Opinion of the European Central Bank of 2 November 2023 on the imposition of a temporary tax on banks (CON/2023/35)
Date: 2023-11-02
Institutions: European Central Bank
Subjects: banking supervision, financial stability, monetary policy

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 2 November 2023 

on the imposition of a temporary tax on banks 

(CON/2023/35) 

Introduction and legal basis 

On 4 October 2023 the European Central Bank (ECB) received a request from the Slovenian Minister for 

Finance for an opinion on a draft legislative provision imposing a temporary tax on the balance sheets of 

banks  and  savings  banks  (hereinafter  the  ‘draft  provision’),  introduced  as  part  of  a  draft  Law  on 

reconstruction,  development  and  provision  of  funds1  introducing  other  temporary  measures  aimed  at 

alleviating  the  consequences  of  the  floods  and  landslides  experienced  in  Slovenia  in  August  2023.  On 

30 October 2023, the ECB received from the Ministry of Finance an updated version of the draft provision.2 

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  and  sixth  indents  of  Article  2(1)  of  Council  Decision 

98/415/EC3, as the draft provision concerns Banka Slovenije, rules applicable to financial institutions insofar 

as  they  materially  influence  the  stability  of  financial  institutions  and  markets,  and  the  ECB’s  tasks 

concerning  the  prudential  supervision  of  credit  institutions  pursuant  to  Article  127(6)  of  the  Treaty.  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 provision 

1.1  The draft provision introduces an additional tax on the balance sheets of all banks and savings banks 

that provide banking services in Slovenia4. The tax is introduced for the five calendar years 2024-

2028,  and  it  will  be  secured  for  the  co-financing  of  post-flood  and  landslide  reconstruction  and 

development measures and projects.  

1.2  The tax is determined by applying a rate of 0.2 % to the tax base, defined as the total value of assets 

in the statement of financial position of a bank’s balance sheet. For this purpose, a bank’s balance 

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Zakon o obnovi, razvoju in zagotavljanju finančnih sredstev. 
Now introduced as Article 59 of the draft Law on reconstruction, development and provision of funds. 

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). 

Under the draft  provision,  the  following entities  will be  subject to the additional tax: i) domestic banks and  savings 
banks that have obtained a licence to perform banking services; ii) banks and savings banks established in another 
Member  State  that  provide  cross-border  banking  services  in  Slovenia  via  a  branch;  iii)  banks  and  savings  banks 
established in another Member State that operate in Slovenia via a business unit as defined in the Law on corporate 
income tax; and iv) third-country banks and savings banks which have a branch in Slovenia. See the fourth paragraph 
of the draft provision.  

 
 
 
 
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sheet is calculated as an average value of balances as at the last day of each month in the applicable 

tax period.  

1.3  The amount of the tax for each bank will not, in any case, be greater than 30% of a bank’s annual 

profit before the recognition of the amount levied on account of the additional balance sheet tax.  

1.4  The tax is to be paid for the calendar year 2024 and for a total period of five calendar years until 

2028. Banks subject to the tax are to pay the tax within 30 days of submitting their tax returns, which 

must  be  submitted  to  the  tax  authority  by  31  March  for  the  preceding  calendar  year,  starting  on 

31 March  2025.  For  tax  periods  that  are  shorter  than  12  months,  the  taxpayer’s  tax  liability  is 

proportional to the length of the tax period in relation to the calendar year. 

1.5  The draft provision allows for the application of certain deductions to the amount of the additional 

tax. First, banks may deduct any amount of payments to address the consequences of the natural 

disaster that affected Slovenia in August 2023 made in the tax period to a dedicated account of the 

Republic of Slovenia. Moreover, banks may also deduct an amount equal to the difference between 

the amount of corporate income tax paid under the higher rate set by the draft Law on reconstruction, 

development  and  provision  of  funds5  and  the  amount  of  corporate  income  tax  due  under  the 

applicable rate set out in Article 60 of the Law on corporate income tax.6 The total amount of both of 

these deductions cannot exceed the tax amount for the tax period in question. 

