Spain’s largest banks face additional payments to the government that could impact third-quarter earnings after a review found they underpaid a windfall tax.

The country’s financial sector has paid around €3 billion in the last two years, after Madrid in 2022 imposed an extra levy to syphon off some of the profits banks were making on the back of higher interest rates.

But a review ordered by the government concluded that lenders paid less than they should have, according to people familiar with the matter. Banks now face extra payments, they said, asking not to be identified discussing private information.

A spokesperson for the budget ministry declined to comment.

The demands could exacerbate tensions between the country’s largest lenders and the government, which turned to the finance industry two years ago to help fund relief for consumers struggling with high inflation. Banks have criticised the tax — a levy on their net interest income and fees obtained in Spain — because it was imposed on revenue rather than profit and singled out their industry.

The biggest banks had excluded some of their income from the tax, for instance, from foreign units and businesses such as insurance, after seeking an opinion on the tax, the people said.

Across Europe, extra money is needed to fill the hole caused by multiple crises — the cost of Covid support, helping households with energy bills during the inflation spike and funding Ukraine’s resistance to Russia’s invasion.

Measures that target cash-rich firms and the wealthy help governments avoid austerity on the scale seen during the euro-area debt crisis. They also allow politicians to tell frustrated voters that the burden of repairing government finances doesn’t all fall on them.

  - Bloomberg