Italy shocks banks with 40% windfall tax for 2023

Italy dealt a surprise blow to its banks and sent shockwaves across the sector in Europe by setting a one-off 40% tax on profits reaped from higher interest rates, after reprimanding lenders for failing to reward deposits.
 

Sharply higher official interest rates have yielded record profits for banks, as the cost of loans soared while lenders held off paying more on deposits.

Countries such as Spain and Hungary have already imposed windfall taxes on the sector and others may now follow suit.

Italian Prime Minister Giorgia Meloni's government had floated the idea earlier in the year, but appeared to have cooled on the plan.

A senior banking executive told Reuters that lenders had been ready for "the chopping block, but then the axe didn't come down".