Simeon Dyankov proposes €1 billion windfall tax on Bulgarian banks

Simeon Dyankov, chairman of the Fiscal Council, suggests that a temporary windfall tax on bank excess profits in Bulgaria could generate over €1 billion for the state budget. This measure aims to help reduce the national deficit without increasing general corporate taxes or broad-based taxes like VAT or personal income tax.

Dyankov notes that the surge in banking profits since 2022 is primarily driven by changes in the macroeconomic and interest rate environment rather than new investments, technological improvements, or increased entrepreneurial risk. As interest rates rose across Europe, income from loans and other interest-bearing assets increased rapidly, while deposit rates rose more slowly, significantly boosting net interest income.

The proposal suggests the tax should target profitability exceeding a predetermined historical norm and should include a clear expiration date to avoid becoming a permanent tax increase. Dyankov highlighted that 12 EU member states—including Belgium, the Netherlands, Slovenia, Estonia, Latvia, Lithuania, Czechia, Romania, Slovakia, Hungary, Spain, and Italy—have already implemented various forms of additional banking sector taxation.