Washington to Support EU Windfall Tax on Frozen Russian Assets

Calling the proposal a sensible way to help finance Ukraine’s reconstruction, US Treasury Secretary Janet Yellen voiced support for the European Union’s plan to impose a windfall tax on profits generated by frozen Russian sovereign assets, adding that Washington is already discussing the idea with the European bloc, Bloomberg reports.

Yellen noted that this would be a different thing than outright seizing the assets, something the US was pressured to do, which would be illegal under current law. Having that in mind, the EU’s legal service came up with the alternative idea of taxing the profits earned on the Russian frozen funds.

According to a person familiar with the matter, the US officials, including Yellen, have considered endorsing the proposal in order to help unlock the debate over it in Europe as it opens the way to tap profits from Russian funds for Ukraine’s benefit.

The proposal, however, was heavily criticized by European Central Bank President Christine Lagarde, who warned that it could threaten the liquidity of the euro and the eurozone’s financial stability.

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