Opinion of the European Central Bank of 23 August 2011 on a special levy on financial institutions operating in Slovakia (CON/2011/66)
Date: 2011-08-23
Institutions: European Central Bank
Subjects: Slovakia, bank, banking, financial stability, monetary crisis, national law, tax

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 23 August 2011  

on a special levy on financial institutions operating in Slovakia 

(CON/2011/66) 

Introduction and legal basis 

On  25  July  2011  the  European  Central  Bank  (ECB)  received  a  request  from  the  Slovak  Ministry  of 

Finance  for  an  opinion  on  the  draft  law  on  a  special  levy  on  selected  financial  institutions,  on  an 

amendment to Law No 479/2009 Coll. on state administration authorities in the field of taxes and charges 

and on amendments to certain laws (hereinafter the ‘draft law’). 

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/EC of 

29 June  1998  on  the  consultation  of  the  European  Central  Bank  by  national  authorities  regarding  draft 
legislative provisions1, as the draft law relates to rules applicable to financial institutions insofar as they 

materially  influence  the  stability  of  financial  institutions  and  markets.  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 

The  draft  law  imposes  an  obligation  on  banks  and  branches  of  foreign  banks  (hereinafter  jointly  the 

‘banks’) to pay a special levy, the proceeds of which are to be held in a separate extra-budgetary account 

intended to cover costs related to the resolution of financial crises in the banking sector and to protect the 
stability of the banking sector in Slovakia2. The rate of the levy for the respective calendar year will be 
0.2%  of  the  amount  of  liabilities  of  the  bank  reported  in  the  balance  sheet3,  with  certain  deductions 

including: (a) the amount of the bank’s equity, provided that its value is positive; (b) the value of financial 

resources  provided  to  the  branch  of  a  foreign  bank  on  a  long  term  basis;  (c)  the  value  of  subordinated 

debt;  (d)  the  value  of  deposits  received  by  the  bank  within  the  territory  of  the  Slovak  Republic  and 
protected  according  to  a  special  regulation4;  (e)  the  value  of  deposits  received  by  the  bank  within  the 

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OJ L 189, 3.7.1998, p. 42.  
See Article 4(1) to (3) of the draft law.  
The ECB understands that these liabilities are non-consolidated, i.e. are on an individual basis. 
Law No 118/1996 Coll. on the protection of bank deposits and amending certain other laws, as amended. 

 
 
 
 
                                                 
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territory  of  Slovak  Republic  and  protected  in  other  Member  State  of  the  European  Economic  Area5. 
Levies shall be administered by the Tax Office for Selected Tax Entities6.  

2. 

Collection of the bank levy  

2.1  As noted in the general part of the explanatory memorandum to the draft law7, the imposition of the 

bank levy introduces the risk of ‘double charging’ which may arise when Member States introduce 

bank levies on subsidiaries of their own financial institutions resident in other Member States or on 

foreign branches of Union banks resident in their own territory. There is therefore a risk that the 

draft law may result in double charging, in particular through the imposition of a levy on branches 
of foreign banks8. In this context, the ECB notes that the European Council has called for ‘further 
coordination between different levy schemes in order to avoid double-charging’9.  

2.2  The  ECB  supports  the  development  of  a  harmonised  approach  to  bank  levies,  which  should  be 
aligned  with  the  developing  Union  framework  for  bank  recovery  and  resolution10  and  is 

complementary  to  existing  regulation.  The  development  of  this  harmonised  approach  would 

achieve  the  overall  objective  of  preserving  the  level-playing  field,  whilst  limiting  distortions  to 

competition,  and  ensuring  that  financial  stability  is  equally  safeguarded.  This  is  particularly 

important  in  the  Union  where  the  introduction  of  different  bank  levy  schemes  could  potentially 

undermine  the  process  of  financial  integration  by  introducing  elements  of  fiscal,  regulatory  and 

supervisory fragmentation. Hence, the ECB invites the Slovak authorities to amend the draft law to 

introduce  an  approach  which  is  flexible  enough  to  adapt  to  the  ongoing  changes  in  Union 

regulation  and  supports  the  medium-term  Union  harmonised  solution,  e.g.  through  the  built-in 

flexibility of a ‘rendez-vous clause’.  

2.3  To enhance coordination between the relevant home and host authorities in these matters, the ECB 

highlights the need for the Slovak authorities to inform, where possible, in advance, the supervisory 

and fiscal authorities of the countries concerned, regarding the plan to introduce a levy system that 

will impose charges on foreign branches in Slovakia.  

