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Austria: Significant Increase in Bank Levy

Published: January 10, 2014; 22:17 · (Vindobona)

In 2014, the bank levy is expected to increase substantially. Austrian banks regard the levy as massive competitive disadvantage.

Austria: Significant Increase in Bank Levy / Picture: © Wikimedia Commons / SKopp [Public domain]

The new Austrian government has agreed on a bank tax hike. The Austrian banking sector has to perform extraordinary taxes since 2010. Due to the partial nationalization of VBAG in spring 2013, the bank tax was raised from EUR 500m to EUR 625m. In 2014, the bank tax is expected to reach about € 700m.

According representatives of the Austrian banking industry, the government plans are “crazy”. Michael Ikrath, spokesman of the Austrian savings banks association, another increase in the bank levy “is a clear competitive disadvantage for the domestic banking sector.”

Michael Mauritz, spokesman of Erste Group: “In the end, the tax has to be paid by the real economy because banks are forced to reduce lending. In the end, the whole economy suffers from such a tax increase.”

Chairman of RZB (Raiffeisen Zentralbank) Walter Rothensteiner pointed that the Austrian banking sector has to bear higher costs than foreign competitors. Due to legal requirements and capital requirements, the Austrian banking industry is already on the breaking point, CEO of RBI (Raiffeisen Bank International) Karl Sevelda said. The Austrian Raiffeisen sector will have to pay the biggest part of the bank levy. This year, the contribution of the Raiffeisen sector is expected to reach about € 120m.

In the next weeks, the Austrian government will develop a new calculation model for the bank tax. A few details are already known.

As before, small banks with total assets below € 1.0bn do not have to perform bank taxes. Moreover, the bank tax will be independent from derivatives trading. As a result, Erste Group and Bank Austria will benefit from lower bank taxes. The Austrian Raiffeisen sector will be the main loser of the new calculation model. According to a spokesperson at Raiffeisen, this new rule is a wrong signal. “When the bank levy was established, derivatives were recognized as cause of the bank crisis. As a result, the tax was linked to the derivatives trading volume. It would be wrong to change that.”