Bank Taxes in Europe

March 18, 2021

The 2007-2008 financial crisis triggered a global debate on whether, and if so how, taxation can be used as an instrument to stabilize the financial sector and to generate revenue to partially cover the costs associated with the recent and potential future crises.

Three approaches were mainly discussed, namely

  • financial stability contributions (levied on financial institutions’ liabilities and/or assets)
  • financial activities taxes (levied either on financial institutions’ profits or remunerations)
  • financial transaction taxes (levied on trade in financial instruments such as stocks, bonds, derivatives, and currencies)

Today’s map shows which European OECD countries implemented financial stability contributions (FSCs), commonly referred to as “bank taxes.”

Bank Taxes in Europe 2021 Bank Tax, financial stability contributions, 2008 financial crisis tax

Austria, Belgium, France, Greece, Hungary, Iceland, the Netherlands, Poland, Portugal, Slovenia, Sweden, and the United Kingdom all levy bank taxes. Almost all of these countries implemented the levy following the 2007-2008 financial crisis, with Greece (1975) the only exception. Slovakia repealed its bank levy as of January 2021.

Most countries levy their bank tax on a measure of liabilities or a measure of assets. However, some countries decided on a different tax base. For example, France taxes the minimal amount of capital necessary to comply with the regulatory requirements.

Financial Stability Contributions (“Bank Taxes”) in European OECD Countries, as of March 2021
OECD Country Tax Rate Tax Base Year of Implementation
Austria (AT) 0.024% – 0.029% Total liabilities net of equity and insured deposits 2011
Belgium (BE) Varying Rates Various tax bases depending on size of institution, risk, and destination of tax payments 2012
France (FR) 0.0642% Minimum regulatory capital requirement 2011
Greece (GR) 0.12% – 0.60% Value of the credit portfolio 1975
Hungary (HU) 0.15% – 0.20% Total assets net of interbank loans 2010
Iceland (IS) 0.145% Total debt 2011
Netherlands (NL) 0.033% – 0.066% Total liabilities net of equity and insured deposits 2012
Poland (PL) 0.44% Total value of assets 2016
Portugal (PT) 0.01% – 0.11% Various tax bases 2011
Slovenia (SI) 0.10% Total assets 2011
Sweden (SE) 0.05% Total liabilities net of equity and insured deposits 2015
United Kingdom (GB) 0.05% – 0.10% Total liabilities net of insured deposits 2011

Note: Most bank taxes have numerous exemptions and thresholds.

Sources: European Union, taxes in Europe database; Bloomberg Tax, “Country Guides;” Devereux, Johannesen, and Vella, “Can Taxes Tame the Banks? Evidence from the European Bank Levies;” and European Union, “Technical Fiche: Tax Contribution of the Financial Sector.”

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The tax base is the total amount of income, property, assets, consumption, transactions, or other economic activity subject to taxation by a tax authority. A narrow tax base is non-neutral and inefficient. A broad tax base reduces tax administration costs and allows more revenue to be raised at lower rates.