On Tuesday 8 November, Competition Comissioner Margrethe Vestager announced that Italy, Spain, Greece and Portugal had modified their public guarantees on banks' deferred tax assets, thereby calming the competition concerns that these guarantees had raised.
These deferred tax assets (DTAs) are created by banks "because they expect to pay less tax in the future, deferring a deduction of an expense or loss from their taxable income", Vestager explained. Banks would, however, only receive a tax deduction from the state if they have a positive taxable income. The schemes of these four countries had deviated from their original purpose, so that the banks were entitled to have these DTAs paid back by the authorities of their countries even if they were loss-making.
These countries therefore ceased creating new DTAs backed by the state if these did not correspond to any anticipated income tax payment, the commissioner explained. For existing DTAs, the four countries have brought in a system to remunerate the state adequately for the guarantee. In Italy and Spain, banks will have to make annual payments (1.5% of the guaranteed amount). In Portugal and Greece, an ex-post compensation system was already in place, in the form of shares. (Original version in French by Élodie Lamer)