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ARCHIVED - Europe considers taking legal action against Spain over tax on big banks
If the infringement procedure goes ahead, it could tie up the courts in Spain for a decade
The Spanish government is facing possible legal action from the European Commission over the new tax on banks and energy companies that came into force on December 28. The threatened infringement procedure comes as a result of a complaint made by a lawyer to the General Directorate of Taxation of the EU that the extraordinary tax applied by Spain goes against European law.
The non-tax public patrimonial benefit, as it is known in Spain, has set a tax rate of 4.8% on the interest margin and commissions charged by the banking and energy sectors. The levy is an attempt to collect 3 billion euros over the next two years, since these institutions are benefiting greatly from the steep rise in interest rates. The funds raised from the tax, the government has explained, will be used to ease the burden on those most affected by the war in Ukraine and the escalation of inflation.
However, the point which could be contrary to EU law is that Spain has forbidden the banks and electricity companies from passing on the cost of the tax to their customers. When it comes to the financial institutions, the European Banking Authority (EBA) stipulates that they can in fact charge their customers more in these cases in order to guarantee profitability.
The European Central Bank (ECB) did actually warn Spain that it could be breaking the law before it approved the taxes last year and if the EC chooses to open proceedings against the government, it could tie up the Spanish courts for a decade, since the banks have already officially challenged the charges here.
This isn’t the first time Spain has found itself in hot water with Europe either. Back in 2015, the government declared that citizens who failed to declare their foreign assets to the Tax Agency before the assigned deadline would be fined up to 150%. Following a complaint by a lawyer, the EC opened an infringement procedure and in January 2022 ruled that the sanctions should be refunded to taxpayers.
Image: Wikimedia Commons
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