(Aug 8): Italy is the latest European country to hit banks with a windfall tax in a surprise move on their profits, which have been bolstered by interest rate rises, to help mortgage holders.

Below is a snapshot of windfall taxes or bank specific duties across European countries:

Czech Republic

The Czech lower house of parliament approved a 60% windfall tax on energy firms and banks in November, aiming to raise US$3.4 billion (RM15.6 billion) this year from profits deemed excessive to fund help for people and firms hit by soaring electricity and gas prices.

France

President Emmanuel Macron said in March that companies with more than 5,000 people should share more of their "exceptionally high" profits with employees instead of buying back shares. But he and Finance Minister Bruno Le Maire have ruled out the possibility of a windfall tax.

That is because French banks are subject to an anti-usury law that limits the pace of quarterly growth in loan prices.

France also has a popular regulated savings scheme, which accounts for just under 20% of bank deposits, with an inflation-linked return that adjusts more quickly than loan rates.

Germany

For some of Germany's biggest banks, net interest income has risen between 50% and 70% from the lows of the pandemic era, but a windfall tax has not been a topic for discussion under pro-business Finance Minister Christian Lindner.

Germany's finance ministry declined to comment on Italy's move in August but noted that tax increases are ruled out under a German coalition government agreement.

Hungary

Hungary's government has tweaked windfall taxes imposed on key sectors of the economy in a decree published in June, saying banks can reduce their 2024 windfall tax payments by up to 50% if they increase their Hungarian government bond purchases.

It also imposed a new 13% "social tax" on certain types of investments, including investment notes and interest rate gains on bank deposits.

Italy

Italy approved on Aug 8 a one-off 40% tax on profits banks reap from higher interest rates and it plans to use the proceeds to help mortgage holders. It expects to collect less than €3 billion (RM15.1 billion) from the tax, according to sources.

Lithuania

Lithuania's parliament approved in May a windfall tax on the banking industry's net interest income for 2023 and 2024 following a sharp rise in European Central Bank interest rates.

The 60% levy on the part of net interest income that exceeds the average of the previous four years by 50% is estimated to raise €410 million for the government's budget, and will be used to boost the military.

Spain

Spain intends to raise €3 billion by 2024 from the windfall tax on banks it approved last year which imposes a 4.8% charge on their net interest income and net commissions above a threshold of €800 million.

Sweden

The Swedish Government started in January last year a "risk tax" for institutions with liabilities linked to Swedish operations of more than 150 billion Swedish crowns (RM64.2 billion) to strengthen public finances and create space to cover the costs that a financial crisis could cause.

The tax was equal to equal 0.05% of liabilities in 2022 and it increased to 0.06% in 2023.

It is expected to raise 6 billion Swedish crowns a year.

UK

Britain has not introduced a bank windfall tax, but since 2011 it has charged a bank levy introduced in response to the financial crisis, which applies to the global balance sheet assets of UK banks as well as assets belonging to the British operations of foreign banks.