Spain has given the final nod to impose a windfall tax on banks in a bid to ease the cost-of-living crisis, reported Reuters. 

As per the report, the Spanish Senate has largely exempted smaller banks and local units of foreign lenders operating in Spain from the tax. 

The tax proposal includes a 4.8% tax on the bank’s net interest income and net commissions. It would be charged above a threshold of €800m.

A similar tax regime for energy companies has also been approved.

Last month, the country’s ruling coalition proposed amendments to tax foreign banking groups’ local units supervised by the European Central Bank (ECB).

However, the upper house passed the bill without any change and it is final.

The bill was introduced by the Spanish government in July this year as part of a scheme to raise €3bn to help authorities deal with the impact of inflation.

Both the bank and the energy taxes have faced opposition from businesses and lenders, who have pledged to sue to remove the new tax policy.

Notably, the ECB has also warned that the banking tax could weaken banks’ capital, raise client expenses, and affect the whole domestic economy.

“If the ability of lenders to attain adequate capital positions is damaged, this could endanger smooth transmission of monetary policy measures to the wider economy,” the eurozone banking regulator was quoted by the news agency as saying.