Opinion of the European Central Bank of 17 December 2024 on a tax on the net interest and commission income of certain financial institutions (CON/2024/41)
Date: 2024-12-17
Institutions: European Central Bank
Subjects: banking supervision, financial stability, monetary policy

ECB-PUBLIC 

EN 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 17 December 2024  

on a tax on the net interest and commission income of certain financial institutions  

(CON/2024/41) 

Introduction and legal basis 

On 28 November 2024 the European Central Bank (ECB) received a request from the Banco de España, 

on behalf of the Spanish Parliament, for an opinion on a draft law establishing a tax on net interest and 

commission  income  of  certain  financial  entities  (hereinafter  the  ‘draft  law’).  This  draft  law  is  part  of  a 

comprehensive  draft  law  on  a  complementary  tax  to  guarantee  a  minimum  overall  level  of  taxation  for 

multinational  groups  and  large-scale  national  groups,  implementing  into  Spanish  law  Council  Directive 

2022/25231, a tax on the net interest and commission income of certain financial entities and a tax on liquids 

for electronic cigarettes and other tobacco-related products and other amendment of tax rules.  

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 Article 2(1), sixth indent, of Council Decision 98/415/EC2, as the 

draft  law  concerns  the  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 Article 17.5, first sentence, 

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 establishes a direct tax on the net interest and commission income obtained by credit 

institutions  established  in  Spain,  by  specialised  lending  institutions,  and  by  branches  of  foreign 

credit  institutions  established  on  Spanish  territory  (hereinafter  ‘financial  institutions’)  arising  from 

their activity in Spain. The taxable base of the tax is the positive margin of interest and fees income 

obtained  in  Spain  after  offsetting  interest  and  commission  expenses,  and  hence  excludes  those 

attributable  to  branches  located  abroad.  The  liquid  base  of  the  tax  is  the  result  of  reducing  the 

taxable base by EUR 100 million.    

1.2 

The draft law establishes a scale of five specific tax rates that are to be applied to the liquid base 

in order to obtain the gross tax charge: a tax rate of 1 % will be applied to a positive liquid base up 

to EUR 750 million; a tax rate of 3,5 % will be applied to  the portion of the liquid base from EUR 

1   

2  

Council Directive (EU) 2022/2523 of 14 December 2022 on ensuring a global minimum level of taxation for 
multinational enterprise groups and large-scale domestic groups in the Union (OJ L 328, 22.12.2022, p. 1). 
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). 

 
 
 
 
 
 
 
 
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750 million up to EUR 1500 million; a tax rate of 4,8 % will be applied to the portion of the liquid 

base from EUR 1500 million up to EUR 3000 million; a tax rate of 6 % will be applied to the portion 

of  the  liquid  base  from  EUR  3000  million  up  to  EUR  5000  million;  and  a  tax  rate  of  7 %  will  be 

applied to the portion of the liquid base from EUR 5000 million upwards.  

1.3 

The  gross tax charge is to be reduced by the amount resulting  from applying 25 %  of  the liquid 

amount of the corporate tax that the financial institution is to pay in that same tax period, or the non-

resident income tax in the case of branches of foreign credit institutions, in order to obtain the liquid 

amount of the tax payable by the financial institution.   

1.4 

Financial institutions are entitled to make an extraordinary deduction of the liquid amount of the tax 

in accordance with a formula established in the draft law if their return on assets (ROA) – calculated 

by  dividing  the  net  income  of  the  financial  institution  without  including  the  expenses  from  the 

payment of the proposed tax by the total assets of the financial institution – is less than 0,7 %. 

1.5 

Financial institutions must make a split payment equal to 40 % of the liquid amount of the tax (or of 

the  liquid  amount  of  the  tax  after  the  ROA-related  extraordinary  deduction)  within  the  first  20 

calendar days of the second month following the end of the tax period. The addressees must pay 

the rest of the tax liability within the first 20 days of the ninth month following the end of the tax 

period. The proceeds from the tax are to be paid to the State Treasury.  

1.6 

The  tax  period  will  coincide  with  the  fiscal  year  of  the  financial  institution  and  the  tax  is  legally 

accrued the first day after the expiration of the fiscal year. Nevertheless, the tax period may end 

earlier, when a financial institution or a foreign branch ceases to operate as such. The tax will be 

applicable  for  the  first  three  consecutive  tax  periods  beginning  on  1  January  in  2024,  2025  and 

2026,  respectively.  This  means  that  the  tax  base  is  to  be  calculated  based  on  the  amounts 

recognised during 2024, 2025 and 2026, respectively, but that financial institutions are legally bound 

to pay in 2025, 2026 and 2027, respectively.  

