Italy plans to raise €4b through tax reforms for banks

Italy will raise approximately 0.2 per cent of its gross domestic product (GDP), or around €4 billion ($4.35 billion), in 2025 by modifying tax rules for banks, insurance products, and gaming business licenses, according to Rome’s draft budgetary plan (DBP) released on Wednesday.

The document, submitted to the European Commission for approval, anticipates an increase in revenues of 0.168 per cent of GDP to help consolidate public finances.

The government announced on Tuesday plans to generate €3.5 billion from domestic banks and insurers after cabinet approval of a three-year budget plan.

However, the DBP indicates that revenues from these sectors are expected to decline by 0.073 per cent of GDP in 2026 and 0.096 per cent in 2027.

Officials revealed that the levy on the financial sector will result from changes to the taxation of stock options for executives and the regulations surrounding banks’ deferred tax assets, which are tax credits arising from past losses.

Economy Minister Giancarlo Giorgetti is scheduled to hold a press conference on Wednesday to elaborate on the upcoming measures.

Discussions about a bank levy have created uncertainty, impacting lender shares due to a lack of clarity from the government.

Last week, Giorgetti remarked that contributions from banks “shouldn’t be considered blasphemous.” Italy previously surprised markets with a 40 per cent tax on banks’ windfall profits, only to retract by narrowing the levy’s scope and offering an opt-out, resulting in no revenue for the state.