publisher: Europeiska centralbanken

sprak: en

title: Opinion of the European Central Bank of 2 November 2023 on the imposition of a temporary tax on banks (CON/2023/35)

serie: con

text: OPINION OF THE EUROPEAN CENTRAL BANK of 2 November 2023 on the imposition of a temporary tax on banks (

text: ) Introduction and legal basis

type: rubrik

text: On 4 October 2023 the European Central Bank (ECB) received a request from the Slovenian Minister for Finance for an opinion on a draft legislative provision imposing a temporary tax on the balance sheets of banks and savings banks (hereinafter the ‘draft provision’), introduced as part of a draft Law on reconstruction, development and provision of funds introducing other temporary measures aimed at alleviating the consequences of the floods and landslides experienced in Slovenia in August 2023. On 30 October 2023, the ECB received from the Ministry of Finance an updated version of the draft provision. The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the third and sixth indents of

text: Article 2(1) of Council Decision 98/415/EC

text: , as the draft provision concerns Banka Slovenije, rules applicable to financial institutions insofar as they materially influence the stability of financial institutions and markets, and the ECB’s tasks concerning the prudential supervision of credit institutions pursuant to Article 127(6) of the Treaty. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

type: stycke

text: 1. Purpose of the draft provision

text: 1.1 The draft provision introduces an additional tax on the balance sheets of all banks and savings banks that provide banking services in Slovenia . The tax is introduced for the five calendar years 2024- 2028, and it will be secured for the co-financing of post-flood and landslide reconstruction and development measures and projects. 1.2 The tax is determined by applying a rate of 0.2 % to the tax base, defined as the total value of assets in the statement of financial position of a bank’s balance sheet. For this purpose, a bank’s balance

text: 1 Zakon o obnovi, razvoju in zagotavljanju finančnih sredstev.

text: 2 Now introduced as Article 59 of the draft Law on reconstruction, development and provision of funds.

text: Council Decision 98/415/EC of 29 June 1998

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42).

text: 4 Under the draft provision, the following entities will be subject to the additional tax: i) domestic banks and savings banks that have obtained a licence to perform banking services; ii) banks and savings banks established in another Member State that provide cross-border banking services in Slovenia via a branch; iii) banks and savings banks established in another Member State that operate in Slovenia via a business unit as defined in the Law on corporate income tax; and iv) third-country banks and savings banks which have a branch in Slovenia. See the fourth paragraph of the draft provision. sheet is calculated as an average value of balances as at the last day of each month in the applicable tax period. 1.3 The amount of the tax for each bank will not, in any case, be greater than 30% of a bank’s annual profit before the recognition of the amount levied on account of the additional balance sheet tax. 1.4 The tax is to be paid for the calendar year 2024 and for a total period of five calendar years until 2028. Banks subject to the tax are to pay the tax within 30 days of submitting their tax returns, which must be submitted to the tax authority by 31 March for the preceding calendar year, starting on 31 March 2025. For tax periods that are shorter than 12 months, the taxpayer’s tax liability is proportional to the length of the tax period in relation to the calendar year. 1.5 The draft provision allows for the application of certain deductions to the amount of the additional tax. First, banks may deduct any amount of payments to address the consequences of the natural disaster that affected Slovenia in August 2023 made in the tax period to a dedicated account of the Republic of Slovenia. Moreover, banks may also deduct an amount equal to the difference between the amount of corporate income tax paid under the higher rate set by the draft Law on reconstruction, development and provision of funds and the amount of corporate income tax due under the applicable rate set out in Article 60 of the Law on corporate income tax. The total amount of both of these deductions cannot exceed the tax amount for the tax period in question. 1.6 Under the draft provision, Banka Slovenije will prepare an annual report to be submitted to the Government of the Republic of Slovenia on the impact of the tax on the stability of the banking system in the Republic of Slovenia. In the event of a significant negative impact, Banka Slovenije is to propose the adoption of appropriate measures to mitigate these consequences. The explanatory memorandum accompanying the draft provision further explains that these measures encompass both legislative amendments, such as reducing the tax rate or abolishing the tax, as well as regulatory measures within Banka Slovenije’s competence. 1.7 According to the explanatory memorandum, the aim of the draft provision is to achieve a fairer distribution of the inflation burden between credit institutions and households, considering that households have experienced a decrease in purchasing power. The explanatory memorandum also states that the rationale for introducing an additional tax on banks’ balance sheets is based on the fact that banks are engaged in a specific activity and have a particular position in the economy, and their setting of business policy is influenced by the implementation of monetary policy. 1.8 The explanatory memorandum makes a number of specific points with regard to the introduction of the tax. First, the banking sector has benefited in recent years from relatively higher net interest profits, which were the result of higher interest rates introduced by the ECB in its implementation of monetary policy measures aimed at achieving a timely return of inflation to the target across the euro area. Second, in recent years the banking sector has suffered the least damage compared with most

text: 5 Article 42 of the draft Law on reconstruction, development and provision of funds introduces an amendment to the rate of the corporate income tax.

text: 6 Zakon o davku od dohodkov pravnih oseb (Uradni list RS, št. 117/06, 56/08, 76/08, 5/09, 96/09, 110/09 – ZDavP-2B, 43/10, 59/11, 24/12, 30/12, 94/12, 81/13, 50/14, 23/15, 82/15, 68/16, 69/17, 79/18, 66/19, 172/21 in 105/22 – ZZNŠPP). other sectors of the economy through the coronavirus (COVID-19) epidemic, the energy crisis and, most recently, the Slovenian natural disaster of August 2023. Third, the introduction of the tax is also warranted given the current high profitability of banks, which creates a public expectation that banks will share the burden of high inflation and demonstrate solidarity with the rest of society by providing additional funds to address the extensive material damage caused by the recent floods and landslides. Fourth, owing to underdeveloped capital markets in Slovenia, the majority of household savings have been deposited with banks, without the latter having to increase interest rates to attract such deposits. 1.9 The explanatory memorandum further states that the introduction of the tax should not adversely affect the stability of the banking system or endanger individual credit institutions. Moreover, it should not lead to a material negative response from domestic and foreign investors. 1.10 The explanatory memorandum also provides a preliminary analysis of the total net effect of the tax on the Slovenian banking sector, which is estimated at EUR 90-100 million in the first year of application of the draft provision. 1.11 Last, the explanatory memorandum points out that the draft provision has been prepared with due consideration of past ECB opinions on similar tax regimes in other Member States.

text: 2. General observations

text: 2.1 The ECB recently adopted opinions on a draft Italian law on the imposition of an extraordinary tax on credit institutions , a draft Lithuanian law establishing a temporary solidarity contribution applicable to credit institutions and a draft Spanish law on the imposition of temporary levies on operators in the energy sector, credit institutions and financial credit establishments . In these opinions, the ECB considered legislative initiatives introducing temporary levies and taxes from the monetary policy, financial stability and prudential supervision perspectives. 2.2 The ECB understands that the additional tax envisaged by the draft provision will affect the amount of corporate income tax paid by the banks in question on account of the additional tax reducing the tax base of the banks in respect of the corporate income tax, defined as the tax on the net profits of each bank. To this end, the ECB understands that the maximum cap of 30% of a bank’s net profits will be applied after taking into account the deductions allowed under the draft provision and prior

text: 7 As stated in the explanatory memorandum, the total net effect of the tax may be further impacted in subsequent years by the concurrent increase of the corporate income tax rate, which currently stands at 19% of the tax base, as defined in the Law on corporate income tax (Zakon o davku od dohodkov pravnih oseb (Uradni list RS, št. 117/06, 56/08, 76/08, 5/09, 96/09, 110/09 – ZDavP-2B, 43/10, 59/11, 24/12, 30/12, 94/12, 81/13, 50/14, 23/15, 82/15, 68/16, 69/17, 79/18, 66/19, 172/21 in 105/22 – ZZNŠPP)).

