- Question ID
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2014_720
- Legal act
- Regulation (EU) No 575/2013 (CRR)
- Topic
- Own funds
- Article
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32, 33
- COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
- Not applicable
- Article/Paragraph
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N.A
- Type of submitter
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Individual
- Subject matter
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Own funds - Prudential Filters
- Question
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Regarding the calculation of the prudential filters defined in Article 32 and 33 of Regulation (EU) No. 575/2013 (CRR) it is not clear if such filters shall be considered net or gross of the related tax effects. It seems reasonable to consider the filters net of tax effects. This will be consistent with the aim of such filters to exclude from Common Equity Tier 1 any increase in the institution's equity due to securitised assets and changes in its own credit risk, which are registered in the accounting framework net of tax effects.
- Background on the question
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The question is relevant for calculating the amount of the prudential filters to be applied to Common Equity Tier 1.
- Submission date
- Final publishing date
-
- Final answer
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Depending on the applicable accounting framework under Regulation (EU) No. 575/2013 (CRR) the valuation effects from the underlying transactions and the related tax effects may either be shown on a net basis (i.e. no separate identification of the tax effects) or on a gross basis (i.e. separate identification of the tax effects) in an institution's accounts.
Banks shall apply the filters set out in Article 32 and Article 33 (1) of the CRR on a net basis, i.e. including any tax effects in order to fully neutralise the effects of the transactions to which the filters apply when calculating CET 1 capital.
- Status
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Final Q&A
- Answer prepared by
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Answer prepared by the EBA.
- Note to Q&A
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Update 26.03.2021: This Q&A has been reviewed in the light of the changes introduced to Regulation (EU) No 575/2013 (CRR) and continues to be relevant.
Disclaimer
The Q&A refers to the provisions in force on the day of their publication. The EBA does not systematically review published Q&As following the amendment of legislative acts. Users of the Q&A tool should therefore check the date of publication of the Q&A and whether the provisions referred to in the answer remain the same.