August 2011 – Following the EU-wide initiatives for the introduction of special levies and taxes on financial institutions, the Slovak draft “Act on Special Levy for Selected Financial Institutions” aims to introduce a levy on the banks and branches of foreign banks in Slovakia. This article gives a short overview of the draft Bill.
The draft Bill requires the banks and branches of foreign banks to pay the levy (avoiding the sensitive word “tax”) and regulates the amount and method of such payment and the administration of such levy. The levy will be mandatory for the banks and branches of foreign banks. At present, the draft Bill does not extend the levy to foreign banks doing business in Slovakia without a branch (based on a uniform passport) or other financial institutions, such as e.g. investment funds, collective investment companies or insurance companies.
The proposed rate of annual levy for the relevant calendar year is 0.2% calculated on the total of the bank’s liabilities recorded on its balance sheet reduced by the following items:
(i) bank’s equity (provided such amount of equity is a positive number),
(ii) funds on long term offer to a branch of a foreign bank,
(iii) subordinated debt (determined under a Decree of the National Bank No. 4/2007),
(iv) deposits accepted by the bank in Slovakia and protected by the Act on Protection of Deposits,
(v) deposits accepted by the bank in Slovakia and protected in another EU or EEA Member State.
In principle, the annual levy is payable by the bank in four quarterly advance instalments, each in the amount of 25% of the annual rate multiplied by the base for the relevant calendar quarter. (The data for the relevant quarter should be taken from the preliminary financial statements of the previous quarter and from the final statements of the previous financial year). Each instalment should be due on the 20th day of the relevant calendar quarter.
If the bank loses its banking licence and has paid the advance instalments of the levy, such instalments will not be refunded.
The levy should be paid to the Tax Office for Selected Taxpayers with its seat in Bratislava (this tax office already has jurisdiction over financial institutions and large taxpayers). The purpose of the levy should be to finance the measures against the financial crisis and the protection of the Slovak financial system.
It is planned that the Bill should enter into force on 1 January 2012. It is likely that the Bill will undergo substantial changes during the discussions in the Parliament (if it is approved at all). We will inform readers of further developments in this area in the next issues of our bulletin.
For further information please contact Adam Hodoň, Partner, at .