Franak Association: Banks intend to impose future tax on loan users

The Franak Association has received information from its members that certain banks are incorporating illegal contractual provisions into new loan agreements. According to known information, this concerns Zagrebačka banka, Privredna banka Zagreb, and Splitska banka.

As the Franak Association informs, it is about a provision stating that “the loan user will pay any tax that may be prescribed to the creditor in the future.”

By a final judgment in a collective lawsuit, due to the contracting of unfair and illegal provisions regarding variable interest rates that change at the bank’s discretion, it has already been established that such provisions are illegal. Despite this, state institutions have done nothing to prevent the continuation of illegal banking practices, which is why banks are repeating the same scenario.

The Franak Association points out that by contracting a provision that shifts the payment of taxes, which may eventually be prescribed to banks, onto consumers, banks are violating legal provisions.

1. The provision from Article 272 of the Obligations Act, which clearly states that a contractual obligation must be determinable. A contractual provision that is unknown in the future is not a determinable contractual provision, and a contract containing such a provision, according to the provision from Article 272 of the Obligations Act, is a null and void contract.

2. The provision of Article 2 of the Consumer Credit Act, which stipulates that the total costs of the loan consist of “interest, fees, taxes, and all other charges that the consumer must pay in connection with the loan agreement and which are known to the creditor, except for notary fees.” In illegal contractual provisions regarding future taxes, the creditor preemptively includes those taxes that may arise but will be prescribed to the creditor. These are neither taxes known at the time of concluding the loan agreement nor taxes that may eventually be prescribed to consumers/debtors in connection with the loan agreement.

3. The provision from Article 4 of the Consumer Credit Act, where it is clearly stated that the loan agreement must contain the total amount that the consumer must pay, while future services that are not immediately present may be contracted, whereby the tax prescribed to the creditor in no way represents a service of the creditor, but an obligation to the state, which will anyway be clearly prescribed to the future taxpayer. Any future tax that the creditor may eventually pay must not be transferred to the shoulders of the debtors, and such a method of risk protection is an unfair business practice for which banks have already been condemned in a collective lawsuit, but even after the final judgment, they have not changed such practices.

The Franak Association publicly and openly calls on the Government of the Republic of Croatia, the Ministry of Finance, and the Croatian National Bank to prevent banks from attempting to circumvent completely clear legal provisions and to instruct banks through authorized persons or authorized services to cease the described illegal practices and prohibit banks from including provisions on the payment of future tax costs that creditors may eventually bear in contracts.