The total tax rate of the CECA sector amounted to 53% of profits

Taxes specific to financial activity amounted to almost €1 billion

The total tax contribution of the CECA sector totalled €5,013 million in 2020, the largest figure in the last five years

Madrid, 22 November 2021 – In a year marred by the health crisis, with a sharp deterioration in economic activity, high market volatility and interest rates at record lows, the tax contribution of CECA's member entities totalled €5,013 million in 2020. So states a tax study conducted by KPMG Abogados, which takes into account the sum of input and output taxes. This is the highest figure recorded in the five consecutive years that this report has been compiled.

Once again this year, CECA's member entities: CaixaBank, Kutxabank and Cajasur Banco, Abanca, Unicaja Banco, Ibercaja Banco, Caixa Ontinyent, Colonya Pollença and Cecabank[1] have released data relating to their tax contributions. With regard to input taxes, that is, those that represent a cost for banks and directly affect their results, they totalled €2,619 million during this period, compared with €2,610 million the previous year, the highest figure in the last five years.

With respect to output taxes, which are taxes withheld or passed on to third parties in the course of business activity, they totalled €2,394 million, similar to the figures for 2019. Thus, for the third consecutive year, input taxes exceeded output taxes.

One of the most relevant items of input taxes are the taxes specific to the financial sector

In terms of input taxes, the social security payable by the entity continues to be the most significant item. This figure totalled €990 million, in line with that recorded in 2019. Meanwhile, net tax payments on profits totalled €347 million, compared to €284 million in the previous year.

It should also be noted that non-recoverable input VAT and the IDEC (Tax on Credit Institutions' Deposits) continue to represent, as in 2019, a significant tax cost for CECA sector entities, totalling €638 million and €161 million, respectively. These taxes, together with the IAJD (Document Duties) on mortgages, which totalled €163 million in 2020, represent the taxes specific to the financial sector and totalled approximately €1 billion. This is, once again, one of the most significant items of input taxes.

Thus, the total tax rate of CECA member entities stood at 53%. This ratio is 10 percentage points higher than that obtained in 2019 and is also above the rates recorded in 2018, 2017 and 2016. However, if we were to take into account the contributions made by CECA sector entities to the Deposit Guarantee Fund for Credit Institutions (FGD), €676 million, to the Single Resolution Fund (SRF), €252 million, and to the Single Supervisory Mechanism (SSM), €11 million, the total rate for 2020 would amount to 61%.

Almost half of the output taxes correspond to employment

In terms of output taxes, the largest amount is once again related to employment. Thus, personal income tax withholdings account for 48% of these taxes, totalling €1,151 million compared to the €1,188 million collected the previous year. Secondly, we have tax withholdings on income from financial instruments, insurance and pensions, which totalled €630 million. In terms of sales and service taxes collected, they totalled €371 million, up from €276 million in 2019. As for the amounts collected by Social Security payable by employees, they totalled €216 million, €23 million more than in the previous year.

In 2020, this tax contribution was accompanied by a series of other measures promoted by the sector during the same year, such as legal and sectoral moratoriums, the advance payment of unemployment benefits and pensions, and ICO lines. These initiatives highlight the importance of defining public-private partnership frameworks for the recovery of economic and social well-being.

[1] As the study refers to 2020, the entities included are: CaixaBank, Bankia, Kutxabank and Cajasur Banco, Abanca, Unicaja Banco, Ibercaja Banco, Liberbank, Caixa Ontinyent, Colonya Pollença and Cecabank.