Italian Banks Put 2027 Budget’s Fiscal Impact at €7bn and Question Its Constitutionality
The Takeaway: Italy’s 2027 budget bill would raise a further €7 billion from banks over three years, counting deferred deductions as well as final taxes, the Italian Banking Association estimated in written testimony to Parliament’s budget committees. The bill lifts the banks’ corporate income tax surcharge by 3 points and permanently cuts the regional tax deduction on their running costs. The association says repeated levies aimed chiefly at some sectors raise strong doubts over their constitutionality and asks lawmakers for a thorough rethink.
Banks in Italy would pay corporate income tax at 30.5% in 2027 and 2028 under the budget bill, their association told Parliament on Tuesday, questioning whether the plan is constitutional.
The Italian Banking Association (ABI) set out its case in written testimony to the joint Budget Committees of the Chamber of Deputies and the Senate on the 2027 budget bill. The government bill, presented by Minister of Economy and Finance Giancarlo Giorgetti, was assigned to the Chamber’s Budget and Treasury Committee on 4 November.
The bill adds 3 points to the banks’ corporate tax surcharge
Article 18 of the bill raises by 3 points the corporate income tax (IRES) surcharge that banks already pay. It applies to the first tax period after the one under way on 31 December 2026 and to the period that follows.
ABI says the existing surcharge is 3.5 points on top of the ordinary 24% rate.
On ABI’s figures, the rise would take the rate banks pay to 30.5% and lift the bank surcharge by 86%.
The bill grants each bank a €200,000 credit against the tax itself in each of the two periods, up to the amount of extra tax due. It exempts electronic money institutions and adds a separate surcharge of 3 points for insurers over the same two periods.
ABI argues the extra tax would cut the profits banks can retain to finance themselves, and with them their capacity to lend to households and businesses.
Running costs lose most of their regional tax deduction
Article 19 targets the other administrative expenses and depreciation of banks and insurers. The share they may deduct from the regional tax on productive activities (IRAP) falls to 30% from 90%. The bill makes the change in the IRAP provisions for financial companies and for insurers, and ABI notes it would be permanent.
The non-deductible share of those costs would rise to 70% from 10%.
The bill offsets part of the cut with a €90,000 credit against the tax for each period from 2027, up to the extra tax the cut creates.
ABI says the cut would weigh heavily on the cost of branch networks and on investment in technology, infrastructure, physical security, cybersecurity and innovation. It comes on top of IRAP rates that are already 0.75 points higher for banks.
The 2026 budget law added 2 more points for 2026 to 2028, ABI adds. Non-deductible VAT, a cost for banks, would also become only 30% deductible for IRAP.
The bill also lowers the deductible share of banks’ interest expense for corporate income tax to 96% from 97%. ABI says that change applies in 2027, on top of a restriction in the previous budget.
In ABI’s view, the IRAP cut presumes that depreciation and running costs are not inherent to banking. It argues that this breaches the principle that tax must follow ability to pay, and the Constitutional Court’s rule that a tax base must be rationally linked to what is taxed.
Measures in the 2027 budget bill that ABI contests
| Article | Measure | Change |
|---|---|---|
| 15 | Tobin tax, unlisted | 0.4% to 0.8% |
| 15 | Tobin tax, listed | 0.2% to 0.4% |
| 15 | Tobin tax, high frequency | 0.04% to 0.08% |
| 18 | Bank IRES surcharge, two periods | +3 points |
| 19 | IRAP deductible running costs | 90% to 30% |
| 19 | IRES deductible interest | 97% to 96% |
| 20 | Loss and ACE use limit | 42% to 25% |
| 37 | 2027 Superbonus credit offsets | Over 10 years |
From the bill text (C. 3174-bis), except the listed row. The Tobin tax is the financial transactions tax; the bill amends its main and high-frequency rates, and the listed rates are those in ABI’s testimony, which says the bill doubles them. IRAP running costs are other administrative expenses and depreciation. The loss and ACE limit applies against income arising from the deferred deductions. Superbonus credits are those from 2023 spending, spread over ten equal annual instalments.