text: 8 See Opinion

text: . All ECB opinions are published on EUR-Lex.

text: 9 See Opinion

text: 10 See Opinion

text: 11 As clarified in the explanatory memorandum’s comments on the tenth paragraph of the draft provision. to applying the corporate income tax on the tax base , reduced by the amount levied for the additional tax on the balance sheets of banks. 2.3 The ECB has previously opined on a Slovenian tax on the total value of a bank’s balance sheet . The draft provision resembles that earlier tax from the point of view of the tax base, which was also defined as the average of balances held on the last day of each month in a calendar year . Despite this similarity, the rationale and the macroeconomic context surrounding the adoption of the two taxes is very different and merits separate assessment.

text: 3. Monetary policy context

text: 3.1 The ECB understands that the introduction of the tax is motivated by the higher net profits recorded by banks, whose profit levels have benefited from higher net interest incomes since the start of the tightening cycle. 3.2 The euro area inflation rate reached record levels over the course of 2022 and posed significant challenges for the conduct of monetary policy. Guided by its primary objective of maintaining price stability, the ECB has taken determined action to ensure a timely return of inflation to the 2% target over the medium term. Key ECB policy rates have been raised by a cumulative 450 basis points between July 2022 and September 2023, with the intention of dampening demand and guarding against the risk of a persistent upward shift in inflation expectations. In parallel, net purchases of assets have ended, the asset purchase programme’s portfolio is declining at a measured and predictable pace, and the ECB stands ready to adjust all instruments within its mandate to ensure that inflation returns to the ECB’s medium-term target and to preserve the smooth functioning of monetary policy transmission. Based on its latest October assessment, the ECB considers that the key ECB interest rates have reached levels that, maintained for a sufficiently long duration, will make a substantial contribution to the timely return of inflation to the 2% medium-term target. 3.3 It is important to keep in mind that monetary policy operations always have some distributional implications, including through their effects on incomes and the profitability of credit institutions. From a monetary policy perspective, credit institutions play a special role in ensuring the smooth transmission of monetary policy measures to the wider economy. In this context, maintaining an adequate capital position helps credit institutions to avoid abrupt adjustments to their lending to the real economy. 3.4 Evidence shows that net interest income typically tends to expand on impact as policy rates increase. This effect is faster the greater the weight of short-term or variable interest rate loans within bank

text: 12 The tax base laid down in the Law on corporate income tax (Zakon o davku od dohodkov pravnih oseb, Uradni list RS, št. 117/06, 56/08, 76/08, 5/09, 96/09, 110/09 – ZDavP-2B, 43/10, 59/11, 24/12, 30/12, 94/12, 81/13, 50/14, 23/15, 82/15, 68/16, 69/17, 79/18, 66/19, 172/21 in 105/22 – ZZNŠPP).

text: 13 See Opinion

text: 14 However, the draft law the subject of Opinion

text: provided for a lower tax rate of 0.1 %. Moreover, it provided that banks could reduce the tax by 0.2 % of the amount of loans granted to non-financial corporations and sole traders.

text: 15 See paragraph 2.1 of Opinion

text: and paragraph 3.2 of Opinion

text: 16 See paragraph 2.2 of Opinion

text: , paragraph 2.2 of Opinion

text: and paragraph 3.3 of Opinion

text: . balance sheets. However, as the tightening cycle proceeds, this positive income effect can be offset by lower lending volumes, a higher cost of funding, losses recorded in the securities portfolio and an increase in provisions resulting from potential deterioration of the quality of the credit portfolio. The realisation of downside risks to the economy may significantly reduce the repayment capacity of debtors and translate into lower bank profitability. The net effect of tighter monetary policy on bank profitability when measured across the policy cycle may therefore be less positive, or even negative, over an extended horizon. 3.5 The ECB takes note of the fact that, unlike tax regimes introduced in other Member States , the additional tax in Slovenia is not solely levied on net interest income or a value related to the interest margin . Rather, the amount of tax due under the draft provision is determined by taking the entire balance sheet into account. Caution must be taken so that such tax base does not incentivise credit institutions to contract their balance sheet by reducing their lending activity beyond that which would be warranted from a monetary policy perspective. To this end, the ECB notes that a reduction in lending volumes has already been observed in Slovenia, and the introduction of the additional tax could further inhibit lending activity. 3.6 The ECB further notes that there is a maximum cap on the tax, defined as the amount equal to 30% of the total net profits of each bank. While the ECB understands that this profit-related cap limits the imposition of the tax for less profitable banks in nominal terms and ensures that loss-making banks are exempt, it follows that the tax burden will be higher in relative terms to profits for less profitable banks whose tax liability is close to or bound by the cap. In all cases, it must be ensured that the additional tax does not impact the ability of individual credit institutions to build a strong capital base from retained earnings and adequately provision for increased impairments and a deterioration in credit quality.

text: 4. Financial stability context

text: 4.1 The ECB has previously warned about possible negative effects of extraordinary tax regimes on financial stability owing to such legislative measures having the potential to make it more difficult for credit institutions to build up additional capital buffers, as their retained earnings will be reduced, thus making them less resilient to economic shocks. Moreover, this may lead to negative economic effects by limiting credit institutions’ ability to provide credit, contributing to less favourable terms for customers when providing loans and other services. It is essential that credit institutions have a

text: 17 See paragraph 3.4 of Opinion

text: 18 See Opinion

text: , Opinion

text: and Opinion

text: 19 See paragraph 1.2 of Opinion

text: and paragraph 1.5 of Opinion

text: 20 See paragraph 1.1 of Opinion

text: 21 See paragraph 5.2 of this Opinion.

text: 22 See paragraph 2.3 of Opinion

text: and paragraph 3.5 of Opinion

text: 23 See Opinions

text: and CON 2023/26.

text: 24 See paragraph 4.1 of Opinion CON 2023/26. sound capital base in order for them to fulfil their role as credit intermediaries within the economy. Higher costs and reduced credit supply can adversely affect real economic growth. 4.2 The tax may make attracting new equity capital and wholesale funding more costly for banks, as domestic and foreign investors may have less appetite to invest in Slovenian credit institutions that have a more uncertain outlook. Moreover, the additional balance sheet tax is introduced for a time period of five financial years, which may be viewed unfavourably even compared with similar tax regimes where the additional temporary tax had been introduced as a one-off contribution or for a period of no more than two financial years . The extraordinary tax may lead to fragmentation in the European financial system because of the heterogeneous nature of such taxes for the banking sector. 4.3 Despite the observed favourable liquidity positions of Slovenian banks in recent years, notable differences exist among individual credit institutions. Moreover, banks’ resilience when it comes to solvency and profitability has been assessed as a medium risk. In the light of the higher recent profits recorded by banks, they now have the capacity to improve their capital positions, and it would be favourable for banks to retain their profits and thus improve their resilience. Any legislative measures that affect banks’ retained earnings capacity should therefore appropriately recognise that some banks have chosen to maintain a larger proportion of their retained earnings rather than, for example, opting for a higher distribution of dividends. 4.4 The ECB recommends that in order to assess whether its application poses risks to financial stability, and, in particular, whether it has the potential to impair the banking sector’s resilience and cause market distortion, the draft provision needs to be accompanied by a thorough analysis of potential negative consequences for the banking sector. This analysis should detail, in particular, the specific impact of the tax on credit institutions’ longer-term profitability and capital base, access to funding and the provision of new lending, and its potential impact on liquidity. 4.5 While the explanatory memorandum already provides a preliminary analysis of the total net effect of the draft provision on the Slovenian banking sector, the additional tax is to apply over a five-year period and its impact will also depend on the applicable parameters and other possible legislative changes, regulatory measures or market conditions faced by banks in the coming years. While a careful consideration of the effects of the draft provision is needed prior to its taking effect, the ECB takes positive note that Banka Slovenije is to perform an annual analysis of the impact of the tax on the stability of the Slovenian banking system. The ECB understands that the Government would follow Banka Slovenije’s findings and/or recommendations based on this annual analysis.

