Opinion of the European Central Bank of 14 February 2024 on a special levy for credit institutions (CON/2024/4)
Date: 2024-02-14
Institutions: European Central Bank
Subjects: financial stability

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 14 February 2024 

on a special levy for credit institutions 

(CON/2024/4) 

Introduction and legal basis 

On  19  December  2023  the  National  Council  of  the  Slovak  Republic  adopted  Law  No  530/2023  which 

amends and supplements several laws in relation to improving the state of public finances 1 (hereinafter the 

‘adopted law’). The European Central Bank (ECB) has not been consulted by the Slovak authorities on the 

adopted law.  

The ECB has decided to deliver an own initiative opinion on the adopted law. The ECB’s competence to 

deliver an opinion is based on Article 127(4), second paragraph, and Article 282(5) of the Treaty on the 

Functioning of the European Union, as the adopted law relates to the European System of Central Banks’ 

task to contribute to the smooth conduct of policies relating to the stability of the financial system pursuant 

to  Article  127(5)  of  the  Treaty  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 adopted law 

1.1  The adopted law amended and supplemented Law No 235/2012 on a special levy on business in 

regulated industries 2 (hereinafter ‘Law No 235/2012’). In particular, the adopted law expanded the 

scope of regulated persons that are to be subject to a special levy to include persons or branches of 

foreign persons that are authorised to perform activities based on an authorisation issued or granted 

by  Národná  banka  Slovenska  (NBS).  Considering  this  new  broader  scope  of  regulated  persons 

subject  to  Law  No  235/2012,  the  adopted  law  introduced  a  special  levy  with  respect  to  credit 

institutions authorised by the NBS or in other European Economic Area Member States.  

1.2  The monthly special levy for credit institutions is computed by multiplying the levy base by the levy 

rate. The levy base for the special levy is the gross profit reported for the accounting period in which 

the  regulated  person  is  authorised  to  carry  out  regulated  activities  multiplied  by  a  coefficient 

representing a ratio between the revenue from regulated activities and the total revenue belonging 

to the accounting period for which the reported economic result was used for the calculation of the 

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2  

Zákon č. 530/2023 Z.z. z 19. decembra 2023, ktorým sa menia a dopĺňajú niektoré zákony v súvislosti so zlepšením 
stavu verejných financií. 
Zákon č. 235/2012 Z.z. z 26. júla 2012, o osobitnom odvode z podnikania v regulovaných odvetviach a o zmene a 
doplnení niektorých zákonov v znení neskorších predpisov. 

 
 
 
 
 
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levy3. The levy rate introduced for credit institutions equals 0.025 for the accounting period starting 

after 31 December 2023, 0.0208 for the accounting period starting after 31 December 2024, 0.0167 

for the accounting period starting after 31 December 2025, 0.0125 for the accounting period starting 

after 31 December 2026, and 0.00363 for the accounting periods starting after 31 December 2027. 

1.3  The  explanatory  memorandum  that  accompanied  the  adopted  law  when  it  was  presented  to  the 

National Council of the Slovak Republic sets out the Ministry of Finance’s view that the special levy 

on  credit  institutions  will,  on  a  net  basis 4,increase  the  income  of  the  public  budget  by 

EUR 335,600,000 in 2024, EUR 281,300,000 in 2025 and EUR 237,900,000 in 2026.  

1.4  According to the explanatory memorandum, developments in the European economy, the increase 

in interest rates by the ECB and other measures created the conditions for increased profitability in 

the  banking  sector,  with  the  expectation  that  such  higher  profitability  would  be  maintained.  The 

explanatory  memorandum  identified credit  institutions as market participants with high profits and 

thus  with  a  higher  potential  to  be  taxed  compared  to  entities  in  other  regulated  sectors.  The 

explanatory memorandum considered the profits in the banking sector as excessive, as these profits 

did not result from credit institutions’ business activities, but rather from unexpected developments 

in  financial  markets  which  allowed  credit  institutions  to  have  higher  profitability  than  other 

entrepreneurs.  The  explanatory  memorandum  considered  that  this  anomaly  allowed  the  State  to 

adopt measures to establish equilibrium so that credit institutions would bear a higher tax burden 

and thus, based on tax solidarity, contribute to an improvement to public finances. Overall, in view of 

the higher profitability of credit institutions caused by developments in interest rates, the explanatory 

memorandum did not consider the proposed tax burden as excessive, but rather reflected the aim of 

achieving a fair balance between the public interest and impacted legal persons. 

1.5  Finally, the explanatory memorandum noted that the increased profitability of credit institutions also 

contributed to the adoption of restrictive tax measures in other Member States, such as Hungary, 

Czechia, Spain, Lithuania, Italy and Sweden, and also in the United Kingdom, while noting Slovenia’s 

plans to introduce increased taxation of credit institutions. 

2. 

