(Reuters) - Italy followed the lead of other European countries by taking a surprise and contested decision in August to impose a windfall tax on its banks' profits, bolstered by interest rate rises, to help mortgage holders.
Below is a snapshot of the status of windfall taxes or bank-specific duties across European countries in alphabetical order:
CZECH REPUBLIC
The Czech lower house of parliament approved a 60% windfall tax on energy companies and banks in November, aiming to raise $3.4 billion this year from profits deemed excessive to fund help for people and businesses hit by soaring electricity and gas prices.
FRANCE
President Emmanuel Macron said in March that companies with more than 5,000 people should share more of their "exceptionally high" profits with employees instead of buying back shares. But he and Finance Minister Bruno Le Maire ruled out the possibility of a windfall tax.
That is because French banks are subject to an anti-usury law that limits the pace of quarterly growth in loan prices.
France also has a popular regulated savings scheme, which accounts for almost 20% of bank deposits, with an inflation-linked return that adjusts more quickly than loan rates.
GERMANY
For some of Germany's biggest banks, net interest income has risen between 50% and 70% from lows during the COVID-19 pandemic, but a windfall tax has not been a topic for discussion under pro-business Finance Minister Christian Lindner.
Germany's finance ministry declined to comment on Italy's move in August but noted that tax increases are ruled out under a German coalition government agreement.
HUNGARY
The Hungarian government has tweaked windfall taxes imposed on key sectors of the economy in a decree published in June, saying banks can reduce their 2024 windfall tax payments by up to 50% if they increase government bond purchases.
It also imposed a 13% "social tax" on certain types of investments, including investment notes and interest rate gains on bank deposits.
ITALY
A one-off 40% tax on profits banks reap from higher interest rates was approved in Italy on Aug. 8, with plans to use the proceeds to help mortgage borrowers. It expects to collect less than 3 billion euros ($3.3 billion) from the tax, sources said.
The Italian economy ministry later clarified that the tax cannot be higher than 0.1% of lenders' total assets. Minister Giancarlo Giorgetti added that the levy "can be improved on" but denied it was unjust.
The European Central Bank (ECB) criticised the proposed tax in a non-binding legal opinion on Sept. 13, saying the measure did not consider lenders' long-term prospects and could make some of them vulnerable to an economic downturn.
The ABI industry lobby said on Sept. 12 that Italian banks should be able to deduct the tax from their overall tax bill.
At the start of the month the chairman of Italy's biggest bank, Intesa Sanpaolo (BIT:ISP), said he saw no cause for alarm over the tax and that it would probably cost his group less than 1 billion euros ($1.1 billion).
LITHUANIA
Parliament gave approval in May for a windfall tax on the banking industry's net interest income for 2023 and 2024 after a sharp rise in ECB interest rates.
The 60% levy on the part of net interest income that exceeds the average of the previous four years by 50% was expected to raise 410 million euros ($451 million) for the government's budget to be used to boost the military.
SPAIN
Spain intends to raise 3 billion euros by 2024 from the windfall tax on banks it approved last year. The tax imposes a 4.8% charge on net interest income and net commission above a threshold of 800 million euros.
SWEDEN
The Swedish Government imposed a "risk tax" in January last year for institutions with Swedish-linked liabilites of more than 150 billion Swedish crowns ($14.1 billion) to strengthen public finances and create space to cover the costs that a financial crisis could cause.
The tax was equal to equal 0.05% of liabilities in 2022 and it increased to 0.06% in 2023.
It is expected to raise 6 billion Swedish crowns a year.
BRITAIN
Though the UK has not introduced a bank windfall tax, it has charged a bank levy introduced in 2011 in response to the financial crisis. The levy applies to the global balance sheet assets of UK banks as well as assets belonging to the British operations of foreign banks.
($1 = 0.9112 euros)
($1 = 10.6366 Swedish crowns)