Bank accounts taxed by up to 10%. Can it happen in Poland?

poland_

18 Mar 2013 / #1

All Cyprus bank account holders will be up to 10% less off in their bank accounts as from tuesday 19th March 2013. The one off levy is being used to raise funds as part of a deal with the EU. Cyprus loaded up on Greek debt in the early days of the crisis, expecting the EU to bail them out.

Expect to see a run on banks in Italy,Portugal and Spain this week as depositors in those countries expect similar levies.

Ziemowit 14 | 3936

18 Mar 2013 / #2

This is an unprecedented move never before having been applied in a debt-stricken eurozone country.

Brussels has started to test new methods of coping with the debt crisis. Bank deposits guarantee from now on seems to be a myth in the EU .

Harry

18 Mar 2013 / #3

This is nothing short of out-right theft and is very likely to have extremely harmful effects on the banking system. Why keep your money in the bank if it can be stolen from there?

AmerTchr 4 | 201

18 Mar 2013 / #4

Well done, EU!

Maybe that will get the attention of citizens who do not hold their governments responsible for their actions and/or insist that austerity is for everyone but them, their family, their industry and their union.

America should consider moves like this to stave off the coming disaster or at least buy time.

Harry

18 Mar 2013 / #5

insist that austerity is for everyone but them, their family, their industry and their union.

Why should the people of Cyprus lose up to 10% of their savings because their banks bought Greek debt? The people of Cyprus have not been living beyond their means and dodging taxes!

AmerTchr 4 | 201

18 Mar 2013 / #6

Then they can vote in a new government to give them their money back from tax revenues next election, not do business with the miscreant banking institutions and elect a government that will rectify the situation by whatever means is appropriate.

Grzegorz_ 51 | 6138

18 Mar 2013 / #7

Feckin bolsheviks. I've been saying that for years.

ShawnH 8 | 1488

18 Mar 2013 / #8

Wow, maybe there is something to that Second Amendment idea...

SeanBM 34 | 5781

18 Mar 2013 / #9

Has it actually been decided yet? Putin is not a happy cat.

Russian banks had about €9.2 billion ($12 billion) placed with Cypriot banks and corporate deposits amounted to €14.6 billion ($19 billion) at the end of 2012, according to Moody's's rating agency.

Irish Times

It should not effect deposits of 100,000 Euro as they are meant to be guaranteed.

Ziemowit 14 | 3936

18 Mar 2013 / #10

Wasn't it the Roosvelt administration which once passed the bill obliging the citizens of America to sell all the gold they own to the Federal Reserve?

Harry

18 Mar 2013 / #11

It should not effect deposits of 100,000 Euro as they are meant to be guaranteed.

Do you mean deposits of under EUR 100,000? If so, my understanding is that those accounts are also being 'taxed', at a rate of 6.75%.

ShawnH 8 | 1488

18 Mar 2013 / #12

It should not effect deposits of 100,000 Euro as they are meant to be guaranteed.

They would be guaranteed by the government with regards to the solvency of the financial institution the funds are deposited in. Remember: There is nothing guaranteed in life but death and taxes. This is a nasty example of the latter.

SeanBM 34 | 5781

18 Mar 2013 / #13

yes under 100,000

A source close to the consultations said authorities were hoping to cut the tax to 3 per cent from 6.7 per cent for deposits under €100,000

from the Irish times link above.

my computer died

OP poland_

18 Mar 2013 / #14

Do you mean deposits of under EUR 100,000? If so, my understanding is that those accounts are also being 'taxed', at a rate of 6.75%.

Whatever is decided Cyprus as a business center is ruined, if the EU didn't want to underwrite non EU depositors, they should have just come out and informed they were only prepared to put guarantees in place for EU domiciled beneficial owners of accounts in Cyprus. Its that simple.

The EU investors holding mutual funds and other financial instruments with cash holdings in Cyprus will also be hit. The Cy levy once adopted has far reaching negative consequences for the EU banking sector.

Harry

18 Mar 2013 / #15

There's an interesting piece on the FT website (I can't link to it as it's behind a pay wall): the basic point of it is that Putin should offer to pay the 'hair cut' for all deposits by Russian customers, but only those ones who are willing to state the source of their funds.

OP poland_

18 Mar 2013 / #16

The Russians have already provided a previous lone credit to CY for 2.5 billion Euros, the fact the EU have gone behind the backs of the Russians with the cash grab, is what infuriates them. Many regular businesses and depositors have money in CY for normal practice, its not all tax dodgers as some would have you believe.

SeanBM 34 | 5781

18 Mar 2013 / #17

its not all tax dodgers as some would have you believe.

Why would anyone have billions of Euros in a Cypriot bank account who is not living there, if not for the tax benefits?

ShawnH 8 | 1488

18 Mar 2013 / #18

This stinks on so many levels...