text: 25 See paragraph 4.1 of Opinion CON 2023/26.

text: 26 See Opinion

text: and Opinion

text: 27 See Opinion

text: 28 See the introductory remarks in Poročilo o finančni stabilnosti, Banka Slovenije, October 2023.

text: 29 See the introductory remarks in Poročilo o finančni stabilnosti, Banka Slovenije, October 2023.

text: 30 See paragraph 3.4 of Opinion

text: , paragraph 3.7 of Opinion

text: and paragraph 4.6 of Opinion CON 2023/26.

text: 31 See paragraph 4.6 of Opinion CON 2023/26. 4.6 One further aspect to consider is the change in the methodology for determining the buffer for other systemically important banks, which will lead to an increased average value of the buffer for the Slovenian banking system and will require individual systemic banks to hold more capital. The higher level of the countercyclical capital buffer, which all banks and savings banks in the Slovenian banking system have to reach by the end of 2023, will have a similar effect.

text: 5. Considerations relating to the prudential supervision of credit institutions

text: 5.1 The ECB understands that the tax would apply to significant credit institutions directly supervised by the ECB and less significant credit institutions directly supervised by national competent authorities under the oversight of the ECB within the framework of the Single Supervisory Mechanism. 5.2 Caution must be taken to avoid scenarios where the tax would act as a further burden for less profitable banks or for banks that have recorded losses in the applicable tax period. Since the determination of the maximum amount of tax due under the draft provision applies only to scenarios where banks actually record profits, it is unclear whether this would prevent the tax being levied on the balance sheets of banks recording losses during the applicable tax period. To this end, the ECB would welcome further clarification as regards establishing a maximum amount of tax due under the draft provision in a context where the total profit, before the recognition of the tax, would be equal to or less than the amount of the tax payable under the draft provision. Concretely, the ECB would welcome clarification on whether, in cases where the net profits recorded by a bank are equal or are less than zero, the amount of tax paid under the draft provision also equals zero.

text: This opinion will be published on EUR-Lex.

text: Done at Frankfurt am Main, 2 November 2023.

text: [signed]

text: The President of the ECB

text: Christine LAGARDE

text: 32 See Poročilo o finančni stabilnosti, Banka Slovenije, October 2023, introductory remarks and p. 75.

type: vagledning

utgivare: ecb


text: Council Decision 98/415/EC of 29 June 1998

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42).

text: Article 3(3) of 10/2005. (VI. 11.) MNB rendelet a kötelező jegybanki tartalék kiszámításáról, illetve képzésének és elhelyezésének módjáról, published in Magyar Közlöny 2005/78.

text: All ECB opinions are available on EUR-Lex. 4 13/2010. (IX. 6.) MNB rendelet a kötelező tartalékráta mértékéről, published in Magyar Közlöny 2010/141. 5 35/2022. (IX. 15.) MNB rendelet a kötelező tartalékráta mértékéről, published in Magyar Közlöny 2022/150.

text: 6/2023. (III. 8.) MNB rendelet a kötelező tartalékráta mértékéről, published in Magyar Közlöny 2023/34. 7 See, for example, paragraph 2.2 of Opinion

text: , paragraph 2 of Opinion

text: and paragraph 2.6 of Opinion

text: . 8 Article 282(4) of the Treaty on the Functioning of the European Union and Article 42.2 of the Statute of the European System of Central Banks and of the European Central Bank. 9 See

text: Article 6(1) of Regulation (EU) 2021/378

text: of the European Central Bank of 22 January 2021 on the application of minimum reserve requirements (ECB/2021/1) (OJ L 73, 3.3.2021, p. 1). 10 See Articles

text: and

text: of Regulation (EU) 2021/378 (ECB/2021/1). 11

text: Article 5(5) of Regulation (EU) 2021/378

text: (ECB/2021/1). 12

text: Article 8(1) of Regulation (EU) 2021/378

text: Article 3(1)

text: , point (a), in conjunction with

text: Article 6 of Regulation (EU) 2021/378

text: (ECB/2021/1). Under

text: Article 2

text: , point (11), of

text: Regulation (EU) 2021/378

text: (ECB/2021/1), ‘end-of-day balance’ means the reserve holdings at the time when the finalisation of payment activities has taken place and entries relating to access to the standing facilities of the Eurosystem have been made.

title: Opinion of the European Central Bank of 8 November 2023 on the minimum reserve requirements of the Magyar Nemzeti Bank (CON/2023/36)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 8 November 2023 on the minimum reserve requirements of the Magyar Nemzeti Bank (

text: ) Introduction and legal basis

text: On 29 September 2023 the European Central Bank (ECB) received a request from the Magyar Nemzeti Bank (MNB) for an opinion on a draft MNB decree amending the MNB Decree on the calculation, method of allocation and placement of minimum reserves (hereinafter the ‘draft decree on required reserves’) and on a draft decree on the required reserve ratio (hereinafter the ‘draft decree on the required reserve ratio’) (hereinafter referred to collectively as the ‘draft decrees’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and

text: Article 2(2) of Council Decision 98/415/EC

text: , as the draft decrees relate to the instruments of monetary policy of a Member State that has not adopted the euro. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Background and purpose of the draft decrees

text: 1.1 The draft decrees aim, from 1 January 2024, to introduce a new method of calculating the MNB’s reserve requirements based on the monthly average of bank balance sheet data and to remove the option to choose among different required reserve ratios. 1.2 Currently, required reserves are calculated using the credit institution balance sheet date fixed as of 31 March 2023 on a spot basis and without recourse to averaging . The ECB adopted Opinion

text: in relation to this calculation method. According to the explanatory memorandum accompanying the draft decrees, this provisional solution will come to an end as both the MNB and credit institutions will have implemented the technical developments necessary for the planned introduction of a permanent monthly averaging calculation method. 1.3 The MNB first enabled credit institutions to choose from different reserve ratios in 2010 , in relation to which the ECB adopted Opinion

text: . In 2022 the MNB reintroduced the option to choose among reserve ratios for certain liabilities , in relation to which the ECB adopted Opinion

text: . Under those provisions, a reserve ratio of 0 % applied to: (1) deposits and loans taken, the maturity of which at the time of appearing in the accounting records of the credit institution subject to reserve requirements exceeds two years; (2) debt securities, provided that the maturity of the securities at the time of the issuance exceeds two years; and (3) repos. Additionally, a reserve ratio of 5 %, 6 %, 7 %, 8 %, 9 % or 10 % applied to all other liabilities included in a credit institution’s reserve base, depending on the declaration of the credit institution subject to reserve requirements. Under the current MNB decree on the required reserve ratio , the reserve ratio of 0 % is retained for the liabilities listed above, while the reserve ratio for all other liabilities included in a credit institution’s reserve base is 10 %, 11 %, 12 %, 13 %, 14 % or 15 %, depending on the declaration of credit institutions subject to reserve requirements. The draft decree on the required reserve ratio would remove the option to choose among different required reserve ratios and introduce a uniform 10 % reserve ratio for those liabilities, while retaining the 0 % reserve ratio for liabilities for which the same ratio currently applies.

