Dutch banking association questions legitimacy of bonus tax

Dutch banking association NVB has questioned whether a proposed bonus tax applied retroactively on banks in the Netherlands that received state aid is legitimate, following a motion in Parliament.

NVB asked yesterday, Wednesday 23 March, whether there was legality and legitimacy to the bonus tax motion put forward a day earlier by the Dutch Freedom Party, with the backing of the Labour and the Socialist Party.

“We regret this proposal which has talked about getting bonuses back from earlier years,” said NVB spokesman Bart van Leeuwen.

“It’s about years already behind us. The books are already closed,” he said.

The proposed bonus tax applies to all bonuses paid out to bailed-out banking and insurance institutions in the Netherlands since 2008. If it goes through, it will not only impact executives, but all staff.

As recipients of state aid during the financial crisis, ING, ABN AMRO, ASR, Aegon, and SNS Reaal will all be caught by the 100% retroactive tax on bonuses.

But Dutch finance minister Jan Kees de Jager, with whom the power lies to decide whether to implement the motion, already said earlier it contradicted the constitution.

Van Leeuwen of the NVB also threw into question the legality of the motion.

“It’s a good custom in politics you don’t agree on proposals which can’t be implemented, because of other laws,” he said.

The motion cannot be considered until after the summer, when an independent monetary committee is due to report on whether banks in the Netherlands have complied with the banking code.

Introduced on 1 January 2010, the banking code was an agreement made between the Dutch government and banking institutions to implement a system of self-regulation on pay.

Under its terms, Dutch banks can set their own bonuses but at no more than 100% of their regular salary.

“We are of course happy Parliament gave us the opportunity that it is willing to wait until after the report of the monetary committee,” added Van Leeuwen.

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