EU ministers tasked the European Commission with studying a windfall profits tax — The Rio Times
In Luxembourg, Luxembourg, EU finance ministers on October 9 asked the European Commission to examine the possibility of introducing a new windfall profits tax on companies in the oil and gas sectors. Austria, Germany, Italy, Poland, Portugal and Spain put forward the initiative for discussion at the EU level.
As The Rio Times reports, the ministers also agreed to establish a working group led by the European Commission. It is to consider possible levy options and exchange practices among member states. Potential measures are envisaged at the national level with the Commission’s technical and legal support.
The European Commission’s position
European Commissioner for Economy Valdis Dombrovskis said that member states are better placed to set such taxes. The European Commission agreed to examine the issue but did not endorse the introduction of a single EU-wide levy.
At the EU summit in Brussels on October 15–16, no decision was made on the windfall profits tax. The tax base, rate, duration and territorial scope of the possible mechanism have not yet been determined.
The 2022 precedent
In October 2022, the Council of the EU adopted Regulation 2022/1854, which introduced a temporary solidarity contribution for companies extracting oil, natural gas and coal, as well as those engaged in oil refining. It applied to companies and permanent establishments in the EU if the relevant activity accounted for at least 75% of their turnover.
The minimum contribution rate was 33% of the portion of taxable profits exceeding the average for four financial years starting from 2018 by more than 20%. According to the European Commission’s final report, the mechanism generated €26.15 billion for the 2022–2023 tax years.
Poland has already adopted its own levy: a law signed on October 1 provides for a 60% tax on excess profits from the sale of liquid fuels. The Polish government expects revenues of about 4 billion zlotys.