text: 2. General observations

text: 2.1 As previously noted by the ECB , Member States whose currency is not the euro retain their powers in the field of monetary policy according to national law . On the introduction of the euro, Hungary’s monetary policy would be the single monetary policy for the euro and would need at that time to be consistent with the Eurosystem’s operational framework. Credit institutions should therefore be familiar with the requirements that will apply to them once the single monetary policy is implemented in Hungary. 2.2 The ECB notes that the draft decree on the required reserve ratio removes the option to choose among different reserve ratios, thus setting out reserve ratio requirements more in line with the minimum reserve requirements established by the ECB , which also do not include the option to choose among different reserve ratios. 2.3 In the euro area, minimum reserves are held and calculated on the basis of the sum of certain eligible liabilities . In particular, credit institutions are required to calculate these liabilities with respect to a particular maintenance period on the basis of the data relating to the month two months prior to the month within which the maintenance period starts , in relation to which a maintenance period begins on the settlement day of the main refinancing operation following the meeting of the Governing Council at which the assessment of the monetary policy stance is pre-scheduled . In order for a credit institution to comply with the reserve requirements, the average end-of-day balance on one or more of its reserve accounts over the maintenance period must be equal to or must exceed the

text: amount calculated for that period . The ECB notes that the draft decree on required reserves introduces a monthly averaging calculation method for the required reserves, thereby ending the provisional solution described in paragraph 1.2 above.

text: Done at Frankfurt am Main, 8 November 2023.

text: [signed]

text: The President of the ECB

text: Christine LAGARDE


text: Council Decision 98/415/EC of 29 June 1998

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42).

text: Bundesverfassungsgesetz über die Begrenzung von Bezügen öffentlicher Funktionäre, Federal Law Gazette I no 64/1997 as amended by Federal Law Gazette I no 46/2014. 3 See Opinion

text: . All ECB opinions are available on EUR-Lex.

text: See Opinions

text: and

text: See, for example, the ECB’s Convergence Report 2022, p. 27; paragraph 6 of Opinion

text: ; and paragraph 4 of Opinion

text: See paragraph 2.4 of Opinion

text: See the ECB’s Convergence Report 2022, p. 29 and the references to ECB opinions contained therein.

text: See Opinion

text: , in particular paragraph 4.3.

title: Opinion of the European Central Bank of 21 November 2023 on pension restrictions for officers and employees of the Oesterreichische Nationalbank (CON/2023/37)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 21 November 2023 on pension restrictions for officers and employees of the Oesterreichische Nationalbank (

text: ) Introduction and legal basis

text: On 9 November 2023 the European Central Bank (ECB) received a request from the Austrian Ministry of Finance for an opinion on a draft law amending the pension regulations of the Oesterreichische Nationalbank (hereinafter the ‘draft law’). The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the third indent of

text: Article 2(1) of Council Decision 98/415/EC

text: , as the draft law relates to the Oesterreichische Nationalbank (OeNB). In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing Council has adopted this opinion.

text: 1. Purpose of the draft law

text: 1.1 The draft law aims to harmonise the pension rules within the OeNB. For this purpose, amendments to the pension rules applicable to one group of employees of the OeNB are proposed, in order to align them with the rules already applicable to other groups of employees of the OeNB. 1.2 The draft law applies to employees falling under Terms of Service III who entered into an employment relationship with the OeNB on or after 1 May 1998 and before 1 January 2007 (hereinafter the ‘affected OeNB employees’). The draft law requires the affected OeNB employees to pay a pension contribution of 3 % of the portion of their monthly remuneration and special payments above the maximum contribution basis applicable under the general Austrian pension system. This pension contribution will increase to 4 % from 1 January 2025 and to 5 % from 1 January 2026. 1.3 Furthermore, the affected OeNB employees are entitled to receive a final pension fund contribution. In this regard, the draft law gradually reduces the calculation basis from the current level of 80 % of the relevant remuneration to 72 % until 2046. Additionally, the draft law gradually increases the calculation period for determining the comparator pension for the affected OeNB employees from the last monthly salary to the average of the last 216 monthly salaries until 2040. Until 2032, the minimum floor of the calculated final pension fund contribution will be gradually reduced to 85 % of a hypothetical comparator pension, which does not take into account the reductions introduced by the draft law. Furthermore, employees are only entitled to receive a final pension fund contribution upon

text: reaching the minimum age for claiming a corridor pension, which is 62 years of age under the general Austrian pension system. If the final pension fund contribution is due before the respective employee reaches the current standard retirement age under the general Austrian pension system, which is 65 years of age, the respective comparator pension is reduced by certain percentages (between 0.15 % and 0.425 %) for each month of early retirement, up to a maximum reduction of 15.3 %. 1.4 The explanatory memorandum accompanying the draft law refers to the Law on the limitation of salaries of public officials , which reduced emoluments and pension benefits for public office holders, including with respect to OeNB employees falling under Terms of Service I and II. In order to align and harmonise the pension rules applicable to the different employee groups within the OeNB, the draft law proposes the abovementioned amendments in respect of employees falling under Terms of Service III. Furthermore, the explanatory memorandum states that the OeNB should observe the principles of economy, efficiency and expediency in its business operations. The explanatory memorandum also notes that the Austrian Court of Audit, which is the Supreme Audit Institution of the Republic of Austria and is also competent to examine whether the OeNB uses taxpayers’ money in an efficient, effective and economic way, takes the view that the current pension rules under Terms of Service III would not achieve these objectives and has recommended further reforms of these pension rules. Lastly, the explanatory memorandum mentions that the Austrian Constitutional Court has assessed previous interferences with existing employment contracts of the OeNB as a legitimate legislative objective, and notes that the same should apply in relation to Terms of Service III.

text: 2. General observations

text: The ECB understands that the draft law aims to harmonise the pension rules for officers and employees of the OeNB between the various Terms of Service, on which the ECB has previously opined . The ECB also notes that the measures contemplated in the draft law are strictly limited to reducing pension costs with the objective of reducing public expenditure.

text: 3. Specific observations

text: Financial independence

text: 3.1 As the draft law applies to and directly affects OeNB’s officers and employees, it should be examined from the perspective of central bank independence requirements . The principle of central bank independence as enshrined in Article 130 of the Treaty prohibits third parties, including the governments of the Member States, from issuing instructions to the national central banks (NCBs) . In addition, the principle of central bank independence means that third parties may not influence,

text: directly or indirectly, an NCB in the performance of its tasks or as regards its ability to fulfil its mandate both operationally in terms of manpower, and in terms of appropriate financial resources . 3.2 In particular, Member States may not impair an NCB’s ability to employ and retain the qualified staff necessary for the NCB to perform independently the tasks conferred on it by the Treaty and the Statue of the European System of Central Banks and of the European Central Bank. An NCB may not be put into a position where it has limited control or no control over its staff, or where the government of a Member State can influence its policy on staff matters. Amendments that lead to reductions in remuneration for an NCB’s staff should not interfere with that NCB’s powers to administer its own financial resources, including the funds resulting from any reduction in salaries 7 8 that it pays . Autonomy in staff matters extends to issues relating to staff pensions . 3.3 To protect autonomy in staff matters, the ECB has consistently recommended in its previous opinions and in its convergence reports that any amendment to legislation on remuneration for members of an NCB’s decision-making bodies and its employees should be decided in close and effective cooperation with the NCB, taking due account of its views, to ensure the ongoing ability of the NCB to independently carry out its tasks . Accordingly, legislative provisions affecting the remuneration of members of its decision-making bodies and employees should be drafted in close and effective cooperation with the OeNB. 3.4 There are no indications that the measures contemplated will prevent the officers or staff members of the OeNB, or the OeNB as a whole, from carrying out their tasks independently. Furthermore, there are no indications that the draft law will limit the OeNB’s ability to retain qualified staff, or otherwise deprive its decision-making bodies of their powers of internal organisation and control over staff, or interfere with its staff policy (e.g. its ability to increase salaries due to promotions or to recruit new staff). Finally, the ECB understands that the OeNB was involved in the preparation of the draft law and would not object to it.

text: This opinion will be published on EUR-Lex.

text: Done at Frankfurt am Main, 21 November 2023.

text: [signed]

text: The President of the ECB

text: Christine LAGARDE


text: COM (2023) 459 final.

