Bloomberg News

Netherlands to Levy Bank Tax of at Least 300 Million Euros

July 01, 2011

(Updates with prime minister’s comment in second paragraph.)

July 1 (Bloomberg) -- The Netherlands will introduce an annual bank tax of at least 300 million euros ($434 million) and use the first proceeds to cut duties on house transactions in a bid to revive the real-estate market.

“Banks aren’t regular companies,” Prime Minister Mark Rutte told reporters in The Hague today. “Banks, especially big banks as we’ve seen, can call upon the government. It’s responsible to tell banks that in return there will be a banking tax, which is also implemented in large countries around us.”

The Netherlands bought Fortis’s Dutch units, including ASR Nederland NV and parts of ABN Amro, in 2008 after the company ran out of short-term funding, customers withdrew deposits and investors lost confidence. The government also provided aid to ING Groep NV, SNS Reaal NV and Aegon NV.

The levy may be introduced gradually, said State Secretary of Finance Frans Weekers.

“I’ve indicated that lending shouldn’t be hurt,” he said. “It should be a balanced package. We have to assess what banks can bear.”

The new global Basel III capital rules are cutting into banks’ core capital and a planned levy to create a guarantee fund to reimburse depositors when a lender fails is crimping savings, Weekers said. The new levy will be based on “more risky” capital such as “wholesale funding and bonds” and details will have to be worked out with the banks, he said.

Tax Revenue

The government today decided to reduce the transaction tax on houses to 2 percent from 6 percent, which will lead to a decline in annual tax revenue of 1.2 billion euros. The change is retroactive to June 15 and runs until July 1, 2012.

Rabobank Group, the biggest Dutch mortgage lender, expects average house prices to fall 2 percent in 2011 and 2.5 percent next year after dropping 2 percent last year and 3.3 percent in 2009. Last year, 126,127 homes were sold compared with 202,401 in 2007, according to national statistics bureau CBS.

In separate measures, companies that lend money to foreign subsidiaries will no longer be able to deduct interest payments from corporate tax, resulting in 340 million euros of extra tax income. The government will also cut tax-exempt savings from gross salaries, yielding 500 million euros.

‘Good Signal’

While the Amsterdam-based Dutch association of banks NVB criticized the planned tax and said it may hurt mortgage lending and the domestic economy, realtors welcomed it.

“This is a good signal to help the house market on its way,” Ger Hukker, chairman of the NVM realtors association, said in a statement from Nieuwegein, the Netherlands. “It’s great news for every home buyer and seller.”

Finance Minister Jan Kees de Jager last year extended a 2009 increase of the limit for mortgages under the National Mortgage Guarantee plan to 350,000 euros from 265,000 euros, seeking to shore up the housing market. That plan compensated homeowners for 35 million euros of losses due to forced sales in 2010.

Declarations under the guarantee plan are forecast to rise to 2,000 this year from 1,341 last year, the organization handling the project said on its website today.

--Editors: Jennifer M. Freedman, Jeffrey Donovan

To contact the reporter on this story: Jurjen van de Pol in Amsterdam at jvandepol@bloomberg.net.

To contact the editor responsible for this story: James Ludden at jludden@bloomberg.net.


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