabilities. Furthermore, since holding and managing the foreign reserves of the Member States is a 

Eurosystem task in accordance with the third indent of Article 105(2) of the Treaty, pressure may 

not be exerted on an NCB to pursue investment strategies aimed at mitigating the financial risks of 

arising  tax  liabilities.  The  draft  article  would  thus  impair  the  institutional  and  financial 

independence of the Banca d’Italia established under Article 108 of the Treaty.  

3.3   Moreover, since the new tax is levied on theoretical profits arising out of changes in the accounting 

valuation of the NCB’s gold reserves, the resulting tax payments by the NCB which would not be 

covered  by  its  realised  profits  would  amount  to  an  increase  of  the  monetary  volume  through 

provision of central bank money to the public sector. This, in parallel to concerns related to central 

bank independence, raises questions regarding compliance of the draft article with the objective of 

maintaining  public  finance  discipline,  which  underlies  the  monetary  financing  prohibition  in 

Article  101(1)  of  the  Treaty.  Furthermore,  even  if  the  Banca  d’Italia  is  able  to  fully  cover  its 

payments  to  the  State  budget  with  realised  profits,  such  profits  would  only  be  available  to  the 

Banca d’Italia at a later stage, when the actual cash flows related to any possible future central bank 

gold sales are realised. This implies that the Banca d’Italia would incur a tax liability in expectation 

of an uncertain income that may or not be realised in the future. Such a situation is in itself a form 

of credit to the public sector incompatible with the prohibition on monetary financing under Article 

101(1) of the Treaty.  

3.4  Finally, the draft article also appears not to be in line with basic accounting assumptions laid down 

in  Guideline  ECB/2006/16  of  10  November  2006  on  the  legal  framework  for  accounting  and 
financial  reporting  in  the  European  System  of  Central  Banks23.  In  particular,  under  the  basic 

accounting  assumption  of  prudence,  which  allows  the  achievement  and  maintenance  of  the 

financial independence of Eurosystem central banks, unrealised capital gains are not recognised as 

income  in  the  profit  and  loss  account,  but  are  recorded  directly  in  a  revaluation  account  and  are 

thus excluded from the regular profit distribution scheme. Any capital losses are deducted from the 

dedicated  account.  These  principles,  laid  down  by  the  ECB’s  Governing  Council  pursuant  to 

Article 26.4 of the Statute of the ESCB, are currently relevant also for the Banca d’Italia’s taxation, 
according to Article 8(1) of Legislative Decree No 43 of 10 March 199824 and Article 114 of the 

Consolidated Law on taxation (Decree of the President of the Republic No 917/1986, as amended). 

In this regard, paragraph 3 of the draft article, which provides for derogation from all other legal 

provisions,  weakens  the  prudence  principle  and  appears  to  be  incompatible  with  the  primacy  of 

Community law. 

3.5   The starting date for the taxation obligations and the timing of the taxation payments  

The draft article does not appear to clearly exclude a retroactive application of the new tax, since it 

does not clarify whether this tax would apply in the beginning only to the unrealised capital gains 

23  
24  

OJ L 348, 11.12.2006, p. 1.  
Gazzetta Ufficiale della Repubblica Italiana No 61, 14.3.1998. 

6 

 
                                                 
accrued in the first fiscal year from its entry into force, or to the entire amount of unrealised capital 

gains  currently  registered  in  the  abovementioned  dedicated  account.  For  the  ECB,  without 

prejudice  to  the  above  observations,  there  should  be  no  retroactive  application  of  new  taxes  to 

NCBs,  retroactive  application  being  understood  as  application  of  the  taxation  obligations  to 

reporting periods earlier than the first full reporting period after entry into force of the draft law. 

Retroactive application of new taxes would impair the NCBs’ ability to efficiently plan the use of 

their  financial  resources  which  is  essential  to  effectively  fulfil  their  mandate;  this  would  be 

detrimental to the NCBs’ financial independence. 

3.6  The draft article foresees taxation payments in instalments transferred in the course of the financial 

year  on  profits  whose  actual  realisation  and  effective  amount  are  still  uncertain.  Therefore, 

payments in instalments may result in profit distributions made in anticipation of the central bank 

income  to  be  realised  in  the  future,  which  is  a  prohibited  form  of  central  bank  financing  of  the 

public sector under Article 101(1) of the Treaty. In this context, the ECB considers that any profit 

transfers to be made by the Banca d’Italia should ensure that such transfers are made on the basis of 

actual realised profits stemming from the last reporting period.  

3.7.  Set-off right under Law No 289/2002 

In addition, pursuant to Article 65 of Law No 289 of 27 December 200225, as amended, the losses 

stemming from the swap transaction carried out by the Banca d’Italia with the Italian Treasury in 

2002  may  be  set  off  annually  against  the  taxable  income,  up  to  50%  of  its  annual  amount.  The 

proposed  new  tax  rule  under  examination  would  provide  for  a  taxation  of  the  unrealised  gains 

coming  from  appreciation  of  central  bank  gold  reserves,  as  registered  in  the  Banca  d’Italia’s 

balance sheet and without considering the abovementioned right to set off. The ECB assessed the 
mechanism laid down by Law No 289/2002 for compliance with Article 101 of the Treaty26, and is 

concerned  that  the  draft  article  now  under  consideration  will  result  in  a  circumvention  of  this 

mechanism, producing a further incompatibility with the Treaty. 

4. 

Conclusions 

4.1  The ECB concludes as follows. First, although the pool of addressees of the draft article is defined 

in general terms as holders of precious metals for non-industrial purposes, the Banca d’Italia, due 

to  the  extent  of  its  gold  reserves,  is  the  entity  primarily  affected.  Second,  the  draft  article  raises 

concerns with respect to the prohibition on central bank monetary financing of the public sector to 

the  extent  that  it  foresees  profit  distributions  in  expectation  of  uncertain  central  bank  income 

potentially realised in the future, and, in addition, it excludes set-off rights applicable under earlier 

legislation. Third, the draft article raises concerns with respect to the Banca d’Italia’s institutional 

and financial independence by allowing for an arbitrary decrease in the Banca d’Italia’s resources 

25  
26  

Gazzetta Ufficiale della Repubblica Italiana, S.O., No 305, 31.12.2002. 
See ECB Opinion CON/2002/30. 

7 

 
 
                                                 
and  by  potentially  forcing  the  Banca  d’Italia  to  deploy  asset  management  strategies  targeting 

financial risks created by the proposed new tax provisions. In particular, the proposed introduction 

of  the  new  tax  scheme  has  not  been  preceded  by  an  assessment  of  the  impact  on  the  Banca 

d’Italia’s  financial  needs.  As  a  result,  the  Banca d’Italia’s  financial  position  would  be  weakened, 

increasing  the  risk  that  it  may  not  have  sufficient  resources  in  the  future  to  carry  out  its  ESCB-

related  and  other  tasks.  In  addition,  the  Banca  d’Italia  implements  a  Eurosystem  task  by  holding 

and managing foreign reserves and, to the extent that the proposed new tax provisions would oblige 

the  Banca  d’Italia  to  pursue  certain  asset  management  strategies,  its  institutional  independence 

would be impaired.  

4.2  

In view of the above, the draft article needs to be reconsidered to address the concerns expressed in 

this  opinion,  relating  in  particular  to  central  bank  independence  and  the  prohibition  on  monetary 

financing.  The  ECB  expects  to  be  consulted  on  any  revised  draft  legislative  provisions  in  this 

matter. 

This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 14 July 2009. 

[ signed ] 

The President of the ECB 

Jean-Claude TRICHET 

8