General observations  

2.1  The ECB understands that the special levy imposed on credit institutions translates into an additional 

taxation of gross profits at an annual rate of 30 % in 2024, 24.96 % in 2025, 20.04 % in 2026, 15 % 

in 2027, and 4.356 % in 2028 and in the following years. The ECB also understands that the current 

income tax applicable to legal persons in Slovakia is 21 % and that the payment of the special levy 

partially  decreases  payments  under  income  tax5,  which  translates  into  an  effective  tax  burden 

applicable to credit institutions amounting to 44.7 % in 2024, 40.7 % in 2025, 36.8 % in 2026, 32.9 % 

in 2027 and 24.4 % in 2028, respectively.  

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4  

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The ECB understands that the coefficient for credit institutions is likely to equal one or be close to one. 
The explanatory memorandum explains that the special levy will decrease the tax basis for the income tax of legal 
persons and thus the fiscal benefit of the special levy will be partially offset by lower income from corporate taxes. 

See footnote 4. 

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2.2  The  ECB  recently  adopted  opinions  on  a  draft  Dutch  law  on  the  imposition  of  a  tax  on  credit 

institutions 6, a draft Slovenian law on the imposition of a temporary tax on credit institutions7, a draft 

Italian  law  on  the  imposition  of  an  extraordinary  tax  on  credit  institutions 8,  a  draft  Lithuanian  law 

establishing a temporary solidarity contribution applicable to credit institutions 9 and a draft Spanish 

law on the imposition of temporary levies on operators in the energy sector, credit institutions and 

financial  credit  establishments 10.  In  these  opinions,  the  ECB  considered  legislative  initiatives 

introducing temporary levies and taxes from the monetary policy, financial stability and  prudential 

supervision perspectives.  

2.3  The ECB has been consulted by the Slovakian Ministry of Finance on six occasions from 2011 to 

2020  on  draft  laws  introducing,  amending  and  abolishing  a  special  levy  on  financial  institutions, 

including credit institutions, operating in Slovakia. The ECB has adopted opinions in response to five 

of these consultation requests11.  

3. 

Monetary policy context 

3.1  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 12, the ECB has taken determined action to ensure a timely return of inflation to its medium-

term 2 % target. Key ECB policy rates were raised by a cumulative 450 basis points between July 

2022 and September 2023, with the intention of decreasing 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,  the 

pandemic emergency purchase programme’s portfolio is intended to be reduced starting from the 

second half of 2024, and the ECB remains 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 transmission13.  

3.2  As key ECB interest rates will be set at sufficiently restrictive levels for as long as necessary to ensure 

a timely return of inflation to the 2 % medium-term target, it is important to keep in mind that monetary 

policy  decisions  always  have  some  distributional  implications.  In  particular,  they  have  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 14. 

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14  

See Opinion CON/2023/45. All ECB opinions are published on EUR-Lex. 
See Opinion CON/2023/35. 

See Opinion CON/2023/26.  
See Opinion CON/2023/9. 

See Opinion CON/2022/36. 
See Opinions CON/2011/66, CON/2012/53, CON/2015/43, CON/2019/40 and CON/2020/28. 

See Article 127(1) of the Treaty. 
See paragraph 2.1 of Opinion CON/2023/9 and paragraph 3.1 of Opinion CON/2023/45. 
See  paragraph 2.2 of  Opinion CON/2022/36,  paragraph 2.2 of  Opinion  CON/2023/9  and paragraph 3.2 of  Opinion 
CON/2023/45. 

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3.3  Evidence  shows  that  net  interest  income  of  credit  institutions  typically  expands  as  policy  rates 

increase. This effect is faster the greater the weight of short-term or variable interest rate loans on 

the asset side of  banks’  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  in  the  current  environment  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 15.  

3.4  Thus, with respect to the special levy introduced by the adopted law, and, while it is acknowledged 

that the decrease of the special levy over time mitigates the effects of this additional burden on credit 

institutions  over time,  the risks to  economic growth, and therefore to the overall  position of credit 

institutions, remain tilted to the downside. 

3.5  More generally, a cautious approach must be taken to ensure that the special levy does not impact 

the  ability  of  individual  credit  institutions  to  build  strong  capital  bases,  to  adequately  provide  for 

increased impairments and deterioration in credit quality. Curtailing the ability of credit institutions to 

maintain  adequate  capital  positions  or  to  prudently  build  provisions  against  the  backdrop  of  a 

possible downturn in credit quality could endanger a smooth bank-based transmission of monetary 

policy measures to the wider economy.  

4. 

Financial stability context 

4.1  The ECB has previously opined on draft legislation introducing taxes applicable to credit institutions 

in several Member States 16. It has, in this respect, underscored that imposing a special tax on the 

banking sector could make it more difficult for credit institutions to build up additional capital buffers, 

as their retained earnings will be reduced, making them less resilient to economic shocks. In effect, 

such  taxes  could  have  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 sound capital base so that they can fulfil their role  as 
credit  intermediaries.  Higher  costs  and  reduced  credit  supply,  or  higher  costs  of  other  banking 
services, can adversely affect real economic growth 17. 

