Opinion of the European Central Bank of 12 January 2016 on a tax for certain financial institutions (CON/2016/1)
Date: 2016-01-12
Institutions: European Central Bank
Subjects: bank charges, banking supervision, financial institution, financial stability, special tax, tax relief

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 12 January 2016 

on a tax for certain financial institutions  

(CON/2016/1) 

Introduction and legal basis 

On 15 December 2015 the European Central Bank (ECB) received a request from the Polish Parliament 
for an opinion on a draft law establishing a tax on certain financial institutions (hereinafter the ‘draft law’) 1. 

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 2, 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 

1.1  The draft law imposes an obligation on certain financial and insurance institutions to pay a special 

monthly  levy  of  0.0366%  on  the  value  of  an  institution’s  assets,  subject  to  certain  exemptions, 

thresholds and deductions  (hereinafter: the ‘tax’). According to the explanatory memorandum, the 

tax is aimed at creating an additional source of funding for public expenditure and at increasing the 

contribution made by the financial sector for funding public expenditure, in particular social security, 

as set out in the Polish Government’s spending programme. 

1.2  Under  the  draft  law,  the  tax  applies  to:  (a)  domestic  banks;  (b)  branches  of  foreign  banks; 

(c) branches  of  Union  credit  institutions;  (d)  cooperative  savings  and  loan  unions;  (e)  domestic 

insurers;  (f)  domestic  reinsurers;  (g)  branches  of  foreign  insurers  and  reinsurers;  (h)  consumer 

credit institutions.  

1.3  Under the draft law, the tax will not apply to: (a) state-owned banks; (b) tax payers that are subject 

to a supervisory decision; and (c) tax payers implementing a restructuring programme. In addition, 

according to the explanatory memorandum, the tax will not apply to: (a) credit institutions located in 

the  Union  that  carry  out  banking  activities  on  a  cross-border  basis  under  the  ‘European  single 

1  

2  

Following  amendments,  the  draft  law  was  adopted  by  the  lower  chamber  of  the  Polish  Parliament  on 
29 December 2015  and  sent  to  the  upper  chamber.  The  upper  chamber  adopted  further  amendments  on 
31 December 2015. The ECB has adopted its opinion based on the draft law sent for consultation, also taking into 
account the amendments introduced by the lower and upper chambers of the Polish Parliament. 
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). 

 
 
 
 
                                                 
ECB-PUBLIC 

passport3’; and (b) insurance companies located in the Union carrying out insurance activities other 

than through a branch. 

1.4  Subject to exemptions, the tax base will comprise the value of the assets at the end of each month 

exceeding  a  threshold  in  the  amount  of:  (a)  PLN  4  billion  for  banks  and  cooperative  savings  and 

loan  unions;  (b)  PLN  2  billion  for  insurers  and  reinsurers;  and  (c)  PLN  200  million  for  consumer 

credit institutions. 

1.5  The draft law provides that the tax base will be reduced:  

(a)  

for domestic banks and branches, by the value of: (i) own funds referred to in Article 126 of 
the  Law  on  Banking4;  and  (ii)  the  assets  acquired  by  the  taxpayer  from  Narodowy  Bank 

Polski (NBP) and securing refinancing credit provided by the NBP to a credit institution; 

(b)  

for cooperative savings and loan unions, by the value of own funds referred to in Article 24 of 

the Law on cooperative savings and loan unions;  

(c)  

for  domestic  banks,  branches  and  cooperative  savings  and  loan  unions,  by  the  value  of: 

(i) the increase in own funds following a supervisory decision; and (ii) assets held in the form 

of Treasury bonds; 

(d)  

for domestic banks that are affiliating banks within the meaning of Article 2(2) of the Law on 

the functioning of cooperative banks, by the value of all funds accumulated on all accounts of 

the affiliated cooperative banks. 

1.6  The draft law also provides that if the tax base is denominated in a foreign currency, the conversion 

into PLN will be performed on the basis of an average exchange rate published by the NBP on the 

last business day prior to the date on which the tax base is determined.  

1.7  The  tax  will  not  be  a  deductible  cost.  Additionally,  institutions  may  not  use  the  tax  as  a  basis  for 

altering any terms on which their financial and insurance services are provided that are included in 

contracts existing prior to the entry into force of the draft law. 

2. 

