The BVerfG’s assessment on the contributions to the Single Resolution Fund and Article 114 TFEU

An often neglected, but fateful aspect of the BVerfG 2019 ruling relates to the legality of the contributions to the Single Resolution Fund (SRF). Yet, the Court considered that, in its view, the ‘real’ legal basis for imposing SRF contributions was not the SRM regulation, but rather the national laws, harmonized by the Bank Recovery and Resolution Directive (BRRD) and coordinated (and mutualized) by the intergovernmental agreement on the SRF, then ratified by the German Republic. Since, in the BVerfG’s view, SRF contributions originated in national law, and EU Law merely coordinated such measures, the Senate did not consider whether banks’ contributions were “taxes” or “fiscal provisions” imposed by EU Law, and could thus dismiss the question of whether the SRM Regulation provisions regulating such contributions lacked a proper legal basis in the TFEU and were ultra vires. The way we see it, the Second Senate’s reasoning is flawed, and the regime for SRF contributions is based on EU Law. Thus, the question of the legality of SRF contributions remains relevant, although we believe there is prima facie a strong basis to ground them in Article 114 TFEU. Furthermore, the issue of the SRF and its contributions raises a host of other issues concerning the interplay between financial stability and fiscal policies. The constitutional implications of all this suggests that the current structure of inter-court dialogue is ripe for some enhancement.