2. 

General observations 

2.1 

The ECB adopted an opinion in 2022 on a draft Spanish law on the imposition of temporary levies 

on  operators  in  the  energy  sector,  credit  institutions  and  by  specialised  lending  institutions 3. 

Thereafter the ECB has adopted a series of opinions addressed to other Member States on draft 

laws  introducing  special,  temporary  or  permanent  taxes,  levies,  fees  or  solidarity  contributions 

applicable to banks and/or financial institutions 4. In these opinions, the ECB considered legislative 

initiatives introducing such taxes, levies, fees or contributions from the monetary policy, financial 

stability and prudential supervision perspectives.   

2.2  Unlike the draft Spanish law on the imposition of temporary levies on operators in the energy sector, 

credit  institutions  and  by  specialised  lending  institutions 5,  the  explanatory  memorandum 

accompanying the draft law does not contain specific explanations on the rationale for the tax on 

the net interest and commission income of certain financial institutions. 

3  
4  
5  

See Opinion CON/2022/36. All ECB opinions are published on EUR-Lex. 
See Opinions CON/2023/9, CON/2023/26, CON/2023/35, CON/2023/42, CON/2023/45 and CON/2024/35. 

See paragraph 1.1 of Opinion CON/2022/36.  

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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, 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 were 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. Following a period of rate stabilisation, key 

interest rates have now been reduced in view of the ongoing disinflationary process.   

3.2  Credit  institutions  play  a  special  role  in  ensuring  the  smooth  transmission  of  monetary  policy 

measures to the wider economy, and thus in respect of the impact of monetary policy on aggregate 

demand and ultimately on inflation rates. The ECB's observations as to the impact of the draft law 

on monetary policy are set out below.  

3.3 

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

implications. Changes in monetary policy have effects on incomes and on the profitability of credit 

institutions. In this context, maintaining an adequate capital position helps credit institutions to avoid 

abrupt adjustments in their supply of credit to the real economy 6.  

3.4  Credit  institutions’  net  interest  income  tends  to  increase  on  impact  as  policy  rates  increase. 

Obviously, this effect occurs at a faster pace the greater the weight of short-term or variable interest 

rate loans within the balance sheets of credit institutions. At the same time, however, the tightening 

cycle  also  typically  results  in  lower  lending  volumes,  higher  costs  of  funding,  eventual  losses 

recorded in the securities portfolio and an increase in provisions owing to a potential deterioration 

of the quality of banks’ credit portfolio. The realisation of downside risks in that environment may 

significantly reduce the repayment capacity of debtors and translate into lower profitability of credit 

institutions.  The  net  effect  of  tighter  monetary  policy  on  bank  profitability  may  therefore  be  less 

positive, or even negative, over a longer time horizon7.  

3.5  ECB interest rate reductions will generally affect bank profit and balance sheet  items with signs 

opposite to those discussed in paragraph 3.4 in respect of monetary tightening. The net effects on 

bank profitability of these reductions can also be positive or negative over different horizons of the 

easing  cycle  and  vary  as  a  function  of  the  financial  situation  of  the  banking  sector  and  macro-

financial conditions. 

3.6  While credit institutions’ net interest income currently remains robust, and the latest reductions in 

past  and  expected  key  ECB  interest  rates  have  led  to  its  stabilisation,  care  should  be  taken  to 

ensure that any measures adopted do not hamper the ability of credit institutions to maintain solid 

capital  bases  and  adequate  provisions  for  impairments  and  ultimately  transmit  monetary  policy 

decisions to firms and households.  

6  
7 

See paragraph 2.2 of Opinion CON/2022/36 and paragraph 2.2 of Opinion CON/2023/9. 

See paragraph 3.4 of Opinion CON/2023/26 and paragraph 3.4 of Opinion CON/2023/35. 

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4. 