text: Artikel 127.1

text: första meningen i fördraget. Enligt

text: artikel 127.1

text: andra meningen i fördraget ska Eurosystemet dessutom stödja den allmänna ekonomiska politiken inom unionen i syfte att bidra till att förverkliga unionens mål enligt

text: artikel 3 i fördraget om Europeiska unionen

text: COM (2002) 661 final.

text: Rådets förordning

text: (EG) nr 530/1999

text: av den 9 mars 1999 om strukturstatistik över löner och arbetskraftskostnader (EGT L 63, 12.3.1999, s. 6),

text: Europaparlamentets och rådets förordning (EG) nr 450/2003 av den 27 februari 2003

text: om arbetskostnadsindex (EUT L 69, 13.3.2003, s. 1) och

text: Europaparlamentets och rådets förordning (EG) nr 453/2008 av den 23 april 2008

text: om kvartalsstatistik över lediga platser i gemenskapen (EUT L 145, 4.6.2008, s. 234).

text: Artikel 1 i förslaget till förordning.

text: Se

text: artikel 5

text: i, och bilagan till, förslaget till förordning.

text: Artikel 4.1 b

text: ii och 4.1 c i samt artikel 6.2 i förslaget till förordning.

text: Artikel 3.1 c i förslaget till förordning.

text: Särskilt i

text: artikel 8

text: 2 i förslaget till förordning.

text: Artikel 4.7 i förslaget till förordning.

text: Enligt kapitel 4, D.1 i bilaga A till

text: Europaparlamentets och rådets förordning (EU) nr 549/2013 av den 21 maj 2013

text: om det europeiska national- och regionalräkenskapssystemet i Europeiska unionen (EUT L 174, 26.6.2013, s. 1).

text: Enligt definitionen i artikel 2.1 i förslaget till förordning.

text: Enligt definitionen i artikel 2.2 i förslaget till förordning.

text: Enligt definitionen i artikel 2.3 i förslaget till förordning.

sprak: sv

title: Europeiska Centralbankens Yttrande av den 24 november 2023 om ett förslag till Europaparlamentets och rådets förordning om EU:s arbetsmarknadsstatistik om företag, och om upphävande av rådets förordning (EG) nr 530/1999 och Europaparlamentets och rådets förordningar (EG) nr 450/2003 och (EG) nr 453/2008 (CON/2023/38)

text: Inledning och rättslig grund

text: Den 12 oktober 2023 mottog Europeiska centralbanken (ECB) en begäran från Europeiska unionens råd om ett yttrande om ett förslag till Europaparlamentets och rådets förordning om EU:s arbetsmarknadsstatistik om företag och om upphävande av

text: rådets förordning (EG) nr 530/1999

text: (EG) nr 450/2003

text: och

text: (EG) nr 453/2008

text: (nedan kallat förslaget till förordning).

text: ECB:s behörighet att avge ett yttrande grundas på artiklarna

text: och

text: i fördraget om Europeiska unionens funktionssätt eftersom förslaget till förordning innehåller bestämmelser som berör ECB:s behörighet enligt

text: artikel 5 stadgan

text: för Europeiska centralbankssystemet och Europeiska centralbanken (nedan kallad ECBS-stadgan) att samla in de statistiska uppgifter som behövs för att utföra Europeiska centralbankssystemets (ECBS) uppgifter och att bidra till harmoniseringen av regler och praxis för insamling, sammanställning och distribution av statistik inom dess behörighetsområde. I enlighet med

text: artikel 17.5

text: första meningen i arbetsordningen för Europeiska centralbanken har detta yttrande antagits av ECB-rådet.

text: 1. Allmänna kommentarer

text: ECB behöver information om andelen lediga platser, arbetskraftskostnadernas nivå och sammansättning samt om lönestrukturen och lönefördelningen för att kunna bedöma den ekonomiska utvecklingen i medlemsstaterna inom ramen för en gemensam europeisk penningpolitik och det därmed sammanhängande huvudmålet för Europeiska centralbankssystemet att upprätthålla prisstabilitet. Aktuell information om tillståndet på arbetsmarknaden och löneutvecklingen är avgörande för att bedöma det underliggande inflationstrycket och ligger till grund för penningpolitiska beslut. Statistik över lediga platser och index över arbetskraftskostnader förtecknas bland de europeiska ekonomiska huvudindikatorerna, vilket ger dem en framträdande roll i den officiella ekonomiska statistiken som används för att övervaka den monetära och ekonomiska politiken. ECB stöder förslaget att ersätta de befintliga rättsakterna om arbetsmarknadsstatistik med en enda förordning som omfattar all arbetsmarknadsstatistik om företag (nedan kallad arbetsmarknadsstatistik om företag). Den föreslagna förbättrade täckningen för arbetsmarknadsstatistiken om företag fr.o.m. 2026 skulle förbättra statistiken och göra den bättre lämpad för ECB:s övervakning, bedömning och prognosarbete och därmed för framtagandet av penningpolitiska beslut. En rapportering av tidiga skattningar av arbetskostnadsindex fr.o.m. 2026 är också välkommen eftersom detta skulle ge denna indikator en mer framträdande roll för analysen och bedömningen av kostnadstryck som kan bottna i förändrade arbetskraftskostnader.

text: 2. Specifika kommentarer

text: 2.1. Den nya rapporteringens omfattning och kvalitet

text: Förslaget att inkludera den offentliga sektorn och små företag i de uppgiftskällor som används för att sammanställa arbetsmarknadsstatistik om företag skulle avsevärt förbättra täckningen och representativiteten i respektive statistik. Det skulle också förbättra harmoniseringen av uppgiftsinsamlingen och därmed möjliggöra bättre jämförelser mellan länderna av utvecklingen av statistiken över lediga platser och arbetskostnadsindex. ECB föreslår att kravet om att tillhandahålla information som gör det möjligt att förstå effekterna av ändringar som avser metod eller urval (t.ex. en lämplig mängd historiska uppgifter, som kan vara baserade på skattningar, proxyvariabler och andra uppgiftskällor) uttryckligen bör fastställas i förslaget till förordning. Detaljerna avseende sådana uppgifter tillsammans med de andra uppgiftskraven bör sedan specificeras av kommissionen i en genomförandeakt.

text: 2.2. Tidsramar för rapportering

text: Förslaget om tidiga skattningar av arbetskostnadsindexet skulle innebära en avsevärd förbättring jämfört med den nuvarande rapporteringsordningen. Det är särskilt viktigt att dessa skattningar sker snabbare eftersom det saknas harmoniserade månadsvisa indikatorer över löneutvecklingen i alla medlemsstater. Den kvartalsvisa information om ersättningar till anställda som offentliggörs enligt nationalräkenskaperna i ENS 2010 gör det endast möjligt att bedöma löneutvecklingen med en större tidsförskjutning. Offentliggörandet av de tidiga skattningarna av arbetskostnadsindexet skulle alltså vara den första tillgängliga informationen om den kvartalsvisa löneutvecklingen. Ytterligare förbättringar av datumen för dataöverföringar avseende undersökningen av inkomststruktur utöver de föreslagna relativt blygsamma ändringarna skulle vara välkomna.

text: 2.3. Definition av statistisk enhet

text: För att i möjligaste mån uppnå en harmoniserad statistisk behandling anser ECB att definitionen av en statistisk enhet har avgörande betydelse för att ta fram europeisk statistik som t.ex. arbetsmarknadsstatistiken om företag. För att undvika överlappningar och luckor, särskilt när företag har lokala enheter i fler än en medlemsstat, är det viktigt att det finns konkreta arrangemang för att samla in uppgifter antingen från företag eller från lokala enheter.

text: I de fall där ECB rekommenderar att förslaget till förordning ska ändras anges de specifika förslagen i ett separat tekniskt arbetsdokument som åtföljs av en förklaring. Det tekniska arbetsdokumentet finns på engelska på i EUR-Lex.