4.2  As noted in paragraph 3, higher net interest income of credit institutions can initially ensue as interest 

rates  increase.  But  increasing  interest  rates  can  also  contribute  to  a  higher  cost  of  funding  and 

eventual  losses  on  outstanding  bank  securities  portfolios.  Moreover,  in  a  long-term  perspective, 

higher interest rates may negatively impact borrowers’ financial situations, thereby increasing credit 

risk  and  reducing  bank  profitability.  In  that  regard,  taxes  applicable  to  credit  institutions  may  put 

15 

16  

17  

See paragraph 3.4 of Opinion CON/2023/26, paragraph 3.4 of Opinion CON/2023/35 and paragraph 3.3 of Opinion 
CON/2023/45. 
See  Opinions  CON/2016/1,  CON/2019/18,  CON/2019/40,  CON/2019/44,  CON/2020/28,  CON/2023/26  and 
CON/2023/45.  
See  paragraph  3.2.1  of  Opinion  CON/2010/62,  paragraph  2.1  of  Opinion  CON/2011/29,  paragraph  3.1  of  Opinion 
CON/2022/36, paragraph 3.1 of Opinion CON/2023/9, paragraph 4.1 of Opinion CON/2023/26 and paragraph 4.1 of 
Opinion CON/2023/45. 

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additional pressure on their capacity to maintain a solid capital position or to rebuild buffers in an 

environment in which profits are lower and (credit) losses may occur. These different factors should 

be  properly  evaluated  in  order  to  ensure  that  credit  institutions  remain  well  positioned  to  absorb 

potential future losses 18. 

4.3  The introduction of taxes applicable to credit institutions may lead to fragmentation in the European 

financial system because of the heterogeneous nature of such taxes  across Member States. The 

risk of double taxation for  credit institutions in other jurisdictions where a special bank tax  is also 

levied may be a further source of such fragmentation. 

4.4 

In the light of the above, the ECB is of the view that the adopted law should have been accompanied 

by a thorough analysis of potential negative consequences for the banking sector in order to assess 

whether it poses risks to financial stability, and in particular its potential to impair the banking sector’s 

resilience and cause market distortion19. The ECB acknowledges that the special levy is based on 

gross profits and decreases over the five-year period between 2024 and 2028 to more sustainable 

levels. The ECB considers these elements of the adopted law crucial for financial stability, as keeping 

special  levy  rates  at  such  high  levels  could  seriously  hamper  the  longer-term  capital  generation 

capacity of credit institutions. The ECB has also previously recommended a clear separation of the 

proceeds of special levies, similar to the adopted  law, from the general budgetary resources of a 

government to avoid their use for general fiscal consolidation purposes 20. 

5. 

Considerations relating to the prudential supervision of credit institutions 

5.1  The  ECB  understands  that  the  special  levy  applies  to  all  credit  institutions,  including  significant 

institutions directly supervised by the ECB 21. 

5.2  As pointed out above, the special levy does not seem to fully take into consideration the full business 

cycle. Thus, the amount of the tax might not be commensurate with the longer-term profitability of a 

credit institution and its capital generation capacity. Also, as a result of the general application of the 

tax to the banking sector, credit institutions that have lower solvency positions or have challenging 

capital projections could become less able to absorb the potential downside risks of an economic 

downturn. As noted in the ECB’s press release of 28 July 2023 on the 2023 stress test22, an improved 

capital position was a key factor in helping banks stay resilient amidst highly adverse conditions. 

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22  

See  paragraph 3.2 of  Opinion CON/2023/9, paragraph  4.3  of Opinion  CON/2023/26  and paragraph 4.2 of  Opinion 
CON/2023/45. 
See  paragraph  3.4  of  Opinion  CON/2022/36,  paragraph  3.7  of  Opinion  CON/2023/9,  paragraph  4.6  of  Opinion 
CON/2023/26 and paragraph 4.5 of Opinion CON/2023/45. 
See paragraph 3.1 of Opinion CON/2022/36 and paragraph 3.4 of Opinion CON/2023/9. 
In the meaning of Article 6(4), third paragraph, of Council Regulation (EU) No 1024/2013 of 15 October 2013 conferring 
specific  tasks  on  the  European  Central  Bank  concerning  policies  relating  to  the  prudential  supervision  of  credit 
institutions (OJ L 287, 29.10.2013, p. 63). 

Available on the ECB’s banking supervision website at www.bankingsupervision.europa.eu. 

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This opinion will be published on EUR-Lex.  

Done at Frankfurt am Main, 14 February 2024. 

[signed] 

The President of the ECB 

Christine LAGARDE 

ECB-PUBLIC 

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