The new Polish Act on the Tax on Financial Institutions will enter into force on 1 February 2016. The Act will introduce a new tax, which will be levied on the assets of certain financial institutions including, among others, banks and branches of credit institutions (jointly referred to as “Banking Entities”), as well as insurance companies and branches of foreign insurers and reinsurers (jointly referred to as “Insurance Entities”), and finally consumer lenders.

The Tax is levied at a rate of 0.0366% per month (0.44% annually) and applies to assets which exceed certain thresholds. Banking Entities will be subject to the Tax on assets which exceed PLN 4 billion (ca. EUR 1 billion), while the threshold for Insurance Entities is much lower, at PLN 2 billion (ca. EUR 0.5 billion). Consumer lenders are subject to taxation on assets above the level of PLN 200 million. Certain financial institutions will enjoy tax exemptions. Only Banking Entities can deduct their equity from their taxable asset base. Insurance Entities and consumer consumer lenders do not have this right. Similarly, only Banking Entities may deduct from their taxable base the value of Polish treasury bonds they own. Furthermore, certain financial institutions are completely released from the duty to pay the tax, e.g. entities subject to compulsory liquidation, bankruptcy or recovery proceedings.

The Act also provides that the introduction of the new tax cannot be the basis for changing the conditions of existing contracts, in order to prohibit financial institutions from passing on the costs of the Tax by increasing the prices of financial products subject to existing contracts.

The Act might violate the ban on state aid stipulated by European law. Any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the production of certain goods is, in so far as it affects trade between Member States, incompatible with the internal market. In order for aid to be compatible with European law, any aid or scheme must comply with the following conditions: (i) appropriateness; (ii) necessity; and (iii) proportionality, all of which are arguable. The government openly admits that the Tax is being levied to provide funds to cover social spending promised during the recent parliamentary election campaign.