Novobanco and CGD receive billions in tax credits for deferred taxes

The Tax Authority reimbursed tax credits worth 620 million euros at Novobanco and 421 million euros at Caixa Geral de Depósitos (CGD) relating to deferred tax assets, according to a report referring to 2022.

According to the document sent on March 11 by the Tax Authority to the Secretary of State for Fiscal Affairs, available on the parliament’s website, by 2022 seven banks had requested the transformation of deferred tax assets into tax credits.

The amount requested amounted to 1,425 million euros, with the State repaying six banks 1,062 million euros. There were still credits pending analysis at the end of 2022.

The bank that benefited most from this regime was Novo Banco with 620 million euros reimbursed, followed by Caixa Geral de Depósitos which received 421 million euros. Haitong received 20 million euros.

Efisa received 860 thousand euros, Banif 562 thousand euros and Bison Bank 49 thousand euros.

In 2014, the PSD/CDS-PP Government created a regime that gave banks the guarantee that accumulated deferred tax assets (due to credit or employment impairments) could be converted into tax credits (deducting taxes payable on profits) or their return could be requested in the future.

This regime ended in 2016 with the PS Government, after the European Commission considered that it could be State aid to banks (the State guarantee on these assets means that they are used by banks to calculate capital ratios), but Assets accumulated until December 31, 2015 can continue to be used.

Tax credits are created by the difference between the accounting costs assumed by banks – namely provisions (for potential losses) for defaulted credits – and recognition for tax purposes. As the tax authorities accept fewer tax deductions than those accounted for by provisions, deferred tax assets are created.