Germany is obligated to refund the national bank tax to the government
In a recent ruling, the Administrative Court in Frankfurt has decided that Germany must repay a significant sum to three major banks - Deutsche Bank, Unicredit, and DZ Bank - due to the unlawful collection of the bank levy between 2011 and 2014. The total repayment amounts to 605 million euros, 334 million euros, and 64 million euros respectively.
The court classified the bank levy as a special levy with a financing function, stating that it must be used "group-specifically," a condition that was not met in the case of the bank levy in question. This decision is likely to be just one step in the dispute over the use of the 2.3 billion euros in old funds.
The bank levy, initially paid as a national levy to the rescue fund Soffin, was intended to provide bridging finance. However, with the expiration of the bridging finance and the lack of new regulation by the legislature, the purpose of the national bank levies has become obsolete.
The black-red coalition, aiming to use the old funds for a Mittelstandsfonds - a fund designed to provide financing for large German SMEs with limited access to the capital market - submitted a draft bill in mid-2022 to transfer the old funds from the Bank Levy Reconstruction Fund to Soffin. However, the legislative procedure could not be completed due to the early end of the legislative period.
The current status of the legislation transferring old tax funds from the Bank Levy Reconstruction Fund to Soffin is that it is under parliamentary review, with completion expected by the end of 2025.
The German Banking Industry has welcomed the decision, while the Citizens' Movement Finance Turnaround considers it a severe setback. The court's decision is not yet legally binding and has allowed an appeal to the Higher Administrative Court of Hesse and a leapfrog appeal to the Federal Administrative Court.
The examinations involve financial constitutional law, EU state aid law, and tax law. The funds accumulated nationally up to 2016 were paid as a national bank levy to Soffin, but from 2016, the European bank levy followed, which flowed into the Single Resolution Fund (SRF).
The court's decision is directed against the financial supervisory authority BaFin, which administers the funds and makes contribution decisions for the bank levy. BaFin has not yet commented on whether it will appeal the decision, awaiting the written reasons for the decision before deciding on the next steps.
The Mittelstandsfonds, if realised, could leverage up to 10 billion euros in equity and debt capital for the digital and climate-neutral transformation of German SMEs. However, there are no concrete legislative plans for the fund yet, as the design of the fund is currently being examined.
The Soffin still has a deficit of 21.1 billion euros at the end of 2024, but it still has assets, including the federal shares in Commerzbank. The legislative regulation regarding the use of the old funds is pending, adding another layer of complexity to the ongoing dispute.
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