December 7, 2010
This story about the potential for double taxes on EU banks was published by EurActiv on 7th December 2010.
A report to be discussed by the EU’s finance ministers today (7 December) paints a bleak picture of the potentially high costs and distortions bank levies could cause in the bloc’s financial sector.
At today’s meeting in Brussels, finance ministers will be taking stock of the stark warning sent by a high-level EU group on how haphazard taxes on banks in different countries could be potentially damaging to the sector and the EU market as a whole.
The ministerial meeting will also give a final blessing to an EU/IMF loan for Ireland’s troubled economy and prepare discussions for a EU leaders summit next week, which will focus on plans for a permanent EU loan facility.
Double taxation warning
In the levy report, the high-level group weighs the risks borne by banks who may be taxed twice as countries impose levies that charge both their home and foreign subsidiary banks, or that charge foreign banks on their own territory.
“The potential magnitude of double-charging is theoretically high,” the group argues, pointing out that 21 member states host EU-owned subsidiaries while nine member states are home to other systemically relevant EU branches.
It warns that the levies risk disturbing an increasingly uneven playing field in the financial sector and may drive business away from the EU.
“Already existing distortions […] may be further un-levelled and result in re-location of activities or provide opportunities for fiscal arbitrage,” it cautions.
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