Financial stability context 

4.1  As indicated above, the ECB has previously opined on draft legislation introducing levies or taxes 

applicable  to  credit  institutions  in  several  Member  States8.  It  has  recommended  that  a  clear 

separation  is  necessary  between  the  extraordinary  account  created  out  of  tax  proceeds  and  the 

general  budgetary  resources  of  a  government  to  avoid  their  use  for  general  fiscal  consolidation 

purposes. The ECB has also underscored that imposing a special tax on the banking sector could 

reduce credit institutions’ ability to build additional capital buffers, as such measures reduce retained 

earnings, thereby weakening the banking sector’s resilience to economic shocks. It is recognised, 

however, that concerns regarding the resilience of the banking sector could be partially alleviated by 

introducing or strengthening capital buffers. In parallel, these taxes could have adverse economic 

effects  by  limiting  credit  institutions’  ability  to  provide  credit,  and  potentially  contributing  to  less 

favourable terms for customers on loans and other services9. Maintaining a sound capital base is 

essential for credit institutions to fulfil their role as credit intermediaries within the economy.  

4.2  As  noted  in  paragraph  3.4,  credit  institutions  may  initially  receive  higher  net  interest  income  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. When it comes to the draft law, the ECB notes, as set out in 

paragraph 1.4, that due to the extraordinary deduction mechanism based on financial institutions’ 
profitability, financial institutions would not be affected by the tax if they record net losses. If profits 

are  positive  but  lower  than  the  0,7  %  ROA  threshold,  the  extraordinary  deduction  decreases  as 

financial  institutions’  profitability  increases  towards  the  prescribed  ROA  threshold.  In  these 

circumstances, the tax would still negatively affect the capacity of financial institutions to maintain a 

solid capital  position  or to rebuild  buffers.  Moreover,  in  periods  of  high  profitability, the  deduction 

would not operate, and thus the tax would limit the capacity to accumulate buffers against future 

negative shocks.  

4.3  Due to the heterogeneous nature of such taxes in relation to the banking sector, the tax, similarly to 

other taxes of this kind across the Union, may lead to fragmentation in the European financial system 

and  impair  the  level  playing  field  across  the  banking  union.  Furthermore,  the  application  of  a 

progressive scale may give rise to competitive asymmetries based on bank size. 

4.4 

In the light of the above, and given that the draft law will apply over the next three years, the ECB 

reiterates the need for continued monitoring of its implications from a financial stability perspective, 

particularly regarding the potential long-term adverse effects on the resilience of the banking sector 

and the possibility of market distortions. As noted in previous opinions10, the ECB recommends a 

thorough analysis detailing the specific impact of the tax on credit institutions’ longer-term profitability 

and capital base, access to funding, potential impact on liquidity, the provision of new lending and 

8  

9  

10  

See Opinions CON/2016/1, CON/2019/18, CON/2019/40, CON/2019/44, CON/2020/28, CON/2022/36, CON/2023/9, 
CON/2023/26, CON/2023/35, CON/2024/4 and CON/2024/35.  

See paragraph 3.2.2 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 and paragraph 4.1 of Opinion CON/2023/26. 
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. 

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competition conditions in the market.  

5. 

Considerations relating to the prudential supervision of credit institutions 

5.1 

The ECB understands that the tax would, as a practical matter, mostly apply to credit institutions 

directly supervised by the ECB within the framework of the Single Supervisory Mechanism.  

5.2  Despite the extraordinary deduction on the amount of the liquid amount of the tax (based on net 

profitability), the basis on which the tax would be established does not take into consideration the 

full business cycle and does not include, inter alia, operational expenses and the cost of credit risk. 

As a result, the amount of the tax may not be fully commensurate with the profitability of a credit 

institution and its capital generation capacity. As a result of the general application of the tax, credit 

institutions that have lower solvency positions or challenging capital projections could become less 

able  to  absorb  the  potential  downside  risks  of  an  economic  downturn.  This  latter  risk  is  further 

exacerbated by the progressive character of the applicable tax rate as the liquid base increases. 

This could lead to a situation where certain credit institutions with lower net profitability (or even a 

loss following the deduction of credit losses) end up paying tax at a higher effective rate, since the 

implicit assumption in the tax calculation that credit institutions with a higher liquid base have higher 

net profits is not necessarily always true. 

5.3 

The ECB understands that the draft law leads to the recognition of the expenses resulting from the 

tax in 2024 eroding the profitability and market profile of the relevant credit institutions, assuming 

the  temporary  levy  on  credit  institutions’  windfall  profits  is  also  recorded  in  2024.  The  ECB 

recommends analysing the accounting effects of the tax in order to avoid unintended consequences 

for credit institutions’ solvency and competitive positions. 

This opinion will be published on EUR-Lex. 

Done at Frankfurt am Main, 17 December  2024. 

[signed] 

The President of the ECB 

Christine LAGARDE 

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