1.6  Under  the  draft  provision,  Banka  Slovenije  will  prepare  an  annual  report  to  be  submitted  to  the 

Government of the Republic of Slovenia on the impact of the tax on the stability of the banking system 

in  the  Republic  of  Slovenia.  In  the  event  of  a  significant  negative  impact,  Banka  Slovenije  is  to 

propose  the  adoption  of  appropriate  measures  to  mitigate  these  consequences.  The  explanatory 

memorandum  accompanying the draft  provision further explains that these measures  encompass 

both legislative amendments, such as reducing the tax rate or abolishing the tax, as well as regulatory 

measures within Banka Slovenije’s competence. 

1.7  According  to  the  explanatory  memorandum,  the  aim  of  the  draft  provision  is  to  achieve  a  fairer 

distribution  of  the  inflation  burden  between  credit  institutions  and  households,  considering  that 

households have experienced a decrease in purchasing power. The explanatory memorandum also 

states that the rationale for introducing an additional tax on banks’ balance sheets is based on the 

fact that banks are engaged in a specific activity and have a particular position in the economy, and 

their setting of business policy is influenced by the implementation of monetary policy. 

1.8  The explanatory memorandum makes a number of specific points with regard to the introduction of 

the  tax.  First,  the  banking  sector  has  benefited  in  recent  years  from  relatively  higher  net  interest 

profits, which were the result of higher interest rates introduced by the ECB in its implementation of 

monetary policy measures aimed at achieving a timely return of inflation to the target across the euro 

area. Second, in recent years the banking sector has suffered the least damage compared with most 

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Article 42 of the draft Law on reconstruction, development and provision of funds introduces an amendment to the rate 
of the corporate income tax. 
Zakon o davku od dohodkov pravnih oseb (Uradni list RS, št. 117/06, 56/08, 76/08, 5/09, 96/09, 110/09 – ZDavP-2B, 
43/10,  59/11,  24/12,  30/12,  94/12,  81/13,  50/14,  23/15,  82/15,  68/16,  69/17,  79/18,  66/19,  172/21  in  105/22  – 
ZZNŠPP). 

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other sectors of the economy through the coronavirus (COVID-19) epidemic, the energy crisis and, 

most recently, the Slovenian natural disaster of August 2023. Third, the introduction of the tax is also 

warranted given the current high profitability of banks, which creates a public expectation that banks 

will share the burden of high inflation and demonstrate solidarity with the rest of society by providing 

additional  funds  to  address  the  extensive  material  damage  caused  by  the  recent  floods  and 

landslides. Fourth, owing to underdeveloped capital markets in Slovenia, the majority of household 

savings have been deposited with banks, without the latter having to increase interest rates to attract 

such deposits.  

1.9  The explanatory memorandum  further states that the introduction of  the tax should not  adversely 

affect the stability of the banking system or endanger individual credit institutions. Moreover, it should 

not lead to a material negative response from domestic and foreign investors.  

1.10  The explanatory memorandum also provides a preliminary analysis of the total net effect of the tax 

on  the  Slovenian  banking  sector,  which  is  estimated  at  EUR  90-100  million  in  the  first  year  of 

application of the draft provision.7  

1.11  Last, the explanatory memorandum points out that the draft provision has been prepared with due 

consideration of past ECB opinions on similar tax regimes in other Member States. 

2. 

General observations 

2.1  The ECB recently adopted opinions on a draft Italian law on the imposition of an extraordinary tax on 

credit institutions8, a draft Lithuanian law establishing a temporary solidarity contribution applicable 

to credit institutions9 and a draft Spanish law on the imposition of temporary levies on operators in 

the energy sector, credit institutions and financial credit establishments10. In these opinions, the ECB 

considered  legislative  initiatives  introducing temporary levies and taxes  from the  monetary policy, 

financial stability and prudential supervision perspectives. 

2.2  The ECB understands that the additional tax envisaged by the draft provision will affect the amount 

of corporate income tax paid by the banks in question on account of the additional tax reducing the 

tax base of the banks in respect of the corporate income tax, defined as the tax on the net profits of 

each bank. To this end, the ECB understands that the maximum cap of 30% of a bank’s net profits 

will be applied after taking into account the deductions allowed under the draft provision and prior11 

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As stated in the explanatory memorandum, the total net effect of the tax may be further impacted in subsequent years 
by the concurrent increase of the corporate income tax rate, which currently stands at 19% of the tax base, as defined 
in  the  Law  on corporate  income  tax (Zakon o  davku  od dohodkov  pravnih  oseb (Uradni  list  RS,  št.  117/06, 56/08, 
76/08, 5/09, 96/09, 110/09 – ZDavP-2B, 43/10, 59/11, 24/12, 30/12, 94/12, 81/13, 50/14, 23/15, 82/15, 68/16, 69/17, 
79/18, 66/19, 172/21 in 105/22 – ZZNŠPP)). 