General observations 

2.1  Unlike in most Member States that have introduced a bank levy, the proposed tax is not linked with 

specific risks stemming from the financial sector, nor does it relate to former public support to the 

financial sector. Rather, the proposed tax exclusively aims at increasing the amount of funds that 

are  being  contributed  by  the  financial  sector  for  financing  public  expenditure.  In  this  context,  the 

ECB has consistently advised that taxes on financial institutions should be considered in relation to 

the  dual  objective  of:  (a)  ensuring  a  more  equitable  distribution  of  the  costs  arising  from  their 

potential failure between taxpayers and the financial sector; and (b) addressing the risks that they 

3  

4  

The  ‘European  single  passport’  is  a  system  that  allows  financial  services  operators  legally  established  in  one 
Member  State  to  establish/provide  their  services  in  the  other  Member  States  without  further  authorisation 
requirements. 
These own  funds  are  defined  under  Article  4(1)(118)  of  Regulation  (EU)  No  575/2013  of  the  European  Parliament 
and  of  the  Council  of  26  June  2013  on  prudential  requirements  for  credit  institutions  and  investment  firms  and 
amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1). 

2 

 
                                                 
ECB-PUBLIC 

pose5. Imposing any ad hoc taxes on banks for general budgetary purposes should  be preceded 

by  a  thorough  analysis  of  potential  negative  consequences  for  the  banking  sector  to  ensure  that 

such taxes do not pose risks to financial stability and the provision of credit, which could eventually 

adversely  affect  growth  in  the  real  economy.  Such  an  effect  might  result  in  banks  offering  less 

favourable terms to their customers when providing loans and other services, and may also induce 

certain  banks to cut back on their activities,  leading  to a reduction  in the availability of credit  and 
creating uncertainty for these banks6.  

2.2  The  introduction  of  the  tax  should  be  carefully  considered  with  regard  to  its  impact  on  the 

profitability of affected financial institutions, their capital adequacy and resilience to adverse shocks 

and,  more  generally,  its  impact  on  financial  stability,  credit  growth  and  the  economy  generally.  In 

this  context,  the  differences  in  the  situation  of  individual  banks  need  to  be  taken  into  account, 

together  with  the  impact  of  other  regulations  being  introduced  in  Poland  and  the  Union.  In 

particular,  the  situation  of  weaker  banks  that  may  record  losses  as  a  result  of  the  proposed  tax 

should be fully analysed. 

2.3  The proposed tax’s structure may give financial institutions an incentive to change their risk profile 

by  restructuring  their  portfolios  in  favour  of  riskier  products,  by  making  use  of  off-balance  sheet 

activities and/or by transferring their assets abroad.  

2.4 

In the light of the foregoing, and in line with its previous opinions7, the ECB invites the consulting 

authority  to  consider  whether  it  would  be  advisable  to  undertake  a  comprehensive  impact 

assessment of the proposed tax. 

3. 

Specific observations 

3.1  Definition of ‘tax base’ 

The current definition of ‘tax base’ in Article 5 of the draft law is unclear and may therefore create 

an  incentive  for  banks  to  reduce  the  size  of  their  balance  sheet  in  order  to  reduce  their  tax 

obligation.  In  the  case  of  an  increase  in  assets  resulting  from  intra-group  unsecured  funding,  the 

corresponding  assets  should  not  be  taxed  twice  within  the  same  financial  group,  since  this  could 

have an adverse effect on the intra-group funding needs of credit institutions.  

3.2  Harmonisation of fiscal policies 

The development of a harmonised, consistent and transparent approach to special taxation of the 

financial  sector  is  necessary  to  achieve  the  overall  objective  of  preserving  a  level  playing  field, 

while 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 

5  

6  

7  

See  paragraph  3.1.1  of  Opinion  CON/2015/43,  paragraph  2.1  of  Opinion  CON/2013/44,  paragraph  2.1  of  Opinion 
CON/2011/29 and paragraph 3.2.1 of Opinion CON/2010/62. All ECB opinions are published on the ECB’s website 
at www.ecb.europa.eu. 

See  paragraph  3.1.1  of  Opinion  CON/2015/43,  paragraph  2.1  of  Opinion  CON/2011/29  and  paragraph  3.2.2  of 
Opinion CON/2010/62. 
See paragraph 2.2 of Opinion CON/2013/44, paragraph 2.2 of Opinion CON/2011/29 and paragraph 3.2.2 of Opinion 
CON/2010/62. 

3 

 
                                                 
could  potentially  undermine  the  process  of  financial  integration  by  introducing  elements  of  fiscal, 

regulatory and supervisory fragmentation. 

ECB-PUBLIC 

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

Done at Frankfurt am Main, 12 January 2016. 

[signed] 

The President of the ECB 

Mario DRAGHI 

4