EBA · 2013_260 Rejected question

Applying the two different applicable percentages of Articles 478(1) and 478(2) CRR to the amount exceeding the thresholds of Article 470(2) CRR

Regulation
Regulation (EU) No 575/2013 (CRR)
Article
478, para. 1, 2
Topic
Own funds
Submitted by
Accounting firm
Submitted
2013-09-17
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Question

How should the two different applicable percentages of Articles 478(1) and 478(2) CRR be applied to the total amount required to be deducted according to Article 36(1)(c) and (i) CRR after applying Article. 470 CRR?

Background

The amount after the calculation of the threshold deductions according to Article 470 CRR exceeding the thresholds specified by Article 470(2) CRR comprises the following components: • DTA that rely on future profitability and arise from temporary differences, both before and after 1.1.2014; and • significant investments in financial sector CET1 instruments. However, according to Articles 478(1) and 478(2) CRR two different applicable percentages have to be applied to this amount. Consequently, the question arises how the aforementioned amount has to be split up between the portion for Deferred Tax Assets (DTA) that rely on future profitability and arise from temporary differences after 1.1.2014 and the significant investments in financial sector CET1 instruments (subject to the percentages of Article 478(1)) on the one side and DTA that rely on future profitability and arise from temporary differences existing before 1.1.2014 (subject to Articlce 478(2)) on the other side. The CRR does not provide any rules for splitting up the amount exceeding the thresholds.
No answer published yet.

Original source: European Banking Authority, Q&A ID 2013_260

This Q&A is published by European Banking Authority and is non-binding. It does not constitute legal advice. Updated weekly from official ESA sources.

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