It is punishment for those that save, and are not living beyond their means.
It is not punishment for those that created this crisis in the first place.
It further devalues the concept of trust with financial institutions.
It makes the concept of fractional reserve even more dubious.

I predict there will be blood in the streets if this goes through..... and that this is just the tip of the iceberg.

Harry

18 Mar 2013 / #19

Many regular businesses and depositors have money in CY for normal practice, its not all tax dodgers as some would have you believe.

Yes, and those businesses and people who lose nothing. To quote from the FT:

The costs would be modest in comparison to the Russian state's resources. Russians hold around $31bn in deposits in Cyprus, or about a third of the total. As Moody's has calculated this includes $19bn in non-bank deposits and $12bn in Russian banks' deposits.
The levy on these deposits should amount to around $3.1bn. This is is only 0.15 per cent of Russia's GDP and only 0.05 per cent of Russia's foreign exchange reserves. This is miniscule.
But, it's a price worth paying. First, without a deal, Cyprus might impose capital controls that could freeze $40bn loans from Russian banks to Cyprus companies of Russian origin. As Ivan Tchakarov of Renaissance Capital says this would amount to a "non-trivial" 2 per cent of GDP. Next, as Monday's trading has already shown, there is is the impact on Russian financial markets.

blogs.ft.com/beyond-brics/2013/03/18/cyprus-a-chance-for-putin-to-join-rescue-and-fight-corruption

Marek11111 9 | 807

18 Mar 2013 / #20

America should consider moves like this to stave off the coming disaster or at least buy time.

they are considerind it but with 401k

rlscott63 4 | 21

18 Mar 2013 / #21

This is the beginning of the Eurozone meltdown part 2 over the year and a little bit.
Most likely we will see a run on the banks in the countries mentioned above into the US dollar.
This will cause the USD to rise as the Euro drops in value.
The thing to watch is how this will affect gold and silver.
In the past gold and silver went up as the USD went down.
It is highly suggestive that they should go down unless there vengeance from Russia towards the West for Cypres.
This should be one more reason for the government of Poland no to take the Euro.

It will be very interesting.

ZIMMY 6 | 1601

18 Mar 2013 / #22

Some Democrats in the U.S. are beginning to salivate hoping to do something similar to the "rich" although the middle class won't be far behind.

After all "it's only fair" and it's another push for their agenda of "equality" as they see it. Of course, such whispers won't make the news and socialists

will bide their time before going public with their hairbrained schemes of redistribution.

OP poland_

18 Mar 2013 / #23

Why would anyone have billions of Euros in a Cypriot bank account who is not living there, if not for the tax benefits?

SBM what % of account holders have billions of Euros in CY, 0.001%, many expats hold funds in CY it was the place of choice before HK and Singapore. iF the EU can impose a tax on CY account holders, they can also do it to the Italy, Portugal and Spain.

Wroclaw Boy

18 Mar 2013 / #24

This is great news, it has literally made my day. It is the perfect example of a flawed system.

Harry

18 Mar 2013 / #25

their hairbrained schemes of redistribution.

Er, you are aware that in the case of Cyprus the money is being taken from the people and given to the elite, aren't you?

Paulina 16 | 4338

18 Mar 2013 / #26

This is nothing short of out-right theft and is very likely to have extremely harmful effects on the banking system. Why keep your money in the bank if it can be stolen from there?

I predict there will be blood in the streets if this goes through.....

I wouldn't be surprised, tbh...

SeanBM 34 | 5781

18 Mar 2013 / #27

many expats hold funds in CY it was the place of choice before HK and Singapore

What made CY "the place of choice" apart from the tax benefits?

ZIMMY 6 | 1601

18 Mar 2013 / #28

you are aware that in the case of Cyprus the money is being taken from the people and given to the elite, aren't you?

They won't make that mistake in the U.S. I see even more banks opening up in the Cayman Islands.

SeanBM 34 | 5781

18 Mar 2013 / #29

the vote could be delayed until as late as Friday.

nytimes.com/2013/03/19/business/global/asian-markets-drop-on-latest-euro-concerns.html?_r=0

This is mental, how on earth can anyone defend taking people's savings.

This is great news, it has literally made my day. It is the perfect example of a flawed system.

I am not happy about it because of the normal people that are getting screwed but the system is wrong if they go ahead with this.

OP poland_

18 Mar 2013 / #30

What made CY "the place of choice" apart from the tax benefits?

The Anglo-Saxon model

Interesting reading for you SBM

bloomberg.com/news/2013-03-10/a-zillion-banks-one-set-of-rules.html

This is great news, it has literally made my day. It is the perfect example of a flawed system.

You fecking kill me WB, I know you have more heart, you may be against certain elements of the banking system, I know you as a poster over the years on PF and I don't believe for a second you would want to see normal people screwed out of part of their life savings.