2.4   Moreover,  in  accordance  with  its  recent  opinion11,  the  ECB  invites  the  Slovak  authorities  to 

consider introducing rules for replenishing the funds collected through the levy where part or all of 

such funds are subsequently used to finance resolution measures.  

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6  
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10  

11  

See Article 2(a) of the draft law.  
See Article 2(b) of the draft law.  
See p. 1 of the general part of the explanatory memorandum to the draft law.  
See Article 1(a) of the draft law.  
See  conclusion  of 
www.consilium.europa.eu.  
See  the  work  on  Union  legislation  aimed  at  harmonising  bank  recovery  and  resolution  rules  initiated  by  the  European 
Commission and in particular, the DG Internal Market and Services working document: technical details of a possible EU 
framework  for  bank  recovery  and  resolution  of  6  January  2011,  available  on  the  Commission’s  website  at 
http://ec.europa.eu.  
See  paragraph  3.6  of  Opinion  CON/2011/29.  All  ECB  opinions  are  published  on  the  ECB’s  website  at 
www.ecb.europa.eu.   

the  European  Council  of  28-29  October  2010,  available  at 

the  Council  website  at 

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3. 

Administration and use of the resolution fund 

3.1  As noted in the general part of the explanatory memorandum to the draft law12, the levy is expected 

to contribute to creating a dedicated resolution mechanism for banks. To this effect, the draft law 

specifies that proceeds of the levy are to be held in a separate extra-budgetary account intended to 

cover costs related to the resolution of financial crises in the banking sector and to protect financial 
stability13. The ECB understands that the proposed levy is to be collected by the general taxation 
authorities14 and will be governed by the general rules of tax administration15. Moreover, the draft 

law  does  not  address  any  further  specific  provisions  as  to  the  conditions  under  which  the  levy 

proceeds are to be applied to finance bank resolution measures.  

3.2  The  ECB  makes  the  following  specific  observations  regarding  the  administration  and  use  of  the 

resolution fund, which is created on the basis of the levy proceeds. 

3.2.1  The  ECB  recommends  that,  as  a  minimum,  a  clearer  separation  is  introduced  between  the  extra-
budgetary account created out of the levy proceeds, and the general budgetary resources16. Potential 

use  of  the  levy’s  proceeds  to  reduce  public  deficit  and  failure  to  establish,  in  the  long  term, 

dedicated resolution funds may result in an increasing dependence of the financial sector on public 

funds, particularly where crisis conditions may reoccur, which would strengthen the moral hazard 

concerns.  

3.2.2  In line with its recent opinion17, the ECB recommends that detailed rules on the application of the 

resolution fund to finance the bank resolution measures are set out in the draft law or in another 

adequate legal instrument. Such rules should, in particular, help to limit moral hazard in connection 

with  the  application  of  the  resolution  fund.  A  primary  purpose  of  resolution  funds  should  be  to 

mitigate  the  effects  of  a  bank  failure  for  the  different  stakeholders,  including  customers,  the  real 

economy and taxpayers. In particular, this implies that resolution funds should not be used for any 

form of bailout or to avoid a bank’s insolvency. Therefore, stringent conditions for their use need to 

be  defined,  including  no  automatic  relationship  between  fund  contributions  and  pay-out,  and 

decisions  about  the  use  of  the  funds  should  reside  with  independent  and  accountable  public 
authorities. The ECB made further recommendations in this respect in a recent opinion18, to which 

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16  

17  
18  

See page 1 of the general part of the explanatory memorandum.  
See Article 4(3) of the draft law.   
See Article 2(b) of the draft law.   
See Article 5 of the draft law, referring in the footnotes to the Law No 563/2009 Coll. on the administration of taxes and 
amending certain other laws.   
According  to  the  draft  law,  the  use  of  state  financial  assets  consisting  of  collected  levies  will  be  governed  by  Law 
No 523/2004 Coll. on budgetary rules of the public administration and amending certain other laws. 
See paragraph 3.2 of Opinion CON/2011/29.  
See paragraph 3.4 of Opinion CON/2011/29.  

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it draws the attention of the Slovak authorities, whilst at the same time inviting them to monitor the 
harmonised solutions which are being developed in this respect at Union level19. 

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

Done at Frankfurt am Main, 23 August 2011. 

[signed] 

The President of the ECB 

Jean-Claude TRICHET 

19  

See the work on Union legislation aimed at harmonising bank recovery and resolution rules initiated by the Commission 
and in particular, the DG Internal Market and Services working document: technical details of a possible EU framework 
for bank recovery and resolution of 6 January 2011, available on the Commission’s website at http://ec.europa.eu. 

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