Italy Drops A Windfall Tax Shock On Its Banks

Since inflation has taken hold in Europe and the US, there has been the risk of windfall taxes on companies as part of government responses to higher inflation, energy prices and interest rates.

This week, the Italian government, having previously publicly toyed with the idea (but then retreated) have imposed a one-off windfall tax on Italian banks. The intention is that the tax will apply to 2023 only (payable up to June 2034), applied on 40% of net interest margin earned in 2022 or 2023 (the greater of the two). While the Italian government has rowed back on the windfall tax in part, the overall policy remains in effect.