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Bank tax. Analysis of the report prepared by the IEE

"The report is a preliminary study on the adaptation to the Constitution and Community Law of the temporary lien on credit entities and financial credit establishments."

By virtue of the institutional relations that Fide maintains, on September 13 we organized a session with the IEE (Institute of Economic Studies), On the «Tax» on banking. in which we analyze the Report recently published by the Institute.

The report is a preliminary study on the adaptation to the Constitution and Community Law of the temporary lien on credit entities and financial credit establishments.

Cristina Jimenez Savurido, President of the Foundation FIDE y Gregorio Izquierdo Llanes, Director General of the Institute of Economic Studies, presented the session in which we had the participation of two of the authors of the report, German Oron Moratal, Professor of Financial and Tax Law, University of Jaume I of Castellón and Jose Manuel Tejerizo Lopez, Professor of Financial and Tax Law at UNED. He moderated the session Salvador Ruiz Gallud, Managing Partner of the Economic Team.

During the initial interventions, the topics included and indicated in the Report were addressed, among which the following stand out: the potential unconstitutionality and non-adherence to community law of the new temporary taxes established in the Law Proposal for the energy sector and credit entities and financial credit establishments.

The experts who have prepared the report consider that the new "non-tax public patrimonial benefits" conceal tax figures that violate the general principle of legal certainty of article 9.3 of the Constitution due to their retroactivity and the tax principles of generality, equality and economic capacity of the article 31.1 of the Constitution. As for the concept de "extraordinary benefits» point out that it is clearly subjective and its determination is at the discretion of the Government, without there being an objective element to support it. This type of tax, according to the report, generates legal insecurity both in substance and in the form chosen for its processing, by eluding public consultation, the Regulatory Impact Report and the Opinion of the Council of State. The experts also point out that the classification of the tax as a non-tax public patrimonial benefit means vetoing the participation of the Autonomous Communities in the collection, in conflict with the Constitution.

We collect below the main conclusions of the Report presented by the speakers and that were analyzed in the session:

  • There is a Fraud of Law in the processing of the norm as a Proposal of Law, since this procedure avoids public consultation, the Regulatory Impact Report and the Opinion of the Council of State, which would have been mandatory in the processing of a Law Proposal. The absence of reports from the Bank of Spain and the CNMC, institutions to which the Law Proposal assigns functions that are not their own.
  • Despite being defined as a non-tax public patrimonial benefit, the temporary levy on banks is actually a tax. It has the typical elements of a tribute and specifically of a tax, given that its de facto budget is made up of facts that highlight economic capacity, it is managed as a tribute, it is reviewed as a tribute and it is deposited in the Public Treasury. to finance public spending.
  • The tax presents very serious problems from the constitutional point of view since violates the general principle of legal certainty of article 9.3 of the Constitution due to its retroactivity, by submitting to it events that occurred in 2019, before the birth of the obligation, and the tax principles of generality, equality and economic capacity of article 31.1 of the Constitution, for example, by not justifying the reason for the threshold of 800 million euros to be subject or not to the tax, or not considering it as a fiscally deductible expense in Corporation Tax. It also reveals the legal indeterminacy in the identification of those obliged to pay, violating the principle of reserve of law for being an essential element of the lien. Finally, alters the financing regime of the Autonomous Communities, who do not participate in the collection of taxes contrary to the provisions of arts. 156 and 157 of the Constitution.
  • Also, it is especially unfortunate configuration sanctioning regime, which does not respect the minimum guarantees required in our legal system. Specifically, the infraction for having repercussions, directly or indirectly, the temporary tax or its anticipated income violates articles 9 and 25 of the Constitution, as it can be applied to conduct that may have been carried out before the approval of the Law. , prohibiting the repercussion of the tax supposes a limit to the freedom of enterprise, contrary to art. 38 of the Constitution and fails to meet the criteria of the European Banking Authority, for whom any certain cost linked to the loans must be included in the fixing of interest. Finally, the report also raises the unconstitutionality of the sanction for violating the principle of proportionality, by not conceiving any modulator element.
  • The content of the Law Proposal is also reprehensible insofar as contains a confusing and contradictory definition of a basic element such as "extraordinary profits" on which the tax turns, which causes the existence of double taxation with the Corporation Tax.
  • The regulation of the tax violates essential elements of Community Law since it discriminates based on residence in Spain or in another country of the European Union and violates basic principles such as the freedom of establishment, the freedom to provide services and the freedom of movement of capital and, in particular, places credit institutions resident in other EU states in a situation of competitive advantage over those resident in Spain.
  • Furthermore, the Setting a threshold is also a violation of Article 107 of the Treaty on the Functioning of the European Union (TFEU), which regulates State aid, for favoring some subjects and having a negative impact on others, which enables them to file a complaint with the European Commission, for the purposes of the provisions of article 116 of the TFEU. Lastly, the authors criticized that the query has not been transferred to the European Central Bank (art. 127.4 TFEU).

Finally, according to some estimates by independent experts, the levy could have a contractionary impact on total economic activity of almost 5.000 million euros, that is, four tenths of GDP in 2021 and 72.000 fewer employed in terms of employment”.

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