text: Utfärdat i Frankfurt am Main den 24 november 2023.

text: Christine Lagarde

text: ECB:s ordförande

text: rådets förordning (EG) nr 530/1999

text: (EG) nr 450/2003

text: och

text: (EG) nr 453/2008

text: Europeiska unionens officiella tidning

text: III Förberedande akter

text: EUROPEISKA CENTRALBANKEN

text: Europeiska centralbanken


title: Opinion of the European Central Bank of 6 December 2023 on excluding the possibility of purchasing real estate with cash and expanding tax disincentives for the use of cash CON/2023/39 (CON/2023/39)

text: OPINION OF THE EUROPEAN CENTRAL BANK of 6 December 2023 on excluding the possibility of purchasing real estate with cash and expanding tax disincentives for the use of cash (

text: ) Introduction and legal basis

text: On 27 October 2023 the European Central Bank (ECB) received a request from the Greek Ministry of Finance for an opinion on certain draft amendments to existing tax legislation that (1) exclude the possibility of purchasing real estate property by paying in cash (hereinafter the ‘first draft amendment’); and (2) further expand already existing tax disincentives for the use of cash (hereinafter the ‘second draft amendment’), together referred to as the ‘draft amendments’. The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the Functioning of the European Union and the second indent of

text: Article 2(1) of Council Decision 98/415/EC

text: , as the draft amendments relate to means of payment. In accordance with the first sentence of Article 17.5 of the Rules of Procedure of the ECB, the Governing Council has adopted this opinion.

text: 1. Purpose of the draft amendments

text: 1.1 The first draft amendment amends certain provisions of the Law on restoring justice in taxation and 2 3 combating tax evasion and the Law on the tax applicable to the transfer of real estate property to exclude the possibility of purchasing real estate property by paying in cash. The first draft amendment provides that for the drawing up of any notarial deed or document for transferring ownership of real estate property (including binding preliminary contracts and settlement deeds), the entire consideration is to be paid exclusively by means of bank payment. If a notarial deed or document records that the consideration for the transfer of ownership of real estate property has been paid, partly or fully, in cash, it is null and void ipso jure. Moreover, it cannot be registered in the relevant public registry and does not produce any legal effects in respect of the parties, the State or any third party. The first draft amendment also provides that notaries must record in the notarial deed the method of payment of the relevant consideration, namely the exclusive use of bank payment means, and that notaries are prohibited from registering a notarial deed which is in breach of that requirement

text: Council Decision 98/415/EC of 29 June 1998

text: on the consultation of the European Central Bank by national authorities regarding draft legislative provisions (OJ L 189, 3.7.1998, p. 42).

text: 2 Law 3842/2010 on restoring justice in taxation and combating tax evasion (Government Gazette A 58/23.4.2010); Νόμος υπ’ αριθμ. 3842 Αποκατάσταση φορολογικής δικαιοσύνης, αντιμετώπιση της φοροδιαφυγής και άλλες διατάξεις (ΦΕΚ Α΄ 58/23.04.2010).

text: 3 Law 1521/1950 on the tax applicable to transfer of real estate property (as codified and amended by Law 1587/1950) ης (Government Gazette A 245/29.10.1950); Α.Ν. 1521 της 29 Οκτωβρίου 1950 Περί φόρου μεταβιβάσεως ακινήτων (ΦΕΚ Α΄ 245/29.10.1950). in the public registry. Last, the first draft amendment provides that persons who do not comply with these obligations will be fined an amount equal to 10 % of the consideration recorded as having been paid in cash, but no less than EUR 10 000 for each breach. 1.2 The second draft amendment amends Article 23 of the Greek Income Tax Code to further expand an already existing tax disincentive for the use of cash. In particular, the Greek Income Tax Code currently provides that certain business expenses may be deducted from the calculation of ‘taxable profit arising from business activities’ (as defined in the Greek Income Tax Code). The Greek Income Tax Code also lists all the business expenses that cannot be deducted from the taxable profit. One of these non-deductible expenses is any expenditure for the acquisition of goods or services with a value exceeding EUR 500 that has not been paid by means of bank payment. The second draft amendment proposes to reduce the EUR 500 threshold to EUR 300 and that the new threshold should apply from the fiscal year 2024 onwards. 1.3 According to the explanatory note accompanying the draft amendments and provided by the consulting authority, the overarching purpose of the draft amendments is to reduce tax evasion and combat money laundering by incentivising the use of electronic transactions, and to contribute to the increase of the revenues of the Greek State.

text: 2. General observations

text: 2.1 Cash continues to play an important role in society. Cash is generally appreciated as a payment instrument because it is widely accepted, fast and facilitates control over the payer’s spending. It is currently the only payment instrument that allows citizens to settle a transaction in central bank money, which is also settled instantly , while, importantly, ensuring privacy, and does not carry the legal possibility of imposing a fee for the use thereof. Moreover, cash could play an important role in 6 7 the event of a disturbance in the payment system and it is robust against cyber-crime , since cash payments do not require a functional technical infrastructure or related investment but are always available. Furthermore, cash payments are not subject to daily or weekly payment limits set by entities providing underlying payment services. In addition, cash payments also facilitate the inclusion of the entire population in the economy by allowing citizens to settle a wide range of payment transactions in this way, thus ensuring freedom of choice as to the method of payment for all citizens . Last, the ability to pay in cash remains particularly important for certain groups in society that, for various legitimate reasons, prefer to use cash rather than other payment instruments, or do not have access to the banking system and electronic means of payments. These groups include

text: 4 Law 4172/2013 on taxation of income, urgent measures for implementing laws 4046/2012, 4093/2012, 4127/2013 and other provisions (Government Gazette A 167/23.7.2013).

text: 5 See paragraph 2.4 of Opinion

text: , paragraph 2.1 of Opinion

text: , paragraph 9.2.1 of Opinion

text: , paragraph 2.3 of Opinion

text: , paragraph 7.2.1 of Opinion

text: , paragraph 2.1 of

text: , paragraph 2.1 of Opinion

text: , and paragraph 2.1 of Opinion

text: . All ECB opinions are published on EUR-Lex.

