Credit Suisse Loses U.K. Case Over Crisis-Era Banker Bonus Tax

(Bloomberg) -- Credit Suisse Group AG lost a U.K. lawsuit over a one-time tax on banker bonuses at the height of the financial crisis.

The Swiss lender sued the British government over the 50% tax, which applied to bonuses over 25,000 pounds ($31,000) in 2010. But a London judge rejected arguments that the levy was “strikingly unfair” because some banks didn’t have to pay it on bonuses distributed outside of the brief window the policy was in effect.

The tax was only designed to apply for a short period, and the bank has “not established a selective advantage,” judge Sarah Falk said in the ruling.

The suit centered on a levy paid at a time when public anger about banker pay surged amid the global financial crisis. The tax generated a total of 3.4 billion pounds, almost five times more than initial estimates.

Credit Suisse says it paid 239 million pounds for the tax and had to cut its global bonus pool by 5% to help fund the cost at the time.

A spokesman for the bank said it “proceeded with this case as we believed there was an important principle of law at stake; however, we accept the judgment of the court.” The U.K. tax authority, HM Revenue & Customs, said the decision confirms its understanding of the rules surrounding the 2010 tax.

‘Discourage’ Bonuses

The tax, introduced by the Labour government, aimed to “discourage banks from paying high bonuses,” and raising money from the charge was a “secondary objective,” the judge said in her ruling.

The bank had argued that the policy’s short time window -- between December 2009 and April 2010 -- was “discriminatory” because 15 banks using calendar years paid “significant” amounts in tax on bonuses, but 16 banks using fiscal years paid “very little.”

But the judge said that short period “allowed what was thought to be the main awards season to be targeted while ensuring that the measure was time-limited.”

To contact the reporter on this story: Kaye Wiggins in London at kwiggins4@bloomberg.net

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Peter Chapman

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