Opinion of the European Central Bank of 30 October 2014 on a specific tax benefit granted to financial institutions (CON/2014/77)
Date: 2014-10-30
Institutions: European Central Bank
Subjects: Hungary, financial institution, financial stability, national law, tax relief

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 30 October 2014 

on a specific tax benefit granted 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 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  Hungarian  Government  intends  to  partially  compensate  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  under  the  draft  law  (hereinafter  the  ‘scheme’).  The 

scheme  allows  those  financial  institutions  to  decrease  their  bank  tax  liability  that  would  otherwise  be 

payable  under  Law  LIX  of  2006.  Portfolio  investments  are  outside  the  scope  of  the  scheme,  as  it  only 

covers the loss in value of the related undertaking operating in Ukraine.  

Under  the  draft  law,  a  financial  institution  could  decrease  its  tax  liability  for the 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 forints3. Any unused part of the available benefit could not be carried forward to subsequent tax 

years  or  applied  retrospectively.  Furthermore,  if  any  of  the  losses  incurred  by  a  participating  financial 

institution are recovered in subsequent years, the financial institution will have to repay the corresponding 

amount of the benefit. 

1  
2  

3  

See Article 51 of draft law No T/1705, available on the website of the Hungarian Parliament: www.parlament.hu. 
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). 
Approximately 17 million euro. 

 
 
 
 
 
                                                            
ECB-PUBLIC 

2. 

Observations 

2.1  Although  the  scheme  is  of  general  application,  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  unlikely  at  the  present  time  that  this  scheme,  being 

temporary  and  limited  in  scope,  would  significantly  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 

2