Opinion of the European Central Bank of 26 July 2013 on measures to encourage long-term lending (CON/2013/55)
Date: 2013-07-26
Institutions: European Central Bank
Subjects: Belgium, banking supervision, central bank, credit institution, long-term credit, national law, tax incentive

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 Nationale 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 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) 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  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  economic  activity.  To  this  end,  following  the  entry  into  force  of  the  draft  law, 

certain  types  of  savings  certificates  issued  and  fixed-term  deposits  collected  by  certain  credit 

institutions will benefit from a favourable tax treatment i.e. a reduction of the withholding 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  of  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  
2  

OJ L 189, 3.7.1998, p. 4. 
Articles 22 and 23 of the draft law, amending Article 171, 3° and Article 269 of the Belgian Income Tax Code. 

 
 
 
 
 
                                                      
ECB-PUBLIC 

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 requirements by the credit institution concerned, the latter will 

have  to  pay  to  the  tax  authorities  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  supervision  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/Banque 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  incentives,  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 clarifications 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  

4  

5  

6  
7  
8  
9  
10  
11  

12  

Article  2,  5°  of  the  draft  law.  In  addition,  the  income  generated  by  the  financed  project  must  be  subject  to  taxes  in 
Belgium (Article 2, 9° of the draft law, Explanatory Memorandum p. 8).  
The eligible projects must have a socio-economic dimension; the concrete eligibility criteria will be defined in a Royal 
Decree (Article 8 of the draft law). 
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). 
Article 24 of the draft law and commentary in the Explanatory Memorandum, p. 22. 
Articles 16 to 19 of the draft law, and commentary in the Explanatory Memorandum, p. 20.  
Article 12 to 15 of the draft law.  
Commentary of Chapter IV of the draft law in the Explanatory Memorandum, p. 18.  
Article 12 of the draft law. 
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. 
See commentary on Article 4 in the Explanatory Memorandum, esp. p. 13. 

2 

 
                                                      
ECB-PUBLIC 

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 institutions14, 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  established  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 institutions on an unequal footing, 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  compliance  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 underlying 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  supervisory 

powers for the purpose of monitoring the draft law should be clarified, to avoid conflict of interest 

with its supervisory tasks.  

Furthermore, the obligation to professional secrecy21 prevents 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  
14 

Commentary on Article 6 and Chapter IV of the draft law in the Explanatory Memorandum, p. 14 and 18. 
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  creating  a  central  register  of  bank  account  numbers  see  Opinions  CON/2011/30  and 

CON/2011/98.  
OJ L 332, 31.12.1993, p. 4–6. 
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). 
Article 8 of the draft law; these criteria will be laid down in an implementing Royal Decree. 
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. 
Article 36/4 of the Law of 22 February 1998. 
Article 35 of the Law of 22 February 1998. 

16  
17  

18 
19  

20  
21  

3 

 
                                                      
 
ECB-PUBLIC 

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  institutions  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 the ECB 

Mario DRAGHI 

22  

23  
24  

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.  
Article 36/14, § 1, 9° of the Law of 22 February 1998. 
Articles 5, 8 and 10 of the draft law. 

4