Opinion of the European Central Bank of 26 November 2012 on amendments to the Law on the financial transaction tax (CON/2012/94)
Date: 2012-11-26
Institutions: European Central Bank
Subjects: Hungary, basis of tax assessment, financial transaction, monetary policy, national law, securities, tax

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  opinion  on  specific  provisions  of  a  draft  law1  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  amended  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  indent  of  Article  2(1)  and  Article  2(2)  of  Council 

Decision  98/415/EC  of  29  June  1998  on  the  consultation  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 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 amends the FTT Law in the following manner: 

(i) 

the draft law excludes from the base of the financial transaction tax (FTT) the issuance of MNB 

bills  with  a  maturity  of  up  to  two  weeks  on  the  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 Law5, other 

transactions  will  also  become  subject  to  the  FTT;  inter  alia,  loan  repayments,  fees  and 

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Draft Law No T/8750, amending proposal No T/8750/77 submitted by the Parliament’s Audit and Budget Committee and 
amending proposal No T/8750/101 submitted by the Minister for the National Economy. 
Published in Magyar Közlöny 2012/98 (VII. 23.). 
All ECB opinions are available on the ECB’s website at www.ecb.europa.eu. 
OJ L 189, 3.7.1998, p. 42. 
I.e. outgoing transfers from accounts owned by clients other than financial intermediaries. 

 
 
 
 
                                                      
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commissions charged by financial services providers, 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 transactions 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/EC6. 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  derivatives  transactions  and  0.1%  on  other  securities 

transactions  without  an  applicable  cap  per  transaction.  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  for  an  urgent  consultation  on  the  draft  law  on 

12 November 2012. The consultation request does not specify a time by which the Hungarian authorities 

would  like  to  receive  the  ECB’s  opinion,  but  it  refers  to  the  fact  that,  for  any  taxation  legislation, 

Hungarian  law  requires  a  30-day  intermediary  period  between  its  publication  and  entry  into  force. 

Therefore,  according  to  the  consultation  request,  the  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 draft 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 must 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  legislative  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 

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COM(2011) 594 final. 

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in  accordance  with  Decision  98/415/EC.  The  Hungarian  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.  Furthermore,  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 European System of Central Banks and of the European 
Central  Bank  (hereinafter  the  ‘Statute  of  the  ESCB’)  and  the  Law  on  the  MNB7.  As  part  of  its 

monetary policy framework, the MNB issues MNB bills and conducts 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 implement 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  instruments  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  independence  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 national central bank’s objectives. In this respect, the 

ECB makes the following specific observations. 

3.2  Application of the tax on transactions 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  taxation  the  issuance  of  MNB  bills  with  a  maturity  of  up  to  two 

weeks on the primary market and the placement of overnight deposits with the MNB.  

The  exemption  of  transactions  with  any  kind  of security  issued by  the  MNB as  an  instrument  of 

monetary  policy,  including  on  secondary  markets,  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  that  will  be  subject  to  the  FTT.  In  particular, 

counterparties  to  securities  transactions  with  the  MNB,  initiated  by  the  MNB  to  achieve  its 

monetary  policy  objectives,  will  be  liable  to  pay  the  FTT  on  such  transactions,  if  they  involve  a 

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Law CCVIII of 2011 on the Magyar Nemzeti Bank. 

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change  in  the  ownership  of  securities  other  than  securities  issued  by  the  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  conditions  of  such  transactions  in  line  with  the 

intended monetary policy objectives, as if the central 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 

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