A term has become fashionable since 2022: the so-called excess profits tax. Economically, the term is controversial – as we know, there is no such thing as “excess profits” in the true sense – but politically it has nevertheless become established. Because politicians want to participate in this and plug their budget holes by skimming off these profits. In any case, this refers to profits that exceed the expected level and usually arise from external crises. A prominent example of this in 2022 was the skimming of so-called “random profits” from electricity producers.
Most recently, this has also reached the banking sector. The stability levy per se has existed in Austria for a long time; it was introduced in Austria – as in other European countries – in 2011 as a temporary measure as a result of the international financial crisis. The aim was to involve banks in the costs of the rescue packages that became necessary after the crisis. At the beginning, the tax brought in more than 500 million euros annually, but from 2017 it was significantly reduced. For 2025 and 2026, the levy was raised again to 500 million euros per year due to the budget crisis. It was originally planned that it would fall again to 200 million euros from 2027.
“The banks have generally coped well with the additional tax burden in the past two years, also due to a comparatively good earnings situation,” says Wifo economist Thomas Url in an interview with the “Presse”. Whether this will continue to be the case in the future remains to be seen. The Oesterreichische Nationalbank (OeNB) is urging banks to build up more equity. The reason is risks in the real estate loan portfolio, where it is important to build up more buffers.
The fact that banks need more equity capital will have an impact on lending, says Url. Because every loan granted must be backed by equity capital. If less capital is available, fewer loans are granted. In other words: The tax could slow down or make investments that are now slowly starting up again. Companies’ demand for credit is already subdued, and the willingness to invest is not particularly high given the economic uncertainty. Additional financing hurdles complicate this situation.
According to Statistics Austria, banks in Austria paid a total of around 5.3 billion euros in taxes from 2011 to 2024. If you add the payments planned for 2025 and 2026, the total amount will rise to around 6.3 billion euros by the end of 2026. The tax was supposed to fall again at the end of the year, but that is not the case now. “We weren’t hoping for this development, but we were afraid,” says Gerald Resch, Secretary General of the banking association, in an interview with the “Presse”. “The basic attitude behind it must be criticized: While other countries see strong banks as an advantage and strengthen them accordingly, the industry in this country is put under additional strain,” says Resch. Especially in Europe, every economy needs an efficient banking landscape.
There are similar voices from the banking world, Bank Austria boss Ivan Vlaho says: “The extension of the bank levy did not surprise us and that is why it is already priced in. But it is a missed opportunity to provide some relaxation in the economy.”
The department chairman and future RBI boss, Michael Höllerer, is a little more explicit: “From the banking industry’s perspective, the extension of the increased bank levy is short-sighted. The planned measure neither makes economic sense nor is it objectively justified. It will ultimately have a negative impact on the entire business location. On the one hand, European and national supervisory authorities are demanding ever higher liquidity and risk buffers from financial institutions, on the other hand, such measures remove valuable liquidity from the economic cycle.”
From an economic perspective, such a form of taxation is viewed critically: “Above all, good tax policy should be predictable and reliable,” says Url. It should not be based on singling out individual sectors and placing additional burdens on them. If the state intervenes with special taxes, it is neither particularly start-up nor investment-friendly.
In the long term, this could definitely harm the location, continues Wifo economist Url. Above all, this weakens the credibility of the Republic as a reliable framework for companies. Although there are also bank-specific levies in other European countries, such a measure is still seen as a signal – not only to the banking industry, but potentially also to other sectors.
Bank levies, although not exclusive, are particularly widespread in Eastern Europe. Germany has also had a bank levy since 2011. However, this serves to finance resolution and stability mechanisms and is not a special budgetary burden. “Austria has to decide which countries it wants to compare itself with,” says Resch.
In order to be able to measure the economic impact, the banking division of the Chamber of Commerce has already commissioned a study: The Chamber of Commerce had Eco Austria evaluate what effects an extension or increase in the bank levy would have. The evidence suggests that banks pass on the full cost of such levies to borrowers, “leading to higher interest rates and limited loan volume.”
Eco Austria assumes that a permanent continuation of the special contribution for banks will have negative effects on the real economy: in 2027 and 2028, a decline in corporate investments of more than 700 million euros and the loss of several hundred jobs can be expected. In the medium to long term, 800 to 1,400 jobs would be lost while unemployment increases. “This reduces the disposable income of private households and dampens private consumption,” says the evaluation.