See Opinion CON/2023/26. All ECB opinions are published on EUR-Lex. 
See Opinion CON/2023/9. 
See Opinion CON/2022/36.  

As clarified in the explanatory memorandum’s comments on the tenth paragraph of the draft provision. 

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to  applying  the  corporate  income  tax  on  the  tax  base12,  reduced  by  the  amount  levied  for  the 

additional tax on the balance sheets of banks. 

2.3  The ECB has previously opined on a Slovenian tax on the total value of a bank’s balance sheet13. 

The draft provision resembles that earlier tax from the point of view of the tax base, which was also 

defined as the average of balances held on the last day of each month in a calendar year14. Despite 

this similarity, the rationale and the macroeconomic context surrounding the adoption of the two taxes 

is very different and merits separate assessment. 

3. 

Monetary policy context 

3.1  The ECB understands that the introduction of the tax is motivated by the higher net profits recorded 

by banks, whose profit levels have benefited from higher net interest incomes since the start of the 

tightening cycle.  

3.2  The  euro  area  inflation  rate  reached  record  levels  over  the  course  of  2022  and  posed  significant 

challenges for the conduct of monetary policy. Guided by its primary objective of maintaining price 

stability, the ECB has taken determined action to ensure a timely return of inflation to the 2% target 

over the medium term. Key ECB policy rates have been raised by  a cumulative 450  basis points 

between  July  2022  and  September  2023,  with  the  intention  of  dampening  demand  and  guarding 

against the risk of a persistent  upward shift  in  inflation expectations. In parallel, net  purchases  of 

assets  have  ended,  the  asset  purchase  programme’s  portfolio  is  declining  at  a  measured  and 

predictable pace, and the ECB stands ready to adjust all instruments within its mandate to ensure 

that  inflation  returns  to  the  ECB’s  medium-term  target  and  to  preserve  the  smooth  functioning  of 

monetary policy transmission.15 Based on its latest October assessment, the ECB considers that the 

key ECB interest rates have reached levels that, maintained for a sufficiently long duration, will make 

a substantial contribution to the timely return of inflation to the 2% medium-term target. 

3.3 

It  is  important  to  keep  in  mind  that  monetary  policy  operations  always  have  some  distributional 

implications, including through their effects on incomes and the profitability of credit institutions. From 

a  monetary  policy  perspective,  credit  institutions  play  a  special  role  in  ensuring  the  smooth 

transmission  of  monetary  policy  measures  to  the  wider  economy.  In  this  context,  maintaining  an 

adequate capital position helps credit institutions to avoid abrupt adjustments to their lending to the 

real economy.16  

3.4  Evidence shows that net interest income typically tends to expand on impact as policy rates increase. 

This effect is faster the greater the weight of short-term or variable interest rate loans within bank 

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The tax base laid down in the Law on corporate income tax (Zakon o davku od dohodkov pravnih oseb, Uradni list RS, 
št.  117/06,  56/08, 76/08, 5/09, 96/09,  110/09  –  ZDavP-2B,  43/10, 59/11,  24/12, 30/12,  94/12, 81/13,  50/14, 23/15, 
82/15, 68/16, 69/17, 79/18, 66/19, 172/21 in 105/22 – ZZNŠPP).  

See Opinion CON/2011/31. 
However, the draft law the subject of Opinion CON/2011/31 provided for a lower tax rate of 0.1 %. Moreover, it provided 
that banks could reduce the tax by 0.2 % of the amount of loans granted to non-financial corporations and sole traders. 
See paragraph 2.1 of Opinion CON/2023/9 and paragraph 3.2 of Opinion CON/2023/26. 
See  paragraph 2.2 of  Opinion CON/2022/36,  paragraph 2.2 of  Opinion  CON/2023/9  and paragraph 3.3 of  Opinion 
CON/2023/26. 

