Eurostat jams the deferred tax for banks

A new jam has occurred on the issue of the deferred tax for banks, this time by Eurostat. According to the rules of the service, the provision of deferred tax on banks is considered capital transfer and for this reason must be charged to the cost of the State deficit. The Greek authorities, in collaboration with the Troika, are discussing with Eurostat the introduction of improvements in order to bring it to the Greek Parliament again. This development, however, brings a new delay in the bank recapitalization process.

 

The Greek government had taken back the deferred tax on banks and had temporarily withdrawn the article that appeared in the registered tax bill, until there was a precise estimate of the impact on banks from participating in the repurchase program on Greek bonds at their current low values.

 

Specifically, Article 11 on deferred tax is withdrawn and reportedly the Finance ministry intends to bring new legislation to parliament, which will take into account the losses suffered by banks due to the recent bond repurchase process.

 

This was deemed necessary because the article that was withdrawn would only apply to losses from the PSI+ rather than their participation in the repurchase of bonds as initially requested by the credit institutions.

 

Article 11 provided for full recognition of the deferred tax on the regulatory capital of banks and the offsetting of losses from their participation in the rearrangement of the Greek debt with future profits even at a range of 30 years, as long as the maximum duration of the bonds they held after the PSI+.

 

With that facilitation the loss of Greek banks from the PSI+ decreased by about 4-4.5 billion euros, which will respectively reduce their capital needs.