The Ministry of Finance is working at full speed to try to make permanent the current taxes on banking and energysomething that has to be achieved before the end of the year and that is becoming increasingly difficult. At the moment there are two large open fronts that are advancing in parallel, one of a political nature and another that concerns purely technical issues. The first involves trying to convince the most reluctant partners with the measure: the PNV and Junts, spurred on by companies like Repsol.. The second wants to ensure that if the new taxes receive the green light, they will not be overturned later by the courts due to formal aspects of design and approach. Some companies have already announced that they will take the tax to court. The Government is especially concerned about both the territorial competition that could be triggered if the new figures are transferred to the Basque and Navarrese concerts, and double taxation, which occurs when the same taxable event is taxed two or more times. For the latter, as confirmed by several knowledgeable sources, the Treasury is considering the possibility of including a clause that allows part of the amount paid in corporate tax to be reduced.
The Government is aware of the difficulties it faces. The first vice president and head of the Treasury, María Jesús Montero, acknowledged yesterday that everything involves reaching an agreement with potential partners so that they validate the new figures in Congress. “Hopefully we can get the support,” he said after remembering that “if the Government of Spain does not have that sufficient majority, it will not be able to fulfill the vocation that taxes remain over time,” he slipped, implying that the figures taxes are in the air.
However, among so many doubts and uncertainty, the Treasury also has some certainties. One of them is that the levies, which were born under the figure of non-tax property benefits, become taxes fully integrated into the Spanish tax system, as confirmed by the ministry. Although it may not seem like it at first glance, there are several differences between both concepts. Benefits, for example, are final and require that the proceeds be used for a specific purpose, while taxes serve to finance public spending in general. The most important aspect, however, is that under the figure of the tax the two taxes could be transferred to the Basque Country and Navarra to be integrated into their respective concerts, one of the red lines claimed by the PNV and which the Government seems willing to give in in order to achieve the endorsement of the Basque nationalists.
At this point, the ministry’s experts have no choice but to find formulas to avoid the risk of double taxation. According to these sources, if banks and energy companies have to face a new tax calculated on part of their income, It is more than likely that they will argue that they are already paying for the same fact through the traditional corporate taxso the measure could fall in court. For this reason, the Treasury is working so that a percentage of the new tax rate can be reduced with the corporate tax. This scheme is reminiscent of what was already done with the solidarity tax on large fortunes and the wealth tax, which includes a similar deduction.
The Ministries of Finance and Economy are also working to adapt the banking tax to the economic context and thus take into account credit cycles and the evolution of interest rates, since the Government’s majority partner argues that the context when extraordinary taxes were born, has changed radically. In parallel, it is also studying how to include in the energy sector a deduction for strategic investments in industry and decarbonization.
When the extraordinary taxes were approved, in 2022, several energy companies – such as Repsol or Acciona – and some banks announced a legal offensive to try to overthrow them. The CEO of the oil company, Josu Jon Imaz, pointed out this week that the tax “will one day end up in court, which is likely to happen.” That is why the Treasury wants to shield the new taxes to avoid litigation. All these changes, which would result in the new design, would be included in an amendment to the European directive that ensures minimum taxation of multinationals, and that Spain has yet to transpose.
Companies, on the warpath
After the personalized complaints from companies like Repsol in recent weeks, The protest this Thursday became general. The financial and energy sector, through its main representative associations, took a step forward and warned about the consequences of making the levies permanent. Although the Government recognized that the measure is still up in the air, the two financial employers’ associations, AEB and CECA, released a joint statement in which they expressed their “strongest rejection of the impact on the sector itself and on the Spanish economy” that would have this measurement. The Spanish Association of Petroleum Products Operators also did the same almost at the same time. And both agreed to point towards billion-dollar consequences in investment and financing capacity that raised up to 66,000 million impact.
“If this initiative is maintained, Spain would become the only European jurisdiction with a permanent tax of these characteristics, which constitutes a competitive disadvantage for Spanish entities and, therefore, for the promotion of the economy, in a context in which that Spanish banking is the sector at the European level that pays the most taxes,” stated the AEB and the CECA. The president of Banco Santander, Ana Botín, who said yesterday that the measure goes “directly against economic growth,” and the president of Bankinter, María Dolores Dancausa, joined the criticism.
The representatives of the sector stated that the existence of a permanent tax on their income “represents an obstacle” to completing the Banking Union and goes against the recommendations of institutions such as the European Central Bank (ECB) or the International Monetary Fund (IMF). “who advise against these taxes because they divert resources that could be used to reinforce the capital of banks and maintain the flow of credit to families and companies”.
Likewise, the financing capacity of the real economy, job creation and economic growth in general would also be affected, they added. Not in vain, the bank calculates that the collection of the tax represents an estimated reduction of 50,000 million in the financing capacity of the sector in Spain. The Spanish Institute of Analysts also calculated this Thursday that the permanent application of the tax could cause “a negative effect on the valuation of the three largest Spanish banks of around 14%.”
For its part, the association of oil companies (AOP) considers that the indefinite tax “would compromise the competitiveness of the industry and hinder the energy transition process, negatively affecting the entire value chain.” For this reason, he called for “an adequate and stable fiscal framework to promote the important investments that the sector intends to undertake for decarbonization and the energy transition”, with investments of more than 16 billion euros until 2030 that could be discouraged by this measure.
Along the same lines as banking, the AOP assures that this tax “would make Spain the only State of the 27 of the EU to have it, which will harm the competitiveness of a sector that bears a very high tax burden.” Furthermore, “the Draghi report warns that the EU’s competitiveness is hampered, among other reasons, by a higher cost of energy than in the United States or China, as a consequence, among other reasons, of tax burdens that the same report calls for. limit”.