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balance sheets. However, as the tightening cycle proceeds, this positive income effect can be offset 

by lower lending volumes, a higher cost of funding, losses recorded in the securities portfolio and an 

increase in provisions resulting from potential deterioration of the quality of the credit portfolio. The 

realisation  of  downside  risks  to  the  economy  may  significantly  reduce  the  repayment  capacity  of 

debtors and translate into lower bank profitability. The net effect of tighter monetary policy on bank 

profitability when measured across the policy cycle may therefore be less positive, or even negative, 

over an extended horizon.17 

3.5  The ECB takes note of the fact that, unlike tax regimes introduced in other Member States 18, the 

additional tax in Slovenia is not solely levied on net interest income19 or a value related to the interest 

margin20. Rather, the amount of tax due under the draft provision is determined by taking the entire 

balance sheet into account. Caution must be taken so that such tax base does not incentivise credit 

institutions to contract their balance sheet by reducing their lending activity beyond that which would 

be warranted from a monetary policy perspective. To this  end, the  ECB notes that  a reduction  in 

lending volumes has already been observed in Slovenia, and the introduction of the additional tax 

could further inhibit lending activity.  

3.6  The ECB further notes that there is a maximum cap on the tax, defined as the amount equal to 30% 

of the total net profits of each bank. While the ECB understands21 that this profit-related cap limits 

the  imposition  of  the  tax  for  less  profitable  banks  in  nominal  terms  and  ensures  that  loss-making 

banks  are  exempt,  it  follows  that  the  tax  burden  will  be  higher  in  relative  terms  to  profits  for  less 

profitable banks whose tax liability is close to or bound by the cap. In all cases, it must be ensured 

that  the  additional  tax  does  not  impact  the  ability  of  individual  credit  institutions  to  build  a  strong 

capital  base  from  retained  earnings  and  adequately  provision  for  increased  impairments  and  a 

deterioration in credit quality.22 

4. 

Financial stability context 

4.1  The  ECB  has  previously  warned  about  possible  negative  effects  of  extraordinary  tax  regimes  on 

financial stability23 owing to such legislative measures having the potential to make it more difficult 

for credit institutions to build up additional capital buffers, as their retained earnings will be reduced, 

thus making them less resilient to economic shocks.24 Moreover, this may lead to negative economic 

effects by limiting credit institutions’ ability to provide credit, contributing to less favourable terms for 

customers  when  providing  loans  and  other  services.  It  is  essential  that  credit  institutions  have  a 

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See paragraph 3.4 of Opinion CON/2023/26. 
See Opinion CON/2022/36, Opinion CON/2023/9 and Opinion CON/2023/26. 

See paragraph 1.2 of Opinion CON/2022/36 and paragraph 1.5 of Opinion CON/2023/9. 
See paragraph 1.1 of Opinion CON/2023/26. 

See paragraph 5.2 of this Opinion.  
See paragraph 2.3 of Opinion CON/2023/9 and paragraph 3.5 of Opinion CON/2023/26. 
See Opinions CON/2016/1, CON/2019/18, CON/2019/40, CON/2019/44, CON/2020/28 and CON 2023/26. 

See paragraph 4.1 of Opinion CON 2023/26. 

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sound capital base in order for them to fulfil their role as credit intermediaries within the economy. 

Higher costs and reduced credit supply can adversely affect real economic growth.25 

4.2  The tax  may  make  attracting new  equity capital and  wholesale funding more costly for banks, as 

domestic and foreign investors may have less appetite to invest in Slovenian credit institutions that 

have a more uncertain outlook. Moreover, the additional balance sheet tax is introduced for a time 

period  of  five  financial  years,  which  may  be  viewed  unfavourably  even  compared  with  similar  tax 

regimes where the additional temporary tax had been introduced as a one-off contribution26 or for a 

period of no more than two financial years27. The extraordinary tax may lead to fragmentation in the 

European  financial  system  because  of  the  heterogeneous  nature  of  such  taxes  for  the  banking 

sector.  

