EU considers windfall tax for energy giants: profits may be coming to an end

Dublin/Brussels, 18 September (CTK correspondent) – At their informal meeting in Ireland today, EU finance ministers will discuss, among other things, whether to introduce an EU-wide windfall tax on energy companies benefiting from the sharp rise in oil and natural gas prices following the blockade of the Strait of Hormuz. Reuters reported this. Further talks are expected in October at the ministers’ regular meeting in Luxembourg.

The debate was launched at the end of August by the finance ministers of Germany, Spain, Portugal, Italy, Poland and Austria. They warned that consumers are facing one of the biggest disruptions to oil supplies in recent decades, which is increasing voter dissatisfaction due to rising living costs. Parliamentary elections will be held next year in France, Italy, Spain, Poland, Greece, Finland, Slovakia and Estonia.

Oil futures prices have climbed above $100 per barrel and are around 50 percent higher than before the war with Iran. The fighting in the Middle East is also threatening other supply routes.

Arriving for the meeting of EU finance ministers in Dublin, German Finance Minister Lars Klingbeil called on the European Commission (EC) to propose ways of taxing what he described as excessive profits of oil companies. “The Commission has been very reluctant on this issue, although several member states have long called for proposals to be put forward,” the minister said. In his view, the proposals should be presented no later than the next meeting of EU finance ministers.

“People in our countries see how oil companies are taking advantage of this situation, charging excessively high prices and significantly increasing their profits,” Klingbeil added.

In his view, the prices he described as excessive need to be addressed. However, European Commissioner for Economy Valdis Dombrovskis said that the EC currently has no plans to propose an EU-wide mechanism for taxing these profits. According to him, tax policy falls within the competence of member states, and individual countries can proceed as they see fit.

In their August letter, the ministers of the six countries said that the EU should draw on its experience from 2022. At that time, in response to the energy crisis following Russia’s military invasion of Ukraine, the European Union adopted emergency measures that included a temporary solidarity contribution on excess profits of businesses operating in the oil, natural gas, coal and refining sectors. Member states could introduce an equivalent national measure instead. The windfall tax, as the extraordinary tax on unexpected profits is known in English, also applied in Czechia, which introduced its own extraordinary taxation of selected energy and petrochemical companies as well as banks.