MADRID -The Spanish Senate gave the final approval to a windfall tax on banks and large energy companies on Wednesday, designed to alleviate the cost of living crisis, although largely leaving out smaller local lenders and foreign banks’ units in Spain.
The banking tax imposes a 4.8% charge on banks’ net interest income and net commissions above a threshold of 800 million euros ($849 million).
For energy companies with a turnover of at least 1 billion euros, excluding the domestic regulated business and foreign operations, the rate is 1.2%.
After the bill cleared the first hurdle in Congress last month, the lower house introduced some corrections, reimposing the 800 million euro threshold as originally planned by the government, although the Congress-approved version called for all banks the European Central Bank supervised to pay.
As the bill has been passed without any changes, the upper house approval is final.
Lenders and companies have opposed both the bank and energy taxes, and have threatened to challenge the new tax regime in court.
The vast majority of Spanish units of foreign banks, such as Deutsche Bank, will not be taxed as opposed to a previous version of the draft that was passed in November.
BNP Paribas in Spain could however be subject to the levy depending on the perimeter of the business that will be taxed.
The government introduced the original proposal to create the temporary levy on banks and large energy companies in July to raise a total of 7 billion euros by 2024 to fund measures to ease cost of living pressures.
The energy proposal was meant to raise 4 billion euros but the Bank of Spain recently estimated it would just raise 2 billion euros after their domestic regulated activities and foreign operations were left out of the levy.