4.3  Despite  the  observed  favourable  liquidity  positions  of  Slovenian  banks  in  recent  years,  notable 

differences exist among individual credit institutions.28 Moreover, banks’ resilience when it comes to 

solvency and profitability has been assessed as a medium risk. In the light of the higher recent profits 

recorded by banks, they now have the capacity to improve their capital positions, and it would be 

favourable for banks to retain their profits and thus improve their resilience. Any legislative measures 

that  affect  banks’  retained  earnings  capacity  should  therefore  appropriately  recognise  that  some 

banks  have  chosen  to  maintain  a  larger  proportion  of  their  retained  earnings29  rather  than,  for 

example, opting for a higher distribution of dividends. 

4.4  The ECB recommends that in order to assess whether its application poses risks to financial stability, 

and, in particular, whether it has the potential to impair the banking sector’s resilience and cause 

market distortion, the draft provision needs to be accompanied by a thorough analysis of potential 

negative consequences for the banking sector.30 This analysis should detail, in particular, the specific 

impact of the tax on credit institutions’ longer-term profitability and capital base, access to funding 

and the provision of new lending, and its potential impact on liquidity.31 

4.5  While the explanatory memorandum already provides a preliminary analysis of the total net effect of 

the draft provision on the Slovenian banking sector,  the additional tax is to apply over a five-year 

period and its impact will also depend on the  applicable parameters and other possible legislative 

changes, regulatory measures or market conditions faced by banks in the coming years. While  a 

careful consideration of the effects of the draft provision is needed prior to its taking effect, the ECB 

takes positive note that Banka Slovenije is to perform an annual analysis of the impact of the tax on 

the  stability  of  the  Slovenian  banking  system.  The  ECB  understands  that  the  Government  would 

follow Banka Slovenije’s findings and/or recommendations based on this annual analysis. 

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See paragraph 4.1 of Opinion CON 2023/26. 
See Opinion CON/2023/9 and Opinion CON/2023/26. 

See Opinion CON/2022/36. 
See the introductory remarks in Poročilo o finančni stabilnosti, Banka Slovenije, October 2023.  

See the introductory remarks in Poročilo o finančni stabilnosti, Banka Slovenije, October 2023. 
See  paragraph 3.4 of  Opinion CON/2022/36,  paragraph 3.7 of  Opinion  CON/2023/9  and paragraph 4.6 of  Opinion 
CON 2023/26. 

See paragraph 4.6 of Opinion CON 2023/26. 

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4.6  One further aspect to consider is the change in the methodology for determining the buffer for other 

systemically  important  banks,  which  will  lead  to  an  increased  average  value  of  the  buffer  for  the 

Slovenian banking system and will require individual systemic banks to hold more capital. The higher 

level of the countercyclical capital buffer, which all banks and savings banks in the Slovenian banking 

system have to reach by the end of 2023, will have a similar effect.32 

5.

Considerations relating to the prudential supervision of credit institutions

5.1  The ECB understands that the tax would apply to significant credit institutions directly supervised by

the ECB and less significant credit institutions directly supervised by national competent authorities

under the oversight of the ECB within the framework of the Single Supervisory Mechanism.

5.2  Caution  must  be  taken  to  avoid  scenarios  where  the  tax  would  act  as  a  further  burden  for  less

profitable  banks  or  for  banks  that  have  recorded  losses  in  the  applicable  tax  period.  Since  the

determination of the maximum amount of tax due under the draft provision applies only to scenarios

where banks actually record profits, it is unclear whether this would prevent the tax being levied on

the balance sheets of banks recording losses during the applicable tax period. To this end, the ECB

would welcome further clarification as regards establishing a maximum amount of tax due under the

draft provision in a context where the total profit, before the recognition of the tax, would be equal to

or  less  than  the  amount  of  the  tax  payable  under  the  draft  provision.  Concretely,  the  ECB  would

welcome clarification on whether, in cases where the net profits recorded by a bank are equal or are

less than zero, the amount of tax paid under the draft provision also equals zero.

This opinion will be published on EUR-Lex. 

Done at Frankfurt am Main, 2 November 2023. 

[signed]

The President of the ECB 

Christine LAGARDE 

32 

See Poročilo o finančni stabilnosti, Banka Slovenije, October 2023, introductory remarks and p. 75. 

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