text: 6 See paragraph 2.1 of Opinion

text: , paragraph 9.2.1 of Opinion

text: , paragraph 7.2.1 of Opinion

text: , and paragraph 2.3 of Opinion

text: 7 See paragraph 2.2 of Opinion

text: and paragraph 2.1.1 of Opinion

text: 8 See paragraphs 2.4 and 3.1 of Opinion

text: , paragraph 2.7 of Opinion

text: , paragraph 2.6 of Opinion

text: , paragraphs 2.1 to 2.3 of Opinion

text: , paragraph 7.2.1 of Opinion

text: , paragraph 2.3 of Opinion

text: , paragraph 2.1 of Opinion

text: , and paragraph 2.1 of Opinion

text: . not only elderly people, but also some disabled citizens, immigrants, socially vulnerable citizens, minors and others with limited or no access to digital payment services . Against this backdrop, the ECB closely monitors any national law developments that aim to limit cash payment possibilities and thereby interfere with citizens’ right to pay in cash. 2.2 Under the Treaty, the European System of Central Banks (ESCB) has the basic task of promoting the smooth operation of payment systems , and the ECB has the exclusive right to authorise the issue of euro banknotes within the Union . The euro banknotes issued by the ECB and the national central banks of the euro area are the only banknotes with legal tender status within the euro area . 2.3 The concept of ‘legal tender’ of a means of payment denominated in a currency unit has been considered by the Court of Justice of the European Union. In particular, the Court has clarified that the concept of ‘legal tender’ signifies that this specific means of payment cannot generally be refused in settlement of a debt, denominated in the same currency unit at its full face value, with the effect of discharging the debt. In clarifying the concept of ‘legal tender’ under Union law, the Court has taken into consideration Commission Recommendation 2010/191 of 22 March 2010 on the scope and effects of legal tender of euro banknotes and coins , which provides useful guidance for the interpretation of the relevant provisions of Union law. Point 1 of Recommendation 2010/191 states that, where a payment obligation exists, the legal tender of euro banknotes and coins should imply (a) mandatory acceptance of those banknotes and coins; (b) their acceptance at full face value; and (c) their power to discharge from payment obligations. According to the Court, this shows that the concept of ‘legal tender’ encompasses, inter alia, an obligation in principle to accept banknotes and coins denominated in euro for payment purposes . 2.4 The Court has clarified that the concept of ‘legal tender’ is a concept of Union law that must be given an autonomous and uniform interpretation throughout the European Union . Insofar as it allows the Union legislature to lay down the measures necessary for the use of the euro as the single currency, the Court clarified that Article 133 of the Treaty empowers the Union legislature alone to specify the legal rules governing the status of legal tender accorded to banknotes and coins denominated in euro, insofar as that is necessary for the use of the euro as the single currency. In this respect, the ECB notes that, on 28 June 2023, the Commission published a proposal for a regulation on the legal tender of euro banknotes and coins, which would establish rules on the legal tender of euro banknotes and coins in binding Union secondary law . The explanatory memorandum of the proposed regulation states that discussions within the Euro Legal Tender Expert Group (ELTEG) confirmed the existence of uncertainty and important differences regarding the practical application

text: 9 See paragraph 1.5 of Opinion

text: 13 OJ L 83, 30.3.2010, p. 70.

text: 14 See judgment of the Court of Justice of 26 January 2021, Hessischer Rundfunk, joined cases

text: and

text: , EU:C:2021:63, paragraphs 46 to 49.

text: 15 See judgment of the Court of Justice of 26 January 2021, Hessischer Rundfunk, joined cases

text: and

text: , EU:C:2021:63, paragraph 45.

text: 16 Proposal of the European Commission of 28 June 2023 for a regulation of the European Parliament and of the Council on the legal tender of euro banknotes and coins (COM(2023) 364 final). of the concept of legal tender across the euro area . These differences would justify establishing rules on the legal tender of euro cash in a regulation adopted under Article 133 of the Treaty. 2.5 The Union legislature’s exclusive competence precludes any competence on the part of the Member States in the matter, unless they have been empowered by the Union to do so or for the implementation of Union acts . 2.6 However, the Court further clarified that the status of legal tender calls only for acceptance in principle of banknotes and coins denominated in euro as a means of payment, not for absolute acceptance. The Union’s exclusive competence in matters of monetary policy is without prejudice to the competence of the Member States whose currency is the euro to regulate the procedures for settling pecuniary obligations, which do not affect the principle that, as a general rule, it must be possible to discharge a payment obligation in cash. Thus, that exclusive competence does not prevent a Member State from adopting a measure falling within one of the Member State’s competences; for instance, a Member State may, based on its competence to organise its public administration, oblige the public administration to accept cash payments from citizens. Neither does it prevent a Member State, in the exercise of its own powers, from introducing, on legitimate public interest grounds, a derogation from that obligation for statutorily imposed payments, subject to compliance with certain conditions. In particular, the obligation to accept euro banknotes and coins may, in principle, be restricted by the Member States for reasons of public interest and subject to the principle of proportionality. This means that any such restrictions must be proportionate to the public interest objective pursued. When limiting the possibility, recognised by Union law, of generally discharging a payment obligation in banknotes and coins denominated in euro, Member States must ensure that any measures comply with the principle of proportionality, which requires in particular that they are appropriate for achieving the legitimate objectives pursued by the legislation at issue and do not go beyond what is necessary in order to achieve those objectives . 2.7 The Court has established that restrictions of the legal tender status of euro banknotes in particular require that the legislation (i) does not have the object or effect of establishing legal rules governing the status of legal tender of euro banknotes; (ii) does not lead, in law or in fact, to abolition of those banknotes, in particular by calling into question the possibility, as a general rule, of discharging a payment obligation in cash; (iii) has been adopted for reasons of public interest; (iv) only entails a limitation on payments in cash that is appropriate for attaining the public interest objective pursued; and (v) only entails a limitation on payments in cash that does not go beyond what is necessary in order to achieve the public interest objective . 2.8 Regarding the proportionality of a restriction of the legal tender status of euro banknotes, the Court requires not only that the measure is appropriate for attaining the public interest objective pursued, but also that it must not go beyond what is necessary in order to achieve that objective. The ECB

text: 17 See section 3, page 4 of the Explanatory memorandum of the proposed regulation on the legal tender of euro banknotes and coins, and the Final report of the Euro Legal Tender Expert Group (ELTEG) of 6 July 2022.

text: 18 See judgment of the Court of Justice of 26 January 2021, Hessischer Rundfunk, joined cases

text: and

text: , EU:C:2021:63, paragraphs 50 to 52.

text: 19 See judgment of the Court of Justice of 26 January 2021, Hessischer Rundfunk, joined cases

text: and

text: , EU:C:2021:63, paragraphs 55 to 56 and 67 to 70.

text: 20 See judgment of the Court of Justice of 26 January 2021, Hessischer Rundfunk, joined cases

text: and

text: , EU:C:2021:63, paragraph 78. has undertaken additional reflection in its opinions with respect to whether limitations may be considered proportionate . In particular, the ECB has noted that the broader and more general a limitation is, the stricter should be the interpretation of the requirement for the limitation to be proportionate to the objective pursued . When considering whether a limitation is proportionate, the adverse impact of the limitation in question and whether alternative measures could be adopted that would fulfil the relevant objective with a less adverse impact should always be considered . 2.9 Finally, the ECB notes that it opined in 2019 on the tax disincentive for the use of cash which is the subject of the second draft amendment .

text: 3. Specific observations

text: 3.1 The ECB considers that the draft amendments represent restrictions of the legal tender status of euro banknotes and that therefore they should be assessed against the criteria laid down by the Court. 3.2 The ECB further considers that neither of the draft amendments has the objective or the effect of amending the legal rules governing the status of legal tender of euro banknotes or coins. The draft amendments do not lead, in law or in fact, to the abolition of banknotes in Greece . 3.3 The draft amendments are proposed to be adopted for reasons of public interest. Regarding the first draft amendment, the explanatory note explains that, based on currently available data, approximately one-quarter of all real estate property transfers in Greece have been recorded as partly or fully paid for in cash. The consulting authority considers the first draft amendment to remove the possibility of purchasing real estate property in cash necessary in order to tackle tax evasion, clean the real estate market and, at the same time, strengthen the banking system by channelling cash and activating anti-money laundering (AML) procedures for purchases of real estate property. The explanatory note also mentions that imposing the use of bank payments for these purchases would allow the competent audit authorities to immediately identify cases of tax evasion as well as cases falling within the competence of the Greek Anti-Money Laundering Authority, which under the current framework are almost impossible to detect and deal with, even if the competent services increase the number of audits performed. 3.4 According to the explanatory note, the aim of the second draft amendment is to further limit the use of cash in business transactions in order to enhance the transparency of these transactions and to combat tax evasion and the shadow economy. The explanatory note observes that the use of electronic means of payment is expected to be the first choice of an organised business and is in any case required for its proper management. The explanatory note states that despite the fact that the law already provides that any single cash payment for the acquisition of goods and services exceeding EUR 500 for consumer-to-business transactions is prohibited and that such payment may