Deferred deductions and Superbonus credits move the cash burden
Article 20 would, ABI says, defer in full the deduction due in 2027 for items tied to deferred tax assets: write-downs and losses on older loans, goodwill and intangibles, and the first adoption of IFRS 9. The amounts would be recovered in equal parts in 2028 and 2029.
The same article lowers to 25% from 42% the limit on using tax losses and allowance for corporate equity (ACE) surpluses against the extra taxable income the deferral creates. ABI says recovering what goes unused would then depend on future taxable income.
The measure acts on the timing of payments, ABI says, and creates a financing cost for postponing the recovery of tax positions already accrued.
Article 37 spreads over ten equal annual instalments the share of Superbonus tax credits that could be offset in 2027. It covers credits from home renovation spending in 2023 under the scheme, which reached banks through transfers and invoice discounts.
ABI says the credits were acquired on a use schedule already fixed by law, and that changing it would appear equal to “a forced restructuring of a State debt”. It cites the bill’s own technical report as finding no effect on government net borrowing, and says the measure would still weigh heavily on liquidity, including for the companies involved.
Article 15 doubles the financial transactions tax, known as the Tobin tax. The bill raises the main rate to 0.8% from 0.4%.
The rate on high-frequency trading rises to 0.08% from 0.04%. ABI warns of effects on market liquidity, transaction costs and the competitiveness of Italian finance.
ABI says the 0.8% rate applies to purchases of unlisted instruments, and that the doubled rate on listed ones would be 0.4%.
ABI puts the tax bill from three budgets at €22 billion
ABI splits its €7 billion estimate in two. Final taxes, such as the IRES surcharge and the IRAP cut, account for €4.8 billion, and deferred deductions and offsets for €2.1 billion.
The two parts sum to €6.9 billion, against ABI’s total of €7 billion. It says the deferrals also affect banks’ prudential capital ratios.
The 2025 and 2026 budget laws had already added almost €15 billion of taxes on banks, ABI says. Its conclusions put the combined impact of those two laws and the new bill at €22 billion.
The association frames the bill against banks’ role in the economy. It cites €1,700 billion of loans to households, businesses and public administrations, and €2,150 billion of savings collected and invested.
Banks invest more than €6 billion a year in all, including in the security of payments and banking operations and in digital transformation, ABI says. It adds that their capital strength lets them own more than €400 billion of Italian public debt.
For scale, the total assets of Italy’s domestic banking groups and stand-alone banks reached €2,968 billion at the end of June. That was 5.60% more than a year earlier, according to the ECB consolidated banking data set out here on 6 November.
Against that base, ABI’s €7 billion over three years equals 0.24% of assets.
Banca d’Italia’s October projections, set out here on 17 October, put Italian growth at 0.7% in 2027. ABI says geopolitical uncertainty and technological change call for more growth and more investment capacity.
In The Edge’s reading, ABI’s case rests less on the size of the bill than on predictability: €2.1 billion of the total is timing rather than final tax, yet ABI treats the rescheduling of purchased credits and deferred deductions as a breach of legitimate expectations.
ABI invokes Articles 3 and 53 of the Italian Constitution, on equality and ability to pay, and the case law of the European Court of Justice. It also cites the Constitutional Court’s 2015 Robin Tax ruling, which in ABI’s account stressed the need for a reasonable link between a levy’s purpose, its economic basis and the taxpayers it targets.
It adds that the European Central Bank has repeatedly called for the effects of sector taxes on bank resilience, financial stability, lending and competition to be considered.
The association asks for a thorough rethink of the measures and an assessment of their combined effect with the earlier budgets. It also asks lawmakers to examine their compatibility with constitutional and EU law, which it says final opinions from law firms will set out.
Figures are from the Italian Banking Association’s (ABI) written testimony to the joint Budget Committees of the Chamber of Deputies and the Senate on the 2027 budget bill, dated 10 November 2026 and published by the Chamber of Deputies, and from the text of bill C. 3174-bis on the Chamber’s site; translations from Italian are The Edge’s, and percentages and comparisons not attributed to a source are The Edge’s calculations.
Sources: Associazione Bancaria Italiana, Italian Chamber of Deputies, European Central Bank, Banca d’Italia, The Edge.
