The European Commission is examining a complaint by the Association of Lithuanian Banks regarding the bank solidarity levy introduced earlier this year.
In a letter sent earlier this week, the EC said it would soon ask the Lithuanian authorities to provide explanations on what it considers to be unlawful state aid as a result of the additional levy on some financial market players.
In August, the Association of Lithuanian Banks turned to the EC, arguing that the bank taxation model distorted competition as the exemption of some financial market players from the levy constitutes unlawful state aid and potentially runs counter to EU law, such as the principle of non-discrimination.
“No other sectors of the economy, except for financial institutions, have had their so-called windfall profits taxed,” the association said.
The solidarity levy is calculated on banks’ net interest income exceeding 50 percent of the average of the past four years.
Banks are estimated to pay around 130 million euros in solidarity levy into the state budget in 2023, followed by 230 million euros in 2024 and 50 million euros in 2025.
The levy was introduced as the country’s banks were expected to make a profit of over 1 billion euros this year, which is seen as a windfall as they profit from the European Central Bank’s interest rate hikes.
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