text: 21 See paragraph 4 of Opinion

text: 22 See paragraph 2.7 of Opinion

text: and paragraph 2.11 of Opinion

text: 23 See paragraph 2.7 of Opinion

text: and paragraph 2.7 of Opinion

text: 24 See Opinion

text: 25 See paragraph 4.6 of Opinion

text: . only be made via electronic means , and despite increased controls and audits carried out by the competent authorities, it has been established in practice that the rate of tax evasion remains high. The explanatory note also points out that the use of electronic means of payment remains low even after Greek law provided relevant tax incentives to businesses and cites the ECB survey on the use of cash by companies in the euro area of October 2022 , according to which 51 % of Greek retail trade, hotel, restaurant, entertainment and recreation businesses currently pay their suppliers in cash, compared with the euro area average of 20 %. The explanatory note also emphasises that, based on the corresponding annual calculations of the European Commission, Greece ranks third highest in terms of loss of VAT revenue . However, the explanatory note provides an assessment that is not entirely consistent with the data presented in the ECB survey, where the 51 % figure refers merely to those companies regularly withdrawing cash, which accounted for 30 % of the surveyed companies. Hence, the assessment carried out by the Greek authorities might have overstated the share of companies paying their suppliers in cash . On the other hand, it is accurate according to the survey that the prevalence of companies withdrawing cash to pay suppliers in Greece is roughly 2.5 times higher than in the euro area overall. 3.5 Expanding existing tax disincentives for the use of cash is also deemed appropriate, according to the explanatory note, because it is envisaged that it will become mandatory in 2024 for businesses to connect with the digital tax platform myDATA and report their revenues and expenses via that platform. The fines under the draft amendments are expected to be coupled with (a) increased fines for breaching the prohibition of using cash for all consumer-to-business transactions exceeding EUR 500 mentioned in paragraph 3.4 above; and (b) fines that are expected to be introduced for businesses not transmitting tax data to the digital tax platform myDATA, to produce a combined deterrent effect. 3.6 The ECB acknowledges that the draft law’s objectives of combating tax evasion and money laundering may, in general, constitute ‘public interest reasons’ justifying the dis-incentivisation of, and the resulting limitation on, the use of cash payments . Some studies indicate that tax evasion and money laundering might be facilitated by cash, in particular in the real estate market. On 14 July 2023 and 21 November 2023, the Council and the Commission recommended that Greece

text: Article 20

text: , paragraph 3, of Law 3842/2010 as amended by Article 69 of Law 4446/2016. See paragraphs 1.3 and 2.10 of Opinion

text: 27 The report is available on the ECB’s website at www.ecb.europa.eu.

text: 28 European Commission, Directorate-General for Taxation and Customs Union, Poniatowski, G., Bonch-Osmolovskiy, M., Śmietanka, A. and Sojka, A., VAT gap in the EU – 2023 report, Publications Office of the European Union, 2023, available on the European Commission’s website at www.ec.europa.eu.

text: 29 The share of companies in Greece that regularly withdraw cash amounted to 30%, which corresponds to the euro area average of 28%.

text: 30 See, among others, paragraph 2.2 of Opinion

text: ; paragraph 2.4 of Opinion

text: ; paragraph 2.5 of Opinion

text: ; paragraph 2.4 of Opinion

text: ; paragraph 2.3 of Opinion

text: ; paragraph 4 of Opinion

text: ; paragraph 2.6 of Opinion

text: ; paragraph 2.10 of Opinion

text: ; and paragraphs 3.2 and 3.3 of Opinion

text: . See also paragraph 2.6 of Opinion

text: assessing the second of the draft amendments, where the ECB also acknowledged that ‘the draft amendments’ objectives of (i) combating tax evasion and (ii) broadening the tax base, while maintaining fiscal balance after the decreases in corporate income tax and personal income tax may, in general, constitute “public reasons” justifying the disincentivisation through taxation of, and the resulting limitation on, the use of cash payments’.

text: 31 Remeur, C. (2019), “Understanding money laundering through real estate transactions”, European Parliamentary Research Service; OECD (2007 and updated since), “Real estate sector: Tax fraud and money laundering vulnerabilities”; ECORYS & CEPS (2017), “Study on an EU initiative for a restriction on payments in cash”, commissioned by the European Commission. should, among others, strengthen tax compliance by extending the use of electronic payments . Tax evasion in Greece seems to be higher than in other EU Member States. For 2021, the European Commission estimated Greece as having the third highest VAT gap (the difference between the VAT revenue that could in theory be collected with full compliance and the VAT that is in fact collected) in the EU, equal to 17.8% of potential VAT revenue. 3.7 It is, however, difficult for the ECB to assess whether the measures contained in the draft amendments are appropriate for attaining the public interest objectives pursued, and whether they do not go beyond what is necessary in order to achieve those objectives, especially in view of the vague description of those objectives in the explanatory note to the draft amendments and the absence of concrete impact assessments of the expected effect of the draft amendments. 3.8 Regarding the first draft amendment more specifically, the explanatory note does not provide evidence that real estate purchases, regardless of their value, are being used for tax evasion and/or money laundering purposes, nor does it explain how imposing the use of bank payments for these purchases will be effective in (a) preventing shadow economy phenomena whereby part of the consideration for these purchases remains unrecorded in the notarial deeds and is paid in cash; or (b) facilitating the detection by competent authorities of cases of tax evasion and/or money laundering. It is not explained why cases of tax evasion and/or money laundering would be impossible to detect and deal with when the payment is made in cash, even if audit authorities increase the number of audits they perform. The explanatory note also does not specifically describe the extent to which alternative and equally or more effective (but less onerous) measures could be adopted which would also fulfil the objectives of the first draft amendment. 3.9 The ECB notes that the first draft amendment implies a full prohibition of using cash in Greece for real estate transactions. The ECB further notes that the purchase price of certain real estate properties may be very low depending on their size (e.g. parking spaces, storage rooms) or location and nature (e.g. plots of agricultural land, farmhouses in rural areas). The latter type of asset might have a strong presence in areas where citizens have limited access to bank offices or digital payment services. The explanatory note does not address the social impact and risk of financial exclusion that could potentially result from the first draft amendment. The envisaged prohibition of cash would mean that legitimate transactions of low value real estate assets could not be settled using cash as a means of payment. Moreover, as experience within the Union has shown, certain cashless payment instruments may be temporarily unavailable as they depend on the underlying technical infrastructure operated by payment service providers. 3.10 Regarding the second draft amendment, the explanatory note does not explain why the current threshold of EUR 500 paid in cash for the acquisition of goods or services that may not be deducted from taxable profit arising from business activities has not produced the expected results in combating tax evasion and the shadow economy and increasing VAT revenues. If such a measure

text: 32 Council Recommendation of 14 July 2023 on the 2023 National Reform Programme of Greece and delivering a Council opinion on the 2023 Stability Programme of Greece (OJ C 312, 1.09.2023, p. 67) and Commission Opinion of 21 November 2023 on the Draft Budgetary Plan of Greece, C(2023) 9507 final, where the Commission also suggests that the full and timely implementation of the two draft amendments would be key to deliver on the recommendation.

text: 33 See speech of the Governor of the Bank of Greece of 31 October 2023, available on the website of the Bank of Greece at www.bankofgreece.gr. See also Vasardani, M., “Tax Evasion in Greece: An overview”, Economic Bulletin, Bank of Greece, Issue 35, Article

text: . has not produced the desired effects, it is hard to understand why lowering that threshold to EUR 300 would be considered more appropriate and more effective, or necessary also considering the envisaged mandatory connection of businesses with the Greek tax authorities through the digital tax platform myDATA, in which all revenues and all expenses of a business should be declared. The new proposed threshold of EUR 300 is in fact currently lower than when it was first proposed by the consulting authority in 2019, once inflation is accounted for. The explanatory note also does not explain why this indirect limitation on the use of cash through tax disincentives has not produced the expected results when combined with the general prohibition to use cash for the acquisition of goods and services exceeding EUR 500. 3.11 Against this background, it is therefore questionable whether or not the draft amendments could be considered proportionate to the objectives pursued. This opinion will be published on EUR-Lex. Done at Frankfurt am Main, 6 December 2023. [signed] The President of the ECB Christine LAGARDE