On August 7, the government introduced a one-time bank profit tax of 40%. This move led to a drop in shares the very next day. It was expected that the tax would bring in about 2 billion euros to the budget.
After the fall of stocks, on August 8, the Ministry of Finance announced that the tax will not be 40%, but will be limited to 0.1% of assets. Revenues from the tax should go to help mortgage holders and reduce taxes.
Income from the difference between bank lending and deposit rates will be taxed.
A windfall tax is a levy imposed by the government on companies that have benefited from external conditions or events (rising oil prices or rising interest rates that have resulted in significantly higher than expected profits).
The introduction of the tax was preceded by an increase in interest rates by banks. This led to record profits for Italian banks, which was the impetus for the government to take a corresponding decision.
Other European countries, including Hungary and Spain, have introduced similar windfall taxes for banks.
In May, Lithuanian lawmakers approved a temporary tax on excess bank profits to finance defense spending.
Estonia plans to raise the bank tax to 18%, up from 14% this year.